It’s been a rough journey for the cryptocurrency market in 2022. As of November the market was down by 70 percent from its previous high in November 2021. Just when the market was going downhill, the FTX crash made them look worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of drops in the past. Each time, it’s rebounded with a big increase.
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 reached a new high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, it broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are typically followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and better companies and industries taking to the technology, its use and acceptance is growing. From gaming to finance, crypto is being used in many ways. This growing demand could lead to increasing participation in the crypto market which could boost prices.
The rise in interest of institutions in crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds and even large corporations are now exploring the potential of crypto assets. This increased interest from institutions could provide more stability to the crypto market and result in more expensive prices.
Regulations of the government
As the crypto market continues to mature as it matures, governments all over the world are beginning to establish more favorable regulations for crypto. This is likely to attract more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can benefit from blockchain technology. This will drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will increase. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on through the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven investments like gold and crypto. Since the economic outlook for the world is uncertain and uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to participate in the crypto market. As more and more people learn about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the market for crypto continues to mature as more and more people are starting to learn about and appreciate the concept. As understanding and acceptance grows of crypto it could result in more people buying or holding cryptocurrency, and this can raise prices.
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services developed using blockchain technology. As DeFi expands and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows increasing numbers of companies are starting using crypto to be a means of payment. This could result in increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are now beginning to show interest in cryptocurrency as a possible asset class. As more of these funds devote a percentage of their assets to digital currencies, it could lead to increased demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is its capability to perform fast and cheap cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions, this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto continue to increase it will be easier for individuals to purchase and store crypto, which could drive up demand and prices.
Security tokens are developed for development
Security tokens, which are digital assets that signify ownership in an asset such as stocks or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, it could result in a rise in demand, and thus higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more merchants begin accepting cryptocurrency as a method of payment, this will make it more convenient for people to hold and use cryptocurrency, which will drive up demand and prices.
So, will crypto grow in 2023? Only time will tell. However, with these aspects being considered, it’s possible that the crypto market could be able to see a rebound in 2023. If you’re looking to invest for the long run, being patient and disciplined is essential.