It’s been a tough experience for the crypto market until 2022. In November, the market had dipped by more than 70 percent from its previous high on November 20, 2021. Just when the market was looking down, the FTX crash made them look even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. Every time, it’s rebounded with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. However, in 2017, it broke the record, and hit a new record high of $19,600. In 2018, the price was at $3,100. And in 2020, it broke through that resistance, and reached a record peak of $68,000 in the month of November 2021. And just like that, we’ve witnessed another drop. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are usually followed by a prolonged bull run that eventually breaks through the resistance created by the previous high price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in a myriad of ways. This growing demand could result in increasing participation in the market which could boost prices.
The rise in interest of institutions in crypto
In recent times we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the market for crypto and result in more expensive prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for crypto. This is likely to attract more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrencies, blockchain, has a wide range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can utilize 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 advances continue to be made in areas like scalability and security, the potential of crypto assets will continue to expand. This could result in more acceptance 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 increasing numbers of investors are starting to look for safe haven investments like cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to more demand for crypto as well as more expensive prices.
Interest from retail investors
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 everyday people become aware of cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing increasing numbers of people are beginning to learn about and appreciate it. As the awareness and acceptance grows of crypto it could result in more people purchasing as well as holding the crypto that can drive up prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services built upon blockchain technology. As DeFi expands and more projects and platforms come online, this could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the crypto market is growing increasing numbers of companies are beginning to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned investment vehicles, are now beginning to show interest in crypto as an asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses start to utilize cryptocurrency for international transactions this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of ATMs that accept crypto increase it will be more convenient for people to buy and keep crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, also known as 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, it could lead to increased demand, and thus higher prices for crypto.
A greater adoption rate by merchants
As more and more businesses begin accepting cryptocurrency as a method of payment, this will make it easier for customers to hold and use cryptocurrency, which will increase demand and price.
Will crypto be on the rise in 2023? Only time will tell. With these things in mind, it’s possible that the crypto market will be able to see a rebound in 2023. And for those who are looking to invest for the long run patience and discipline will be key.