It’s been a tough journey for the cryptocurrency market through 2022. In November the market was down by more than 70 percent from the previous high in November 2021. And just when things were going downhill, the FTX crash turned things even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips over the years. Each time, it’s bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year, reaching a low 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 the year 2020 it struck that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve seen another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a long bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in not just 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 more companies and industries adopting it, its usage and acceptance is increasing. From banking to gaming, crypto is being used in many ways. This growing demand can lead to increasing participation in the market, which in turn could boost prices.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the potential for crypto-based assets. The increased interest of institutions can bring stability to the market for crypto and lead to more expensive prices.
Government regulations
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for cryptocurrency. This could help attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications that go beyond financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can utilize blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas like scalability and security, the potential of crypto assets will expand. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on due to the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven investments like gold and crypto. Because the global economic climate remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the cryptocurrency market. With increasing numbers of everyday people are educated about crypto and how to invest in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing as more and more people are beginning to learn about and appreciate it. As understanding and acceptance of cryptocurrency grows, it will lead to more people buying or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows the provision of financial services built using blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market 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 an increase in the cost of transactions.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are beginning to explore cryptocurrency as a possible asset class. As more funds allocate a portion of their portfolio to crypto, it could lead to increased demand and higher prices.
Utilization of crypto to make international payments
One of the biggest benefits of crypto is its ability to make swift and affordable cross-border transactions. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto increase it will be more convenient for people to buy and store crypto, which could boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as real estate or stock is a fast-growing area of the crypto market. With the increasing number of security tokens being created and traded, it could result in a rise in demand and higher rates for the crypto.
A greater adoption rate by merchants
As more and more merchants begin accepting cryptocurrency as a method of payment, this makes it easier for consumers to utilize and store crypto, which could drive up demand and prices.
So, is crypto likely to grow in 2023? The only way to know is time. But with these factors to consider, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. If you’re looking to invest for the long run patience and discipline will be key.