It’s been a difficult journey for the cryptocurrency market in 2022. In November the market was down by more than 70 percent from the previous high at the end of November. And just when things were going downhill after the FTX crash made them look even 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 dips over the years. And every time, it has bounced back with a big rise.
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 that record, and hit a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in the year 2020 it struck through that resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve had another dip. However, history has shown us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are typically followed by a prolonged bull run, which eventually overcomes the resistance set by the previous high price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries adopting the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in a variety of ways. This growing demand could lead to more people getting involved in the market, which in turn could increase the price.
Increased institutional interest in cryptocurrency
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 beginning to investigate the possibilities in crypto currencies. This increased interest from institutions can bring stability to the market for crypto and result in more expensive prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology. This will drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like security and scalability, potential of cryptocurrency assets will continue to expand. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
In the current instability in the economy caused by the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets like bitcoin and even gold. Because the global economic climate is uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to invest in the crypto market. In the future, as more everyday people learn about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows, more and more people are starting to learn about it and comprehend the concept. As awareness and acceptance of crypto grows, this could lead to more people buying and holding crypto, which can raise prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that enables finance services created using blockchain technology. As DeFi grows and more projects and platforms come online, this will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows increasing numbers of companies are beginning to accept crypto as a means of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are beginning to explore crypto as an asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and more expensive prices.
Cryptocurrency is used for international payments
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. As more businesses and individuals begin to use cryptocurrency for international transactions, it could result in increased demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s continue to increase it will be easier for people to buy and store cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that represent ownership in an asset like stock or real estate is a fast-growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, this could lead to increased demand and higher prices for crypto.
More adoption by merchants
With the increasing number of retailers start accepting cryptocurrency as a method of payment, it will make it easier for consumers to hold and use crypto, which could boost demand and increase prices.
Will crypto be on the increase in 2023? It’s only time to find out. But with these factors being considered, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. If you’re in it for the long-term patience and discipline will be key.