It’s been a rough experience for the crypto market through 2022. As of November the market had dropped by 70 percent from its previous high in November 2021. And just when things were getting worse, the FTX crash made them look even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips in the past. And every time, it’s bounced back with a big increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. However, in 2017 it broke that record, and hit a new record high of $19,600. Then, in 2018, the price was at $3,100. In the year 2020 it struck that resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are typically followed by a lengthy bull run that finally surpasses the resistance created by the previous market’s highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. This growing demand could result in more people being involved in the market which could drive the prices up.
Increased institutional interest in crypto
In recent years, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the possibilities of crypto assets. The increased interest of institutions can bring stability to the market for crypto and could lead to higher prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrencies, blockchain, offers a variety of potential use cases beyond just financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the early stages of development. As advancements continue to be made in areas like security and scalability, the potential of crypto assets will expand. This could lead to greater use and increase in prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in an increase in demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to invest in the cryptocurrency market. As more and more people are educated about crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are beginning to become aware about it and comprehend it. As awareness and acceptance grows of crypto, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can raise prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that enables finance services created using blockchain technology. As DeFi expands and more platforms and projects become available, this will lead to a rise in adoption and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing increasing numbers of companies are beginning to accept crypto as a means of payment. This could result in increased use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are government-owned instruments for investing, are starting to explore crypto as an asset class. As more funds dedicate a part of their portfolio to crypto, this could lead to increased demand and increased prices.
Use of crypto for payment across borders
One of the major benefits 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 it could result in increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
The number of ATMs that accept crypto continue to increase it will be more convenient for individuals to purchase and hold crypto, which will increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like real estate or stock, are a rapidly growing segment of the cryptocurrency market. Since more and more security tokens will be created and traded, it could lead to increased demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more businesses begin accepting crypto as a means of payment, this will make it easier for consumers to hold and use crypto, which could drive up demand and prices.
So, is crypto likely to rise in 2023? It’s only time to find out. 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 haul, being patient and disciplined will be key.