It’s been a tough journey for the cryptocurrency market in 2022. By November the market had dropped by more than 70 percent from its previous high at the end of November. Just when the market was going downhill after the FTX crash turned them even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of dips over the years. And every time, it has bounced back with a big increase.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. However, in 2017 it broke that record, and hit a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, it broke through the resistance, and reached a record high of $68,000 in November 2021. Just like that, we’ve seen another dip. However, history has shown us that following 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 long bull run that eventually overcomes the resistance set by the previous market’s highest price. This is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and better companies and industries embracing it, its usage and acceptance is rising. From banking to gaming the use of crypto is increasing in a variety of ways. This growing demand could result in more people getting involved in the crypto market which could boost prices.
Increased institutional interest in cryptocurrency
In the last few years we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the possibilities in crypto currencies. This increased interest from institutions could bring more stability to the crypto market and could lead to greater prices.
Government regulations
As the crypto market grows, governments around the world are beginning to establish more favorable regulations for cryptocurrency. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of applications that go beyond the realm of financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can utilize blockchain technology. This could increase investment and enthusiasm in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to expand. This could lead to more use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused through the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets such as gold and crypto. Because the global economic climate is uncertain it could result in more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in crypto. Retail investors, or even individual investors are also beginning to get involved in the market for crypto. In the future, as more people learn about crypto and how to invest in it this could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows increasing numbers of people are starting to learn about and understand it. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying as well as holding the crypto that could raise prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi grows and more projects and platforms come online, this could lead to increased adoption and higher prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow, more and more companies are beginning using crypto to be a means of payment. This could lead to an increase in the usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, it could lead to increased demand and increased prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses begin to use crypto for international transactions, this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto increase it will be easier for consumers to purchase and keep cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset like real estate or stock, are a rapidly growing sector of the crypto market. With the increasing number of security tokens being issued and traded, it could lead to increased demand and higher prices for crypto.
Merchants are more likely to adopt the concept.
With the increasing number of retailers accept cryptocurrency as a method of payment, this will make it easier for consumers to utilize and store crypto, which could boost demand and increase prices.
So, is crypto likely to rise in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. If you’re looking to invest for the long haul patience and discipline is essential.