It’s been a rough experience for the crypto market in 2022. By November the market was down by more than 70% from its previous peak on November 20, 2021. And just when things were looking down and down, the FTX crash made them look worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many dips in the past. Each time, it has bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. In 2017 it broke that record, and hit a new record high of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, it broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. But history shows us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are usually followed by a long bull run that finally surpasses the resistance created by the previous high price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries taking to it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in many ways. And this growing use case could result in more people getting involved in the crypto market which could drive the prices up.
A rise in the interest of institutions for crypto
In recent times we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increasing interest from institutions could provide more stability to the crypto market and result in higher prices.
Regulations of the government
As the market for crypto grows and mature, governments across the globe are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and boost the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, has a wide range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can make use of blockchain technology. This will stimulate more investment and excitement in crypto.
Technology advancements
Crypto and blockchain technology are still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will increase. This could lead to more adoption and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or even individual investors are also beginning to participate in the crypto market. In the future, as more people learn about crypto and the best ways to invest in it This could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows increasing numbers of people are beginning to become aware about and understand it. As awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing and holding crypto, which could increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market, which allows the provision of financial services developed using blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are beginning accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are now beginning to look at crypto as an asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the ability to make quick and inexpensive cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions, this can lead to a rise in the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to grow, it will become easier for consumers to purchase and hold crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like stocks or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, it can lead to a higher demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants begin accepting crypto as a form of payment, it will make it easier for customers to utilize and store cryptocurrency, which will drive up demand and prices.
So, is crypto likely to rise in 2023? It’s only time to find out. With these things in mind, it’s likely that the crypto market will see a recovery in 2023. If you’re looking to invest for the long-term Being patient and disciplined is essential.