It’s been a tough experience for the crypto market until 2022. By November the market was down by 70% from its previous peak on November 20, 2021. When things were getting worse, the FTX crash turned things even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips in the past. Every time, it’s rebounded by a massive increase.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. In 2017, it broke the record, and hit a new record high of $19,600. In 2018, it was trading at $3,100. In 2020, the price broke that resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve seen another dip. But history shows 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 usually followed by a prolonged bull run that eventually surpasses the resistance created by the previous high price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is rising. From finance to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto could lead to more people being involved in the crypto market and, in turn, drive the prices up.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising curiosity from institutions investing in crypto. From banks to hedge funds, many large institutions are beginning to investigate the potential of crypto assets. This increased interest from institutions could provide more stability to the market for crypto and result in greater prices.
Regulations of the government
As the market for crypto continues to mature, governments around the world are beginning to develop more favorable regulations for crypto. This will help draw more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more and more industries are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the beginning stages of development. As advances continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to expand. This could lead to more use and increase in prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused by the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven investments like cryptocurrency and gold. Because the global economic climate remains uncertain it could result in increased demand for crypto and higher 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, or individual investors are also beginning to get involved in the crypto market. With increasing numbers of everyday people become aware of crypto and how to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto continues to mature as more and more people are beginning to become aware about it and comprehend it. As awareness and acceptance grows of crypto it could result in increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow increasing numbers of companies are beginning accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to explore crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and more expensive prices.
Use of crypto for cross-border payments
One of the major benefits of cryptocurrency is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses start to utilize crypto for international transactions, this could lead to increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow it will be easier for individuals to purchase and hold crypto, which will increase demand and price.
Development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as real estate or stock, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, this could lead to increased demand and higher prices for crypto.
More adoption by merchants
As more and more merchants start accepting crypto as a means of payment, it will make it easier for consumers to utilize and store cryptocurrency, which will drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the cryptocurrency market will see a recovery in 2023. For those in it for the long haul, being patient and disciplined will be key.