It’s been a difficult ride for the crypto market through 2022. As of November the market was down by more than 70 percent from the previous high on November 20, 2021. And just when things were looking down and down, the FTX crash turned things more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips in the past. And every time, it’s rebounded by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year, reaching a low of $150. But, in 2017, it broke that record and reached a new record high of $19,600. In 2018, and it was trading at $3,100. In 2020, the price broke that resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. However, the past has proven that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips tend to be followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in recent years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From banking to gaming, crypto is being used in many ways. This growing demand could result in increasing participation in the market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the possibilities in crypto currencies. This increased interest from institutions can bring stability to the market for crypto and could lead to more expensive prices.
Regulations from the Government
As the crypto market is maturing and mature, governments across the globe are beginning to develop more favorable rules for crypto. This will help draw more investors as well as increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrencies, blockchain, has a wide range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more companies are starting to explore how they can benefit from blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas such as security and scalability, the potential of crypto assets will grow. This could result in more use and increase in prices.
Uncertainty in the global economy
In the current economic uncertainty caused through the COVID-19 pandemic and other factors many investors are beginning to look for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world remains uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to participate in the market for crypto. In the future, as more people learn about crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are beginning to become aware about and appreciate it. As understanding and acceptance of crypto grows it could result in more people purchasing as well as holding the crypto that can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services created using blockchain technology. As DeFi grows 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 crypto market grows as more and more businesses are beginning to accept crypto as a means of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are owned by the state as instruments for investing, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds dedicate a part of their portfolio to crypto, it could lead to increased demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of cryptocurrency is its ability to facilitate fast and cheap cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
With the amount of ATMs for crypto increase it will be easier for individuals to purchase and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that represent ownership of an asset, like stock or real estate, are a rapidly growing area of the crypto market. With the increasing number of security tokens being created and traded, this could lead to increased demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
With the increasing number of businesses start accepting cryptocurrency as a method of payment, this makes it easier for consumers to use and hold crypto, which can increase demand and price.
So, is crypto likely to grow in 2023? Only time will tell. But with these factors being considered, it’s likely that the crypto market could be able to see a rebound in 2023. If you’re in it for the long-term, being patient and disciplined will be key.