It’s been a tough ride for the crypto market until 2022. As of November, the market had dipped by 70% from its previous peak at the end of November. And just when things were looking down, the FTX crash turned things even worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of dips in the past. Every time, it has bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. However, in 2017, it broke that record and reached a new record high of $19,600. Then, in 2018, it was trading at $3,100. In the year 2020 it struck through the resistance and hit a new peak of $68,000 in the month of November 2021. And just like that, we’ve seen another dip. However, history has shown us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a prolonged bull run that finally breaks through the resistance created by the previous high price. This pattern can be seen not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more businesses and industries embracing it, its usage and acceptance is increasing. From gaming to finance cryptocurrency is being utilized in many ways. And this growing use case could lead to increasing participation in the market which could drive the prices up.
The rise in interest of institutions in cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the potential in crypto currencies. This increased interest from institutions could bring more stability to the crypto market and lead to higher prices.
Regulations of the government
As the market for crypto continues to mature, governments around the world are beginning to establish more favorable rules for cryptocurrency. This will help draw more investors and boost the adoption rate of crypto.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, has a wide range of possible applications that go beyond financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas like security and scalability, potential of cryptocurrency assets will continue to increase. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty caused due to the COVID-19 pandemic and other factors, more and more investors are looking for safe haven assets like bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to invest in the cryptocurrency market. With increasing numbers of people become aware of cryptocurrency and investing in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market continues to mature, more and more people are beginning to become aware about and appreciate it. As understanding and acceptance of cryptocurrency grows it could result in more people purchasing and holding crypto, which can raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi expands and more projects and platforms become available, this will lead to a rise in adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing, more and more companies are beginning to accept crypto as a method of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned investment vehicles, are now beginning to show interest in crypto as a potential asset class. As more funds allocate a portion of their portfolio to crypto, it could lead to increased demand and more expensive prices.
Utilization of crypto to make international payments
One of the major benefits of crypto is its capability to perform fast and cheap cross-border payments. As more and more people and businesses begin to use crypto for international transactions, this can lead to a rise in demand and higher prices.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and store crypto, which could boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership in an asset like stocks or real estate, are a rapidly growing sector of the crypto market. With the increasing number of security tokens being created and traded, this could lead to increased demand, and thus higher rates for the crypto.
More adoption by merchants
In the event that more businesses begin accepting crypto as a form of payment, it will make it easier for people to hold and use cryptocurrency, which will drive up demand and prices.
So, is crypto likely to increase in 2023? The only way to know is time. But with these factors in mind, it’s possible that the crypto market could have a rebound by 2023. If you’re looking to invest for the long-term, being patient and disciplined is crucial.