It’s been a tough experience for the crypto market through 2022. As of November, the market had dipped by 70 percent from its previous high on November 20, 2021. When things were looking down, the FTX crash turned things even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen many dips over the years. Each time, it’s rebounded with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. However, in 2017, it broke that record and reached a new highest of $19,600. Fast forward to 2018, and it was trading at $3,100. And in 2020, the price broke that resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve had another dip. However, the past has proven that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are usually followed by a long bull run, which eventually breaks through the resistance created by the previous market’s highest price. This pattern is evident in not just 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 more companies and industries embracing it, its usage and acceptance is growing. From banking to gaming the use of crypto is increasing in many ways. This growing demand could lead to increasing participation in the market and, in turn, increase the price.
The rise in interest of institutions in crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are beginning to investigate the potential of crypto assets. This increased interest from institutions could bring more stability to the crypto market and lead to more expensive prices.
As the market for crypto grows and mature, governments across the globe are beginning to establish more favorable rules for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are starting to explore how they can utilize blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology 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 increase. This could result in more acceptance and higher prices.
Uncertainty in the global economy
In the current economic uncertainty caused due to the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets such as cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to get involved in the market for crypto. With increasing numbers of everyday people learn about crypto and the best ways to invest in it This could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows, more and more people are beginning to learn about and appreciate it. As awareness and acceptance of cryptocurrency grows it could result in more people buying as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be built upon blockchain technology. As DeFi expands and more projects and platforms become available, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow, more and more companies are starting using crypto to be a method of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned investment vehicles, are now beginning to show interest in crypto as a potential asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, this could result in a rise in demand and more expensive prices.
Utilization of crypto to make international payments
One of the major benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to increase it will be easier for individuals to purchase and hold crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset such as real estate or stock, are a rapidly growing sector of the crypto market. As more security tokens are issued and traded, it could result in a rise in demand and consequently higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
With the increasing number of merchants begin accepting crypto as a means of payment, this will make it more convenient for customers to hold and use crypto, which could drive up demand and prices.
So, is crypto likely to increase in 2023? Only time will tell. With these things to consider, it’s possible that the crypto market will see a recovery in 2023. And for those who are committed to the long run, being patient and disciplined will be key.