It’s been a difficult journey for the cryptocurrency market through 2022. As of November the market had dropped by more than 70% from its previous peak in November 2021. And just when things were getting worse after the FTX crash turned them more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many drops in the past. Each time, it’s bounced back with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. In 2017, it broke the record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in the year 2020 it struck that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. However, history has shown us that following each 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 tend to be followed by a lengthy bull run that eventually surpasses the resistance created by the previous high 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 recent years. With more and more companies and industries adopting it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a variety of ways. The growing popularity of crypto could lead to more people being involved in the crypto market which could drive the prices up.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the possibilities of crypto assets. This increased interest from institutions could bring more stability to the crypto market and could lead to more expensive prices.
Regulations of the government
As the crypto market is maturing, governments around the world are beginning to establish more favorable rules for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, offers a variety of potential use cases beyond the realm of financial transactions. From supply chain management to voting systems, more industries are exploring ways they can utilize blockchain technology. This will drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the early stages of development. As advances continue to be made in areas like security and scalability, the potential of crypto assets will grow. This could result in more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused through the COVID-19 pandemic and other factors many investors are starting to look for safe haven assets 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 increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, also known as individual investors, are also starting to get involved in the cryptocurrency market. In the future, as more people are educated about cryptocurrency and investing in it This could result in more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing, more and more people are starting to learn about it and comprehend the concept. As awareness and acceptance grows of crypto, this could lead to increasing numbers of people purchasing as well as holding the crypto that could increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built using blockchain technology. As DeFi grows and more projects and platforms come online, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing as more and more businesses are beginning to accept crypto as a method 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
These funds are state-owned investments, are now beginning to look at crypto as an asset class. As more of these funds dedicate a part of their assets to digital currencies, this could lead to increased demand and increased prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s continue to grow, it will become easier for individuals to purchase and keep crypto, which could increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that signify ownership of an asset, such as stocks or real estate, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, this could lead to increased demand and consequently higher rates for the crypto.
More adoption by merchants
With the increasing number of merchants start accepting cryptocurrency as a method of payment, this will make it more convenient for customers to hold and use cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market could be able to see a rebound in 2023. For those committed to the long-term patience and discipline will be key.