It’s been a tough ride for the crypto market in 2022. In November the market had dropped by 70% from its previous peak in November 2021. And just when things were getting worse, the FTX crash turned things 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 seen its fair share of dips in the past. Each time, it’s bounced back by a massive increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. However, in 2017, it broke that record and reached a new highest of $19,600. In 2018, the price was at $3,100. And in 2020, the price broke through that resistance and reached a new peak of $68,000 in the month of November 2021. And just like that, we’ve seen another dip. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a lengthy bull run that eventually surpasses the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and more companies and industries adopting the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a variety of ways. This growing demand could lead to more people getting involved in the crypto market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are starting to explore the possibilities in crypto currencies. The increasing interest from institutions could bring more stability to the crypto market and could lead to higher prices.
Regulations from the Government
As the crypto market continues to mature, governments around the world are beginning to develop more favorable regulations for crypto. This is likely to attract more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are exploring ways they can make use of blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the early stages of development. As advancements continue to be made in areas such as security and scalability, potential of crypto assets will continue to grow. This could result in more acceptance and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty caused through the COVID-19 pandemic, as well as other causes increasing numbers of investors are looking for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and higher prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or individual investors are also beginning to get involved in the crypto 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.
Growing awareness and acceptance of crypto
As the market for crypto grows, more and more people are beginning to learn about it and comprehend the concept. As awareness and acceptance of crypto grows, it will lead to more people buying as well as holding the crypto that can increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that enables finance services built upon blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow as more and more businesses are beginning using crypto to be a means of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are government-owned investment vehicles, are beginning to explore crypto as a potential asset class. As more funds dedicate a part of their portfolio to crypto, this could lead to increased demand and more expensive prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto increase, it will become easier for consumers to purchase and hold crypto, which could increase demand and price.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like stock or real estate is a fast-growing sector of the crypto market. As more security tokens are issued and traded, this could result in a rise in demand, and thus higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more merchants accept crypto as a means of payment, it will make it easier for customers to utilize and store crypto, which could increase demand and price.
So, is crypto likely to rise in 2023? Only time will tell. But with these factors in mind, it’s likely that the crypto market will have a rebound by 2023. For those in it for the long haul, being patient and disciplined will be key.