It’s been a difficult ride for the crypto market in 2022. In November the market was down by more than 70 percent from its previous high in November 2021. When things were going downhill 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 experienced many dips over the years. And every time, it’s bounced back with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. However, in 2017, it broke the record and reached a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, it broke through that resistance and reached a new highest of $68,000 in November 2021. Just like that, we’ve witnessed another drop. But history shows us 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 previously, dips are usually followed by a lengthy bull run that eventually overcomes the resistance set by the previous high price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more companies and industries embracing it, its usage and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. And this growing use case could result in more people getting involved in the crypto market and, in turn, increase the price.
Increased institutional interest in crypto
In the last few years, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the possibilities for crypto-based assets. The increasing interest from institutions could bring more stability to the market for crypto and could lead to more expensive prices.
Regulations of the government
As the crypto market continues to mature as it matures, governments all over the world are beginning to develop more favorable regulations for crypto. This will help draw more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrencies, blockchain, has a wide range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to expand. This could result in more adoption and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused through the COVID-19 pandemic as well as other factors, more and more investors are beginning to look for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain and uncertain, this could lead to increased demand for crypto and more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in crypto. Retail investors, or individual investors, are also starting to invest in the crypto market. In the future, as more everyday people learn about crypto and the best ways to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing, more and more people are beginning to become aware about and appreciate the concept. As awareness and acceptance of crypto grows, this could lead to increasing numbers of people purchasing or holding cryptocurrency, and this could increase prices.
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be developed using blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could result in increased use and increased prices for crypto.
Developments in crypto 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 regular transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are owned by the state as investments, are beginning to explore crypto as a potential asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, it could increase demand and more expensive prices.
Cryptocurrency is used for international payments
One of the main advantages of crypto is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses are beginning to make use of crypto for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s continue to increase, it will become easier for individuals to purchase and hold cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like stocks or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, this could result in a rise in demand and consequently higher costs for cryptocurrency.
More adoption by merchants
In the event that more retailers accept crypto as a means of payment, this will make it easier for people to utilize and store crypto, which can drive up demand and prices.
So, is crypto likely to grow in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the crypto market will see a recovery in 2023. And for those who are in it for the long haul patience and discipline will be key.