It’s been a tough journey for the cryptocurrency market through 2022. As of November the market was down by 70 percent from its previous high in November 2021. Just when the market was looking down and down, the FTX crash made them look even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. And every time, it’s bounced back with a big rally.
For example, in 2013, 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 new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, it broke that resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. However, history has shown us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips tend to be followed by a prolonged bull run, which eventually breaks through the resistance created by the previous high price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries taking to the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in a myriad of ways. The growing popularity of crypto can lead to more people being involved in the market, which in turn could boost prices.
The rise in interest of institutions in crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds, many large institutions are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions could bring more stability to the crypto market and could lead to higher prices.
As the crypto market grows and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, has a wide range of possible applications 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 benefit from blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Blockchain technology and cryptography are still in the beginning stages of development. As advancements continue to be made in areas such as scalability and security, the potential of crypto assets will grow. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
In the current instability in the economy caused through the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven assets like gold and crypto. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
The institutional investors aren’t alone in one who’s showing an interest in crypto. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. As more and more people become aware of cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature increasing numbers of people are beginning to become aware about it and comprehend the concept. As the awareness and acceptance of crypto grows it could result in more people buying and holding crypto, which can raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that enables the provision of financial services created upon blockchain technology. As DeFi grows and more projects and platforms come online, this will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow, more and more companies are beginning accepting crypto payments as a form of payment. This could lead to increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are starting to explore cryptocurrency as a possible asset class. As more funds dedicate a part of their portfolio to crypto, this could lead to increased demand and higher prices.
Use of crypto for international payments
One of the major benefits of crypto is its capability to perform quick and inexpensive cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions, this could lead to increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto increase it will be easier for consumers to purchase and hold crypto, which could drive up demand and prices.
The development of security tokens
Security tokens, which are digital assets that represent ownership in an asset such as stock or real estate are rapidly expanding segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, this can lead to a higher demand and consequently higher costs for cryptocurrency.
More adoption by merchants
As more and more businesses accept crypto as a means of payment, it will make it more convenient for consumers to hold and use crypto, which can drive up demand and prices.
So, is crypto likely to rise in 2023? Only time will tell. With these things being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re looking to invest for the long run, being patient and disciplined is crucial.