It’s been a tough ride for the crypto market in 2022. As of November the market had dropped by 70% from its previous peak at the end of November. Just when the market was looking down, the FTX crash turned them worse. The question is, can 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 with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. However, in 2017, it broke that record and hit a record record high of $19,600. Fast forward to 2018, it was trading at $3,100. In the year 2020 it struck that resistance and hit a new peak of $68,000 in the month of 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 prolonged bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in recent years. With more and more companies and industries adopting the technology, its use and acceptance is growing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the market, which in turn could drive the prices up.
The rise in interest of institutions in crypto
In recent years, we’ve seen a growing curiosity from institutions investing in crypto. From banks to hedge funds, many large institutions are beginning to investigate the potential for crypto-based assets. The increasing interest from institutions could provide more stability to the market for crypto and could lead to higher prices.
Government regulations
As the crypto market is maturing, governments around the world are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of possible applications beyond just financial transactions. From supply chain management to voting systems, more industries are exploring ways they can utilize blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As advances continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to increase. This could result in more adoption and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation is uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to invest in the market for crypto. With increasing numbers of people are educated 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 cryptocurrency
As the crypto market continues to mature, more and more people are beginning to become aware about and appreciate it. As the awareness and acceptance of cryptocurrency grows, this could lead to more people purchasing or holding cryptocurrency, and this could raise prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be developed on top of blockchain technology. As DeFi expands and more projects and platforms become available, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the market for crypto is growing as more and more businesses are starting accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are starting to explore crypto as an asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could result in a rise in demand and higher prices.
Cryptocurrency is used for international payments
One of the main advantages of crypto is the ability to facilitate fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, this can lead to a rise in the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of ATMs for crypto continue to grow it will be more convenient for consumers to purchase and store cryptocurrency, which can drive up demand and prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership of an asset, such as stock or real estate is a fast-growing segment of the cryptocurrency market. As more security tokens are created and traded, this could lead to increased demand and higher costs for cryptocurrency.
More adoption by merchants
As more and more merchants begin accepting crypto as a form of payment, this will make it more convenient for consumers to use and hold cryptocurrency, which will increase demand and price.
So, will crypto rise in 2023? Only time will tell. But with these factors in mind, it’s possible that the crypto market will have a rebound by 2023. And for those who are committed to the long-term patience and discipline will be key.