It’s been a rough ride for the crypto market through 2022. As of November the market was down by 70% from its previous peak on November 20, 2021. When things were looking down and down, the FTX crash turned things even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of dips in the past. Each time, it’s bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. But, in 2017, it broke that record, and hit a new record high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in 2020, it broke through the resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and better companies and industries taking to the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. And this growing use case could lead to increasing participation in the market which could boost prices.
Increased institutional interest in crypto
In recent years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds numerous large institutions are beginning to investigate the possibilities of crypto assets. The increased interest of institutions could provide more stability to the crypto market and could lead to higher prices.
Regulations of the government
As the crypto market grows as it matures, governments all over the world are beginning to establish more favorable rules for crypto. 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, is a broad range of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to increase. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on by the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and higher prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or individual investors are also beginning to participate in the cryptocurrency market. With increasing numbers of everyday people learn about crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market grows as more and more people are beginning to become aware about and appreciate the concept. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this could drive up prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that allows financial services to be developed upon blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows, more and more companies are starting using crypto to be a form of payment. This could lead to an increase in the usage of crypto in daily transactions and higher prices.
Increased investment from sovereign wealth funds
These funds are owned by the state as investment vehicles, are beginning to look at crypto as an asset class. As more funds devote a percentage of their portfolio to crypto, this could increase demand and increased prices.
Use of crypto for payment across borders
One of the major benefits of crypto is its ability to facilitate fast and cheap cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions, this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to increase it will be easier for people to buy and hold cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that represent ownership of an asset, like stocks or real estate, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, it could lead to increased demand, and thus higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of merchants accept crypto as a means of payment, it makes it easier for customers to use and hold crypto, which could drive up demand and prices.
Will crypto be on the grow in 2023? It’s only time to find out. However, with these aspects being considered, it’s likely that the cryptocurrency market will see a recovery in 2023. And for those who are in it for the long haul, being patient and disciplined is crucial.