It’s been a difficult ride for the crypto market through 2022. As of November, the market had dipped by more than 70% from its previous peak at the end of November. And just when things were going downhill and down, the FTX crash turned them even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips in the past. Every time, it’s bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year before hitting a low of $150. But, in 2017, it broke that record and hit a record high of $19,600. In 2018, it was trading at $3,100. And in 2020, it broke that resistance and reached a new peak of $68,000 in the month of November 2021. And just like that, we’ve witnessed another drop. However, history has shown us that at the end of every dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips tend to be followed by a lengthy bull run that finally surpasses the resistance created by the previous high price. This pattern can be seen in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in recent years. With more and better companies and industries adopting the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in a variety of ways. And this growing use case can lead to more people getting involved in the crypto market, which in turn could increase the price.
The rise in interest of institutions in crypto
In the last few years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the possibilities in crypto currencies. The increased interest of institutions can bring stability to the market for crypto and lead to higher prices.
Government regulations
As the market for crypto continues to mature and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This is likely to attract more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, is a broad range of applications that go beyond just financial transactions. From supply chain management to voting systems, more companies are exploring ways they can benefit from blockchain technology. This could increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could lead to greater adoption and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on by the COVID-19 pandemic as well as other factors many investors are looking for safe haven assets such as gold and crypto. As the global economic situation is uncertain, this could lead to more demand for crypto as well as increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. With increasing numbers of everyday people are educated about cryptocurrency and investing in it this could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto continues to mature, more and more people are starting to learn about and appreciate the concept. As understanding and acceptance of crypto grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this could raise prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created on top of blockchain technology. As DeFi grows and more platforms and projects come online, this will lead to a rise in adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing increasing numbers of companies are beginning accepting crypto payments as a form of payment. This could lead to an increase in the usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to explore cryptocurrency as a possible asset class. As more funds allocate a portion of their assets to digital currencies, this could result in a rise in demand and higher prices.
Use of crypto for payment across borders
One of the biggest benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more individuals and businesses 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
The number of crypto ATM’s increase it will be more convenient for individuals to purchase and keep crypto, which will boost demand and increase prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership in an asset like real estate or stock is a fast-growing sector of the crypto market. With the increasing number of security tokens being created and traded, it could lead to increased demand and higher prices for crypto.
More adoption by merchants
In the event that more merchants begin accepting crypto as a form of payment, it makes it easier for customers to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the rise in 2023? Only time will tell. With these things to consider, it’s possible that the crypto market will have a rebound by 2023. For those looking to invest for the long haul, being patient and disciplined is crucial.