It’s been a rough experience for the crypto market in 2022. In November the market had dropped by more than 70 percent from the previous high in November 2021. And just when things were getting worse and down, the FTX crash made them look more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of drops in the past. And every time, it’s bounced back by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. However, in 2017, it broke that record and hit a record highest of $19,600. In 2018, and it was trading at $3,100. In 2020, it broke through that resistance and hit a new peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. 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
Similar to what we’ve witnessed in the past, dips are typically followed by a prolonged 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 cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and more businesses and industries embracing it, its usage and acceptance is growing. From finance to gaming cryptocurrency is being utilized in many ways. And this growing use case can lead to increasing participation in the market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the potential for crypto-based assets. This increased interest from institutions can bring stability to the market for crypto and result in greater prices.
Regulations from the Government
As the market for crypto is maturing and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, offers a variety of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to grow. This could result in more adoption and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on by the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets such as gold and crypto. Because the global economic climate is uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors, are also starting to get involved in the cryptocurrency market. As more and more everyday people are educated about cryptocurrency and investing in it This could result in more demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows as more and more people are beginning to become aware about and appreciate it. As understanding and acceptance grows of crypto, it will lead to more people buying and holding crypto, which could raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows financial services to be developed upon blockchain technology. As DeFi expands and more platforms and projects become available, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the market for crypto grows as more and more businesses are beginning using crypto to be a form of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are now beginning to look at crypto as a potential asset class. As more of these funds dedicate a part of their assets to digital currencies, this could increase demand and more expensive prices.
Cryptocurrency is used for international payments
One of the main advantages of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more and more people and businesses begin to use cryptocurrency for international transactions, this could lead to increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of ATMs for crypto continue to grow it will be easier for individuals to purchase and hold cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as stocks or real estate is a fast-growing sector of the crypto market. Since more and more security tokens will be created and traded, it can lead to a higher demand and higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
As more and more retailers begin accepting cryptocurrency as a method of payment, this will make it easier for people to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the grow in 2023? It’s only time to find out. With these things to consider, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. And for those who are looking to invest for the long haul, being patient and disciplined will be key.