It’s been a difficult journey for the cryptocurrency market through 2022. As of November the market was down by more than 70% from its previous peak in November 2021. When things were going downhill, the FTX crash turned them even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many drops in the past. And every time, it has bounced back with a huge rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. In 2017, it broke the record, and hit a new record high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in the year 2020 it struck through that resistance and hit a new peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. 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 before, fall-offs tend to be followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This is evident in not just Bitcoin but also other cryptocurrencies.
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 the technology, its use and acceptance is rising. From gaming to finance, crypto is being used in a myriad of ways. The growing popularity of crypto could result in increasing participation in the crypto market, which in turn could drive the prices up.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds and even large corporations are beginning to investigate the potential for crypto-based assets. This increased interest from institutions could bring more stability to the market for crypto and could lead to higher prices.
Regulations from the Government
As the market for crypto continues to mature as it matures, governments all over the world are beginning to establish more favorable rules for cryptocurrency. This will help draw more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrencies, blockchain, has a wide range of applications that go beyond just financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can benefit from blockchain technology, which could increase investment and enthusiasm in crypto.
Blockchain technology and cryptography are still in the early stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to increase. This could lead to more adoption and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused through the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to get involved in the cryptocurrency market. As more and more people are educated about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market continues to mature increasing numbers of people are starting to learn about and appreciate the concept. As understanding and acceptance of crypto grows, it will lead to more people purchasing and holding crypto, which could increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that allows financial services to be built upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing as more and more businesses are beginning accepting crypto payments as a means of payment. This could result in increased use of crypto in everyday transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are beginning to look at crypto as a potential asset class. As more funds dedicate a part of their assets to digital currencies, it could increase demand and higher prices.
Utilization of crypto to make payment across borders
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses start to utilize crypto for international transactions, it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to grow it will be more convenient for consumers to purchase and store crypto, which could boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership of an asset, such as stocks or real estate is a fast-growing area of the crypto market. As more security tokens are created and traded, this could lead to increased demand and higher prices for crypto.
More adoption by merchants
With the increasing number of businesses begin accepting crypto as a form of payment, it makes it easier for customers to hold and use cryptocurrency, which will boost demand and increase prices.
So, will crypto grow in 2023? The only way to know is time. However, with these aspects being considered, it’s likely that the crypto market will have a rebound by 2023. And for those who are in it for the long haul, being patient and disciplined is essential.