It’s been a rough journey for the cryptocurrency market until 2022. In November the market was down by 70 percent from its previous high at the end of November. Just when the market was going downhill, the FTX crash turned things even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips in the past. Every time, it has bounced back by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year, reaching a low of $150. In 2017 it broke that record and hit a record highest of $19,600. Then, in 2018, the price was at $3,100. And in the year 2020 it struck through that resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve seen another dip. However, the past has proven that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a prolonged bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is growing. From finance to gaming cryptocurrency is being utilized in many ways. This growing demand could result in more people getting involved in the crypto market which could drive the prices up.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are now exploring the possibilities for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and result in more expensive prices.
Regulations from the Government
As the market for crypto grows as it matures, governments all over the world are beginning to establish more favorable regulations for cryptocurrency. This could help attract more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many companies are starting to explore how they can benefit from blockchain technology. This could drive more investment and interest in crypto.
Advancements in technology
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will grow. This could lead to more adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on through the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation is uncertain it could result in more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the crypto market. With increasing numbers of people are educated about crypto and how to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing, more and more people are beginning to learn about and appreciate it. As the awareness and acceptance of cryptocurrency grows it could result in more people buying as well as holding the crypto that can drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built on top of blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows as more and more businesses are beginning to accept crypto as a form of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investment vehicles, are starting to look at crypto as an asset class. As more funds dedicate a part of their assets to digital currencies, it could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of cryptocurrency is its capability to perform swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s continue to increase it will be easier for people to buy and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that signify ownership of an asset, like stocks or real estate is a fast-growing sector of the crypto market. As more security tokens are issued and traded, it can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
In the event that more retailers start accepting crypto as a means of payment, it will make it easier for consumers to utilize and store crypto, which can increase demand and price.
So, is crypto likely to rise in 2023? It’s only time to find out. But with these factors being considered, it’s likely that the cryptocurrency market will see a recovery in 2023. If you’re committed to the long haul, being patient and disciplined will be key.