It’s been a tough ride for the crypto market until 2022. As of November, the market had dipped by more than 70% from its previous peak on November 20, 2021. And just when things were looking down and down, the FTX crash made them look even more dire. 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 many dips over the years. And every time, it has bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. However, in 2017 it broke that record, and hit a new high of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck through the resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve seen another dip. 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
Similar to what we’ve witnessed previously, dips are typically followed by a lengthy bull run that finally breaks through the resistance created by the previous high price. This pattern can be seen not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and better companies and industries adopting it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are beginning to investigate the potential in crypto currencies. This increased interest from institutions could bring more stability to the market for crypto and lead to more expensive prices.
Regulations of the government
As the market for crypto grows, governments around the world are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many companies are starting to explore how they can utilize blockchain technology. This could increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas such as scalability and security, the potential of crypto assets will increase. This could lead to greater adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven investments like gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in crypto. Retail investors, also known as individual investors are also beginning to get involved in the market for crypto. As more and more people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto grows increasing numbers of people are beginning to learn about it and comprehend it. As awareness and acceptance of crypto grows, it will lead to more people buying and holding crypto, which can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that allows finance services created 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.
Advances in crypto-based payment methods
As the crypto market continues to grow, more and more companies are starting 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.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are starting to look at crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, this could lead to increased demand and increased prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is the ability to make fast and cheap cross-border payments. As more businesses and individuals begin to use crypto for international transactions, this can lead to a rise in the demand for it and a rise in prices.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to increase, it will become easier for people to buy and store crypto, which will increase demand and price.
The development of security tokens
Security tokens, or digital assets that signify ownership of an asset, like stocks or real estate, are a rapidly growing sector of the crypto market. As more security tokens are created and traded, it could lead to increased demand and higher rates for the crypto.
More adoption by merchants
As more and more merchants start accepting cryptocurrency as a method of payment, this makes it easier for customers to use and hold crypto, which could increase demand and price.
So, will crypto grow in 2023? The only way to know is time. But with these factors to consider, it’s likely that the crypto market will be able to see a rebound in 2023. If you’re committed to the long-term patience and discipline is essential.