It’s been a tough journey for the cryptocurrency market until 2022. In November, the market had dipped by more than 70% from its previous peak in November 2021. When things were looking down and down, the FTX crash turned things even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips over the years. Each time, it’s bounced back with a big increase.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year before hitting a low of $150. 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, the price broke through the resistance, and reached a record peak of $68,000 in the month of November 2021. And 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
As we’ve seen in the past, dips are usually followed by a long bull run that finally breaks through the resistance created by the market’s previous highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in a variety of ways. And this growing use case could lead to more people being involved in the market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve noticed a growing interest from institutional investors in crypto. From hedge funds to banks, many large institutions are now exploring the potential in crypto currencies. This increased interest from institutions can bring stability to the crypto market and lead to more expensive prices.
Regulations from the Government
As the crypto market is maturing as it matures, governments all over the world are beginning to establish more favorable regulations for crypto. This will help draw more investors and increase the adoption rate of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, has a wide range of potential use cases beyond just financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can benefit from blockchain technology. This could increase investment and enthusiasm in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas such as security and scalability, potential of crypto assets will expand. This could result in more adoption and higher prices.
Rising global economic uncertainty
With the ongoing instability in the economy caused due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to 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 invest in the cryptocurrency market. As more and more everyday people learn about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature increasing numbers of people are starting to learn about it and comprehend it. As the awareness and acceptance of crypto grows, this could lead to increasing numbers of people purchasing and holding crypto, which could raise prices.
Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows finance services created upon blockchain technology. As DeFi grows and more projects and platforms come online, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow increasing numbers of companies are beginning accepting crypto payments as a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are beginning to explore crypto as an asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could result in a rise in demand and higher prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is its ability to facilitate fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto continue to increase it will be more convenient for people to buy and hold cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, or digital assets that represent ownership in an asset like stock or real estate is a fast-growing segment of the cryptocurrency market. As more security tokens are issued and traded, this could result in a rise in demand and consequently higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of businesses accept crypto as a form of payment, it will make it more convenient for consumers to use and hold cryptocurrency, which will drive up demand and prices.
So, will crypto increase in 2023? It’s only time to find out. However, with these aspects being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re looking to invest for the long-term patience and discipline will be key.