It’s been a tough journey for the cryptocurrency market in 2022. By November, the market had dipped by more than 70 percent from its previous high in November 2021. And just when things were going downhill and down, the FTX crash turned things more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips in the past. Every time, it’s bounced back by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year before reaching a bottom of $150. But, in 2017, it broke the record and hit a record record high of $19,600. In 2018, it was trading at $3,100. In 2020, it broke through the resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve seen another dip. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are usually followed by a prolonged bull run, which eventually overcomes the resistance set by the previous high price. This pattern is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries embracing the technology, its use and acceptance is rising. From banking to gaming, crypto is being used in many ways. The growing popularity of crypto can lead to increasing participation in the crypto market and, in turn, boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks, many large institutions are now exploring the potential of crypto assets. The increasing interest from institutions can bring stability to the market for crypto and result in higher prices.
Regulations from the Government
As the market for crypto is maturing as it matures, governments all over the world are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain is a broad range of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can utilize blockchain technology. This could stimulate more investment and excitement in cryptocurrency.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused by the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven investments like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to get involved in the market for crypto. With increasing numbers of people learn about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market is maturing, more and more people are beginning to learn about and appreciate the concept. As the awareness and acceptance of crypto grows it could result in more people buying as well as holding the crypto that can drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services developed upon blockchain technology. As DeFi grows and more projects and platforms become available, this could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow as more and more businesses are beginning using crypto to be a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, this could lead to increased demand and increased prices.
Cryptocurrency is used for payment across borders
One of the main advantages of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more and more people and businesses start to utilize crypto for international transactions, it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of crypto ATM’s continue to grow it will be more convenient for people to buy and store crypto, which will drive up demand and prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership of an asset, such as stock or real estate is a fast-growing sector of the crypto market. With the increasing number of security tokens being issued and traded, this can lead to a higher demand and consequently higher prices for crypto.
A greater adoption rate by merchants
As more and more merchants begin accepting crypto as a means of payment, this will make it more convenient for people to hold and use cryptocurrency, which will increase demand and price.
Will crypto be on the grow in 2023? The only way to know is time. With these things being considered, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. If you’re looking to invest for the long-term patience and discipline will be key.