It’s been a difficult ride for the crypto market through 2022. By November the market had dropped by 70 percent from the previous high at the end of November. And just when things were looking down, the FTX crash turned them worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of drops in the past. And every time, it’s rebounded by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for a full year before reaching a bottom of $150. But, in 2017, it broke the record and reached a new highest of $19,600. In 2018, the price was at $3,100. In 2020, the price broke through that resistance and hit 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 after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are typically followed by a lengthy bull run that finally surpasses the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and more businesses and industries embracing it, its usage and acceptance is rising. From finance to gaming, crypto is being used in many ways. And this growing use case could lead to increasing participation in the crypto market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in crypto. From hedge funds to banks and even large corporations are starting to explore the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the market for crypto and could lead to greater prices.
Regulations from the Government
As the market for crypto continues to mature and mature, governments across the globe are starting to create more favorable regulations for crypto. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. From supply chain management to voting systems, more companies are starting to explore how they can make use of blockchain technology. This will drive more investment and interest in cryptocurrency.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas such as scalability and security, the potential of cryptocurrency assets will continue to increase. This could result in more use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on through the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven investments like gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. As more and more everyday people are educated about cryptocurrency and investing in it this could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market is maturing increasing numbers of people are beginning to learn about and understand it. As awareness and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing as well as holding the crypto that can increase prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables financial services to be built using blockchain technology. As DeFi expands and more platforms and projects become available, this could result in increased use and increased prices for crypto.
The development of crypto payment methods
As the market for crypto is growing as more and more businesses are beginning accepting crypto payments as a form of payment. This could result in increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are now beginning to show interest in cryptocurrency as a possible asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Utilization of crypto to make cross-border payments
One of the major benefits of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more and more people and businesses start to utilize cryptocurrency for international transactions it could result in increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s continue to grow it will be more convenient for individuals to purchase and store crypto, which could increase demand and price.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, like real estate or stock are rapidly expanding sector of the crypto market. With the increasing number of security tokens being created and traded, it could result in a rise in demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more merchants begin accepting crypto as a means of payment, it will make it easier for customers to utilize and store crypto, which could increase demand and price.
So, is crypto likely to rise in 2023? Only time will tell. But with these factors to consider, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. And for those who are looking to invest for the long haul, being patient and disciplined is essential.