It’s been a tough experience for the crypto market until 2022. As of November the market was down by more than 70% from its previous peak on November 20, 2021. And just when things were looking down after the FTX crash turned things worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of dips over the years. Each time, it’s rebounded with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. In 2017, it broke that record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, the price broke that resistance and hit a new high of $68,000 in November 2021. Then, just like that we’ve seen another dip. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips tend to be followed by a prolonged bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and better companies and industries adopting it, its usage and acceptance is increasing. From finance to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto can lead to more people getting involved in the market which could increase the price.
The rise in interest of institutions in cryptocurrency
In recent times we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the potential for crypto-based assets. The increasing interest from institutions can bring stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto is maturing and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors as well as increase the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can utilize blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas like security and scalability, the potential of crypto assets will continue to expand. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on by the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets such as gold and crypto. Because the global economic climate remains uncertain it could result in an increase in demand for crypto and increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the market for crypto. As more and more everyday people are educated about crypto and how to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto continues to mature as more and more people are beginning to become aware about it and comprehend the concept. As awareness and acceptance of crypto grows it could result in more people buying and holding crypto, which could drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market, which allows finance services developed using blockchain technology. As DeFi expands and more platforms and projects come online, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows as more and more businesses are starting accepting crypto payments as a method of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are government-owned instruments for investing, are beginning to show interest in crypto as a potential asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is the capability to perform fast and cheap cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto increase, it will become easier for consumers to purchase and store crypto, which could increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset such as stocks or real estate are rapidly expanding sector of the crypto market. As more security tokens are created and traded, it can lead to a higher demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
As more and more merchants accept cryptocurrency as a method of payment, this will make it easier for consumers to utilize and store cryptocurrency, which will increase demand and price.
So, will crypto rise in 2023? The only way to know is time. However, with these aspects in mind, it’s likely that the crypto market will see a recovery in 2023. For those looking to invest for the long run patience and discipline is crucial.