It’s been a difficult ride for the crypto market through 2022. In November the market was down by more than 70 percent from its previous high in November 2021. When things were getting worse and down, the FTX crash made them look even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of drops in the past. Every time, it’s rebounded with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. However, in 2017, it broke that record and hit a record record high of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, the price broke through the resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. However, the past has proven that at the end of every dip the bull runs.
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 finally breaks through the resistance created by the previous market’s highest price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From banking to gaming the use of crypto is increasing in many ways. The growing popularity of crypto can lead to more people being involved in the market which could drive the prices up.
The rise in interest of institutions in cryptocurrency
In recent years, we’ve seen a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the potential for crypto-based assets. The increased interest of institutions could provide more stability to the crypto market and result in more expensive prices.
As the crypto market grows as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This will help draw more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, has a wide range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can benefit from blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the early stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could result in more use and increase in prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or individual investors, are also starting to get involved in the market for crypto. As more and more everyday people become aware of crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are beginning to learn about and appreciate the concept. As awareness and acceptance of cryptocurrency grows, it will lead to more people buying as well as holding the crypto that could drive up prices.
The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services developed upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could result in increased use and increased prices for crypto.
Advances in crypto-based 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 result in increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are starting to look at crypto as a potential asset class. As more funds allocate a portion of their portfolio to crypto, this could increase demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is its ability to make fast and cheap cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions, it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to grow, it will become easier for individuals to purchase and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset such as stock or real estate, are a rapidly growing area of the crypto market. As more security tokens are created and traded, it could result in a rise in demand, and thus higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of merchants start accepting cryptocurrency as a method of payment, it will make it more convenient for customers to hold and use crypto, which can increase demand and price.
So, will crypto increase in 2023? It’s only time to find out. However, with these aspects in mind, it’s likely that the crypto market will have a rebound by 2023. For those committed to the long-term patience and discipline is crucial.