It’s been a rough journey for the cryptocurrency market through 2022. By November, the market had dipped by more than 70 percent from the previous high at the end of November. And just when things were looking down and down, the FTX crash made them look worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips over the years. Every time, it’s bounced back by a massive rise.
For example, 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 that record and reached a new highest of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, the price broke through that resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve seen another dip. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are usually followed by a long bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in more people being involved in the market which could increase the price.
A rise in the interest of institutions for crypto
In recent times, we’ve seen a growing curiosity from institutions investing in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the possibilities for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and lead to greater prices.
Regulations from the Government
As the market for crypto is maturing and mature, governments across the globe are starting to create more favorable rules for crypto. This could help attract more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, is a broad range of possible applications that go beyond financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to increase. This could result in more adoption and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven assets like cryptocurrency and gold. As the global economic situation remains uncertain and uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in crypto. Retail investors, or individual investors are also beginning to get involved in the cryptocurrency market. In the future, as more people learn about crypto and how to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows as more and more people are starting to learn about it and comprehend it. As awareness and acceptance of cryptocurrency grows, this could lead to more people purchasing as well as holding the crypto that can increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be built upon blockchain technology. As DeFi expands and more platforms and projects come online, this could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows, more and more companies are beginning to accept crypto as a means of payment. This could lead to increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investment vehicles, are now beginning to look at crypto as an asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could increase demand and higher prices.
Utilization of crypto to make payment across borders
One of the main advantages of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to grow, it will become easier for consumers to purchase and hold cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, or digital assets that represent ownership in an asset like real estate or stock are rapidly expanding segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, this could result in a rise in demand and higher prices for crypto.
More adoption by merchants
In the event that more businesses accept cryptocurrency as a method of payment, this will make it more convenient for people to use and hold crypto, which can boost demand and increase prices.
So, will crypto grow in 2023? Only time will tell. With these things in mind, it’s possible that the crypto market will be able to see a rebound in 2023. For those in it for the long haul patience and discipline will be key.