It’s been a difficult experience for the crypto market in 2022. By November, the market had dipped by 70 percent from the previous high in November 2021. And just when things were getting worse and down, the FTX crash turned them more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of drops in the past. And every time, it has bounced back by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. In 2017 it broke that record, and hit a new high of $19,600. In 2018, the price was at $3,100. And in 2020, it broke that resistance, and reached a record peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a long bull run that finally overcomes the resistance set by the previous high price. This is evident in more than 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 better companies and industries adopting the technology, its use and acceptance is rising. From banking to gaming, crypto is being used in a variety of ways. And this growing use case could lead to more people being involved in the market and, in turn, boost prices.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds and even large corporations are now exploring the potential of crypto assets. This increased interest from institutions could provide more stability to the market for crypto and result in greater prices.
Government regulations
As the crypto market is maturing, governments around the world are starting to create more favorable rules for crypto. This could help attract more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can make use of blockchain technology. This will stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas such as scalability and security, the potential of cryptocurrency assets will continue to expand. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven assets like gold and crypto. As the global economic situation remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the cryptocurrency market. With increasing numbers of people learn about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows, more and more people are beginning to become aware about it and comprehend it. As the awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can drive up prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it will lead to a rise in adoption and higher prices for crypto.
Developments in crypto payment methods
As the crypto market is growing, more and more companies are beginning accepting crypto payments as a method of payment. This could result in increased use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investments, are now beginning to look at crypto as an asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could lead to increased demand and more expensive prices.
Use of crypto for payment across borders
One of the biggest benefits of crypto is the ability to make fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of crypto for international transactions, it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow it will be easier for people to buy and hold crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that signify ownership of an asset, such as stocks or real estate, are a rapidly growing sector of the crypto market. With the increasing number of security tokens being issued and traded, this could result in a rise in demand and consequently higher prices for crypto.
More adoption by merchants
As more and more businesses start accepting crypto as a form of payment, it makes it easier for people to hold and use crypto, which can boost demand and increase prices.
Will crypto be on the grow in 2023? The only way to know is time. With these things to consider, it’s likely that the crypto market will be able to see a rebound in 2023. And for those who are looking to invest for the long haul patience and discipline will be key.