It’s been a tough ride for the crypto market through 2022. By November the market had dropped by more than 70 percent from the previous high on November 20, 2021. Just when the market was looking down, the FTX crash made them look more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips in the past. And every time, it’s rebounded with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. In 2017, it broke the record and hit a record record high of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, it broke that resistance and hit a new highest of $68,000 in November 2021. Just like that, we’ve had another dip. However, the past has proven that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are typically followed by a long bull run that eventually surpasses the resistance created by the market’s previous highest price. This pattern can be seen 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 better companies and industries adopting it, its usage and acceptance is growing. From banking to gaming, crypto is being used in a myriad of ways. The growing popularity of crypto can lead to increasing participation in the crypto market, which in turn could drive the prices up.
The rise in interest of institutions in crypto
In the last few years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From banks to hedge funds numerous large institutions are now exploring the possibilities for crypto-based assets. The increasing interest from institutions could bring more stability to the market for crypto and result in more expensive prices.
Regulations from the Government
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for crypto. This could help attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, has a wide range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is 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 result in more acceptance and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on through the COVID-19 pandemic, as well as other causes, more and more investors are starting to look for safe haven assets such as gold and crypto. Because the global economic climate remains uncertain it could result in more demand for crypto as well as more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. As more and more people are educated about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature as more and more people are beginning to become aware about it and comprehend the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying as well as holding the crypto that 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 built on top of blockchain technology. As DeFi continues to grow and more projects and platforms become available, this could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are starting to accept crypto as a method of payment. This could lead to increased usage of crypto in daily transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are state-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, it could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of cryptocurrency is its ability to facilitate fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of crypto for international transactions, it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
The number of crypto ATM’s increase, it will become easier for consumers to purchase and keep cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset such as stock or real estate, are a rapidly growing area of the crypto market. With the increasing number of security tokens being created and traded, this can lead to a higher demand and higher rates for the crypto.
More adoption by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, it makes it easier for consumers to use and hold cryptocurrency, which will boost demand and increase prices.
Will crypto be on the grow in 2023? Only time will tell. But with these factors being considered, it’s possible that the cryptocurrency market will have a rebound by 2023. If you’re committed to the long-term, being patient and disciplined will be key.