It’s been a tough ride for the crypto market through 2022. As of November the market was down by more than 70 percent from its previous high at the end of November. And just when things were getting worse after the FTX crash turned them worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips in the past. Every time, it has bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. However, in 2017 it broke that record and hit a record highest of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke that resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are usually followed by a lengthy bull run that finally overcomes the resistance set by the market’s previous highest price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and better companies and industries embracing the technology, its use and acceptance is growing. From finance to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto could result in more people being involved in the market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are now exploring the potential for crypto-based assets. This increased interest from institutions could bring more stability to the crypto market and result in higher prices.
Government regulations
As the market for crypto is maturing, governments around the world are beginning to develop more favorable rules for crypto. This could help attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more and more industries are exploring ways they can utilize blockchain technology. This could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will expand. This could result in more use and increase in prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on through the COVID-19 pandemic, as well as other causes many investors are looking for safe haven assets such as gold and crypto. As the global economic situation is uncertain, this could lead to increased demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, also known as individual investors, are also starting to invest in the crypto market. As more and more people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing as more and more people are beginning to learn about and understand it. As the awareness and acceptance grows of crypto, this could lead to more people purchasing and holding crypto, which can increase prices.
crypto audit firms
Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created using blockchain technology. As DeFi expands and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows as more and more businesses are starting to accept crypto as a method of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are beginning to explore cryptocurrency as a possible asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could result in a rise in demand and increased prices.
Use of crypto for cross-border payments
One of the biggest benefits of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto increase it will be more convenient for people to buy and hold cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that represent ownership in an asset such as stocks or real estate is a fast-growing area of the crypto market. As more security tokens are created and traded, it could lead to increased demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
As more and more businesses begin accepting crypto as a means of payment, it makes it easier for people to hold and use crypto, which could increase demand and price.
So, will crypto increase in 2023? Only time will tell. But with these factors in mind, it’s likely that the cryptocurrency market will have a rebound by 2023. If you’re committed to the long-term, being patient and disciplined will be key.