It’s been a rough ride for the crypto market until 2022. By November the market had dropped by 70 percent from its previous high in November 2021. And just when things were looking down after the FTX crash made them look even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of drops in the past. Each time, it has bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. In 2017, it broke that record, and hit a new highest of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, it broke through the resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve witnessed another drop. However, the past has proven 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 previously, dips are usually followed by a prolonged bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern can be seen in not just 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 more businesses and industries adopting it, its usage and acceptance is rising. From finance to gaming, crypto is being used in a variety of ways. The growing popularity of crypto can lead to increasing participation in the market and, in turn, increase the price.
A rise in the interest of institutions for crypto
In the last few years we’ve noticed a growing curiosity from institutions investing in crypto. From hedge funds to banks and even large corporations are starting to explore the possibilities in crypto currencies. This increased interest from institutions can bring stability to the crypto market and result in higher prices.
Government regulations
As the market for crypto is maturing as it matures, governments all over the world are beginning to establish more favorable regulations for crypto. This will help draw more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more companies are starting to explore how they can utilize blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Technology advancements
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will increase. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on by the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven assets such as bitcoin and even gold. Because the global economic climate is uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors, are also starting to invest in the crypto market. With increasing numbers of people become aware of cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the market for crypto grows increasing numbers of people are starting to learn about it and comprehend the concept. As understanding and acceptance of crypto grows it could result in more people buying as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be created on top of blockchain technology. As DeFi expands and more projects and platforms come online, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow, more and more companies are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions, and a rise in prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are now beginning to explore cryptocurrency as a possible asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the main advantages of cryptocurrency is its ability to make quick and inexpensive cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions it could result in increased demand and higher prices.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto increase it will be more convenient for people to buy and keep cryptocurrency, which can drive up demand and prices.
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 is a fast-growing segment of the cryptocurrency market. Since more and more security tokens will be created and traded, this can lead to a higher demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
In the event that more retailers begin accepting crypto as a means of payment, this makes it easier for consumers to hold and use cryptocurrency, which will increase demand and price.
So, will crypto grow in 2023? The only way to know is time. However, with these aspects to consider, it’s possible that the crypto market could be able to see a rebound in 2023. And for those who are in it for the long run Being patient and disciplined will be key.