It’s been a difficult journey for the cryptocurrency market in 2022. As of November, the market had dipped by more than 70% from its previous peak at the end of November. When things were going downhill, the FTX crash turned them even worse. The question is, can the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. Each time, it’s rebounded with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. But, in 2017 it broke that record, and hit a new record high of $19,600. In 2018, it was trading at $3,100. And in 2020, it broke that resistance, and reached a record high of $68,000 in November 2021. 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
Similar to what we’ve witnessed previously, dips are typically followed by a prolonged bull run that eventually breaks through the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more businesses and industries embracing it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in a myriad of ways. This growing demand could result in increasing participation in the market which could drive the prices up.
A rise in the interest of institutions for crypto
In the last few years we’ve witnessed a rising demand from investors of institutional scale 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 result in greater prices.
Regulations of the government
As the market for crypto continues to mature and mature, governments across the globe are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, has a wide range of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can utilize blockchain technology. This will drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will increase. This could result in more use and increase in prices.
Global economic uncertainty is growing
In the current instability in the economy caused through the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets like gold and crypto. Because the global economic climate is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors are also beginning to participate in the cryptocurrency market. As more and more people become aware of crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature as more and more people are beginning to become aware about and understand it. As awareness and acceptance of cryptocurrency grows it could result in more people purchasing and holding crypto, which can drive up prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows the provision of financial services developed using blockchain technology. As DeFi grows and more projects and platforms are launched, it could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow increasing numbers of companies are beginning accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investments, are beginning to explore crypto as a potential asset class. As more of these funds devote a percentage of their portfolio to crypto, it could result in a rise in demand and higher prices.
Use of crypto for cross-border payments
One of the biggest benefits of crypto is its ability to make quick and inexpensive cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions it could result in increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s increase it will be easier for consumers to purchase and hold cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, or digital assets that represent ownership in an asset like real estate or stock is a fast-growing area of the crypto market. As more security tokens are created and traded, it can lead to a higher demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
As more and more merchants start accepting crypto as a form of payment, this will make it easier for people to hold and use cryptocurrency, which will increase demand and price.
So, is crypto likely to grow in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market will be able to see a rebound in 2023. If you’re committed to the long haul, being patient and disciplined will be key.