It’s been a difficult experience for the crypto market in 2022. By November, the market had dipped by 70 percent from its previous high at the end of November. When things were going downhill, the FTX crash turned things even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips over the years. Each time, it has bounced back by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. But, in 2017 it broke that record and reached a new high of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, the price broke through the resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve had another dip. However, history has shown us that at the end of every 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 typically followed by a long bull run that eventually breaks through the resistance created by the previous high price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more companies and industries adopting it, its usage and acceptance is increasing. From finance to gaming the use of crypto is increasing in many ways. This growing demand can lead to increasing participation in the market and, in turn, 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 crypto. From hedge funds to banks, many large institutions are starting to explore the potential in crypto currencies. This increased interest from institutions could provide more stability to the crypto market and result in more expensive prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable rules for cryptocurrency. This is likely to attract more investors and boost the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of potential use cases beyond just financial transactions. From supply chain management to voting systems, more and more industries are beginning to look at ways they can make use of blockchain technology. This could drive more investment and interest in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are at the very beginning of development. As progress is made in areas such as security and scalability, the potential of crypto assets will continue to expand. This could result in more adoption and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused through the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world remains uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or even individual investors, are also starting to participate in the crypto market. With increasing numbers of everyday people are educated about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows, more and more people are beginning to learn about and understand the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying as well as holding the crypto that can increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows the provision of financial services developed upon blockchain technology. As DeFi grows and more projects and platforms become available, this will lead to a rise in adoption and increased prices for crypto.
Developments in crypto payment methods
As the crypto market grows as more and more businesses are beginning accepting crypto payments as a form of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
Increased investment from sovereign wealth funds
These funds are government-owned instruments for investing, are now beginning to explore crypto as an asset class. As more funds allocate a portion of their portfolio to crypto, it could result in a rise in demand and increased prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is the capability to perform swift and affordable cross-border transactions. As more and more people and businesses begin to use crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto increase it will be more convenient for individuals to purchase and store crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that signify ownership in an asset like stock or real estate, are a rapidly growing sector of the crypto market. With the increasing number of security tokens being issued and traded, this could lead to increased demand, and thus higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more retailers begin accepting crypto as a means of payment, it will make it more convenient for consumers to hold and use crypto, which could drive up demand and prices.
Will crypto be on the grow in 2023? Only time will tell. However, with these aspects being considered, it’s likely that the crypto market will see a recovery in 2023. If you’re looking to invest for the long-term patience and discipline is essential.