It’s been a rough journey for the cryptocurrency market in 2022. As of November the market had dropped by more than 70% from its previous peak on November 20, 2021. And just when things were getting worse and down, the FTX crash turned them even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many drops in the past. And every time, it’s bounced back with a huge increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. However, in 2017, it broke the record and hit a record highest of $19,600. In 2018, and it was trading at $3,100. In the year 2020 it struck that resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve had another dip. But history shows us that at the end of every dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are usually followed by a long bull run that eventually overcomes the resistance set by the previous high price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in a variety of ways. The growing popularity of crypto could lead to more people getting involved in the crypto market which could increase the price.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the potential in crypto currencies. The increased interest of institutions can bring stability to the crypto market and result in higher prices.
Government regulations
As the crypto market grows as it matures, governments all over the world are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more and more industries are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the early stages of development. As advancements continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to expand. This could lead to more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on through the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets like cryptocurrency and gold. As the global economic situation is uncertain, this could lead to more demand for crypto as well as increased prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors are also beginning to participate in the cryptocurrency market. In the future, as more people are educated about crypto and how to invest in it this could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing as more and more people are beginning to learn about it and comprehend the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be created on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it could lead to increased adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows increasing numbers of companies are beginning accepting crypto payments as a form of payment. This could lead to an increase in the usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part of their portfolio to crypto, it could increase demand and increased prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is its ability to make swift and affordable cross-border transactions. As more businesses and individuals begin to use cryptocurrency for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto continue to increase, it will become easier for consumers to purchase and store crypto, which will increase demand and price.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset such as 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 lead to increased demand and consequently higher prices for crypto.
More adoption by merchants
In the event that more retailers accept crypto as a means of payment, this makes it easier for customers to hold and use cryptocurrency, which will boost demand and increase prices.
Will crypto be on the rise in 2023? The only way to know is time. However, with these aspects to consider, it’s likely that the cryptocurrency market will see a recovery in 2023. If you’re looking to invest for the long run Being patient and disciplined is crucial.