It’s been a difficult journey for the cryptocurrency market in 2022. By November the market was down by more than 70 percent from its previous high on November 20, 2021. And just when things were getting worse and down, the FTX crash turned them even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips in the past. And every time, it’s bounced back by a massive increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. However, in 2017, it broke the record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. In 2020, it broke that resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve witnessed another drop. However, history has shown us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are typically followed by a prolonged bull run that eventually surpasses the resistance created by the previous market’s highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few 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. This growing demand could result in more people getting involved in the crypto market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing curiosity from institutions investing in crypto. From banks to hedge funds, many large institutions are starting to explore the possibilities for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and lead to more expensive prices.
Regulations from the Government
As the crypto market continues to mature, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many and more industries are exploring ways they can utilize blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As advancements continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to increase. This could lead to more adoption and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused due to the COVID-19 pandemic and other factors many investors are looking for safe haven investments like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to invest in the market for crypto. In the future, as more people learn about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto grows, more and more people are beginning to learn about it and comprehend the concept. As understanding and acceptance of crypto grows, it will lead to increasing numbers of people purchasing and holding crypto, which can drive up prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows finance services built on top of blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto grows as more and more businesses are starting using crypto to be a form of payment. This could lead to an increase in the usage of crypto in daily transactions and higher prices.
More investment from sovereign wealth funds
These funds are state-owned instruments for investing, are starting to look at cryptocurrency as a possible asset class. As more funds devote a percentage of their portfolio to crypto, this could lead to increased demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of crypto is its ability to facilitate fast and cheap cross-border payments. As more and more people and businesses start to utilize cryptocurrency for international transactions this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s increase it will be easier for consumers to purchase and hold cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, such as real estate or stock are rapidly expanding area of the crypto market. With the increasing number of security tokens being issued and traded, this could result in a rise in demand, and thus higher rates for the crypto.
More adoption by merchants
As more and more retailers start accepting crypto as a form of payment, this makes it easier for people to hold and use crypto, which could drive up demand and prices.
So, will crypto rise in 2023? The only way to know is time. However, with these aspects to consider, it’s likely that the crypto market will be able to see a rebound in 2023. If you’re in it for the long run Being patient and disciplined will be key.