It’s been a tough journey for the cryptocurrency market in 2022. In November the market was down by 70% from its previous peak in November 2021. Just when the market was getting worse and down, the FTX crash turned them worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips in the past. Each time, it has bounced back with a big increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. However, in 2017, it broke the record and hit a record high of $19,600. Fast forward to 2018, the price was at $3,100. And in 2020, it broke through the resistance, and reached a record highest of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips tend to be followed by a long bull run, which eventually surpasses the resistance created by the market’s previous highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more businesses and industries embracing the technology, its use and acceptance is growing. From banking to gaming, crypto is being used in many ways. This growing demand can lead to more people getting involved in the market, which in turn could increase the price.
A rise in the interest of institutions for crypto
In the last few years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are beginning to investigate the possibilities in crypto currencies. This increased interest from institutions could provide more stability to the crypto market and lead to more expensive prices.
Government regulations
As the market for crypto grows, governments around the world are starting to create more favorable rules for cryptocurrency. This could help attract more investors as well as increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that is the basis of the majority of cryptocurrencies, blockchain is a broad range of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can utilize blockchain technology. This could stimulate more investment and excitement in cryptocurrency.
Technology advancements
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas such as scalability and security, the potential of cryptocurrency assets will continue to increase. This could lead to more adoption and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on by the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the market for crypto. In the future, as more people learn about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto is maturing increasing numbers of people are beginning to become aware about and understand it. As understanding and acceptance of cryptocurrency grows, it will lead to more people purchasing as well as holding the crypto that can drive up prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows the provision of financial services developed upon blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing, more and more companies are beginning to accept crypto as a method of payment. This could lead to increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
These funds are government-owned investment vehicles, are now beginning to show interest in crypto as a potential asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of crypto is the ability to facilitate swift and affordable cross-border transactions. As more individuals 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.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto continue to grow, it will become easier for people to buy and hold crypto, which could drive up demand and prices.
The development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as real estate or stock are rapidly expanding segment of the cryptocurrency market. As more security tokens are created and traded, it could lead to increased demand, and thus higher costs for cryptocurrency.
More adoption by merchants
In the event that more retailers begin accepting cryptocurrency as a method of payment, it will make it easier for customers to use and hold crypto, which could drive up demand and prices.
So, is crypto likely to increase in 2023? The only way to know is time. With these things in mind, it’s likely that the cryptocurrency market will have a rebound by 2023. For those looking to invest for the long haul Being patient and disciplined will be key.