It’s been a rough ride for the crypto market in 2022. In November the market had dropped by 70% from its previous peak on November 20, 2021. When things were going downhill after the FTX crash turned them even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of drops in the past. And every 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, reaching a low of $150. But, in 2017, it broke the record and reached a new high of $19,600. In 2018, and it was trading at $3,100. In the year 2020 it struck that resistance and hit a new highest of $68,000 in 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 in the past, dips are typically followed by a lengthy bull run that finally overcomes the resistance set by the previous high price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and better companies and industries adopting the technology, its use and acceptance is growing. From finance to gaming the use of crypto is increasing in a variety of ways. And this growing use case can lead to more people being involved in the market which could drive the prices up.
Increased institutional interest in crypto
In the last few years we’ve noticed a growing curiosity from institutions investing in crypto. From hedge funds to banks and even large corporations are starting to explore the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the crypto market and could lead to more expensive prices.
Government regulations
As the market for crypto is maturing and mature, governments across the globe are starting to create more favorable rules for crypto. This will help draw more investors and boost the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more companies are starting to explore how they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As progress is made in areas like scalability and security, the potential of cryptocurrency assets will continue to grow. This could result in more adoption and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty caused due to the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets such as gold and crypto. Since the economic outlook for the world remains uncertain and uncertain, this could lead to more demand for crypto as well as more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the crypto market. In the future, as more everyday people become aware of crypto and how to invest in it this could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows as more and more people are beginning to learn about and understand it. As awareness and acceptance of crypto grows, it will lead to more people purchasing as well as holding the crypto that could increase prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services created upon blockchain technology. As DeFi expands and more projects and platforms become available, this could result in increased use and higher prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow, more and more companies are starting using crypto to be a form of payment. This could result in increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as state-owned investment vehicles, are starting to look at crypto as an asset class. As more of these funds devote a percentage of their portfolio to crypto, it could increase demand and higher prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is the ability to make fast and cheap cross-border payments. As more businesses and individuals start to utilize crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s increase, it will become easier for individuals to purchase and store crypto, which will increase demand and price.
The development of security tokens
Security tokens, or digital assets that represent ownership of an asset, like stock or real estate is a fast-growing segment of the cryptocurrency market. As more security tokens are issued and traded, it can lead to a higher demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more businesses begin accepting crypto as a means of payment, it makes it easier for people to hold and use cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to increase in 2023? It’s only time to find out. But with these factors in mind, it’s likely that the cryptocurrency market will have a rebound by 2023. And for those who are in it for the long haul patience and discipline is crucial.