It’s been a difficult journey for the cryptocurrency market in 2022. By November the market had dropped by more than 70 percent from its previous high on November 20, 2021. And just when things were going downhill and down, the FTX crash turned things even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips in the past. Each time, it has bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. In 2017 it broke that record, and hit a new highest of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, it broke through that resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are usually followed by a lengthy bull run, which eventually overcomes the resistance set by the previous market’s highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and more businesses and industries embracing it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in many ways. The growing popularity of crypto could result in increasing participation in the market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the possibilities of crypto assets. The increasing interest from institutions can bring stability to the crypto market and result in more expensive prices.
Government regulations
As the market for crypto grows as it matures, governments all over the world are beginning to establish more favorable rules for crypto. This could help attract more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of applications that go 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 make use of blockchain technology, which could drive more investment and interest in cryptocurrency.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will grow. This could result in more adoption and higher prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic and other factors increasing numbers of investors are beginning to look for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world is uncertain and uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or individual investors are also beginning to invest in the cryptocurrency market. As more and more everyday people are educated about crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows increasing numbers of people are starting to learn about and understand it. As the awareness and acceptance grows of crypto, it will lead to more people buying and holding crypto, which can raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created upon blockchain technology. As DeFi grows and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow, more and more companies are beginning to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are beginning to look at cryptocurrency as a possible asset class. As more funds devote a percentage of their assets to digital currencies, it could lead to increased demand and higher prices.
Utilization of crypto to make cross-border payments
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more and more people and businesses begin to use cryptocurrency for international transactions, this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto continue to grow it will be more convenient for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that represent ownership in an asset such as real estate or stock is a fast-growing area of the crypto market. Since more and more security tokens will be issued and traded, it could result in a rise in demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
As more and more retailers begin accepting crypto as a form of payment, it will make it more convenient for customers to hold and use crypto, which could drive up demand and prices.
So, will crypto rise in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market will see a recovery in 2023. And for those who are looking to invest for the long run, being patient and disciplined is essential.