It’s been a rough journey for the cryptocurrency market through 2022. As of November, the market had dipped by more than 70% from its previous peak in November 2021. When things were looking down after the FTX crash turned things more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of dips over the years. And every time, it’s rebounded by a massive rally.
In 2013, for instance, 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 record high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in 2020, the price broke through the resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve had another dip. But history shows us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are typically followed by a long bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and better companies and industries embracing it, its usage and acceptance is rising. From banking to gaming the use of crypto is increasing in a variety of ways. The growing popularity of crypto could result in more people getting involved in the market which could increase the price.
Increased institutional interest in cryptocurrency
In recent years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are now exploring the potential of crypto assets. The increasing interest from institutions can bring stability to the crypto market and could lead to greater prices.
Regulations from the Government
As the market for crypto grows, governments around the world are beginning to establish more favorable rules for cryptocurrency. This could help attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can make use of blockchain technology. This will drive more investment and interest in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will grow. This could lead to greater use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic and other factors many investors are looking for safe haven assets like bitcoin and even gold. As the global economic situation remains uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the crypto market. In the future, as more people learn about crypto and the best ways to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market is maturing, more and more people are beginning to become aware about it and comprehend it. As the awareness and acceptance grows of crypto, it will lead to increasing numbers of people purchasing and holding crypto, which can drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that enables the provision of financial services built upon blockchain technology. As DeFi continues to grow and more projects and platforms become available, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing increasing numbers of companies are beginning accepting crypto payments as a method of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are beginning to explore 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 higher prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto increase, it will become easier for individuals to purchase and keep cryptocurrency, which can increase demand and price.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as stocks or real estate is a fast-growing area of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and consequently higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of businesses accept cryptocurrency as a method of payment, this makes it easier for consumers to hold and use crypto, which could boost demand and increase prices.
So, is crypto likely to rise in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market will see a recovery in 2023. For those looking to invest for the long run, being patient and disciplined will be key.