It’s been a tough journey for the cryptocurrency market in 2022. As of November the market had dropped by 70 percent from the previous high at the end of November. When things were getting worse after the FTX crash made them look more dire. So, will the crypto market recover in 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 bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before hitting a low of $150. However, in 2017 it broke that record, and hit a new highest of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, the price broke through that resistance, and reached a record high of $68,000 in November 2021. Just like that, we’ve had another dip. 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 can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more companies and industries embracing the technology, its use and acceptance is increasing. From gaming to finance cryptocurrency is being utilized in a variety of ways. This growing demand can lead to more people being involved in the crypto market which could boost prices.
A rise in the interest of institutions for crypto
In the last few years, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks, many large institutions are beginning to investigate the potential for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and result in more expensive prices.
Regulations from the Government
As the crypto market is maturing as it matures, governments all over the world are starting to create more favorable rules for crypto. This will help draw more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will expand. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused due to the COVID-19 pandemic and other factors many investors are beginning to look for safe haven investments like gold and crypto. Because the global economic climate is uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. In the future, as more everyday people become aware of crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing increasing numbers of people are beginning to learn about and appreciate it. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing or holding cryptocurrency, and this can drive up prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows finance services built on top of blockchain technology. As DeFi expands and more projects and platforms are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are starting 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 investment vehicles, are beginning to look at cryptocurrency as a possible asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, it could lead to increased demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals begin to use crypto for international transactions, it could result in increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto continue to increase it will be easier for consumers to purchase and hold crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that signify ownership of an asset, such as stock or real estate is a fast-growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, it could result in a rise in demand, and thus higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, it will make it more convenient for people to use and hold crypto, which can increase demand and price.
So, is crypto likely to rise in 2023? Only time will tell. With these things being considered, it’s likely that the crypto market will see a recovery in 2023. For those in it for the long haul patience and discipline is crucial.