It’s been a difficult ride for the crypto market until 2022. As of November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were getting worse after the FTX crash turned them even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many drops in the past. Every time, it’s rebounded with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year before hitting a low of $150. But, in 2017, it broke the record and hit a record record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in the year 2020 it struck through that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. However, history has shown us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are typically followed by a long bull run that finally breaks through the resistance created by the previous market’s highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and better companies and industries embracing the technology, its use and acceptance is increasing. 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 in turn could boost prices.
Increased institutional interest in cryptocurrency
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are starting to explore the possibilities for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and lead to greater prices.
Regulations from the Government
As the crypto market is maturing as it matures, governments all over the world are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the early stages of development. As advancements continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to expand. This could result in more acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like gold and crypto. Because the global economic climate is uncertain it could result in an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or individual investors are also beginning to participate in the market for crypto. As more and more people learn about crypto and the best ways to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows, more and more people are beginning to become aware about and understand the concept. As awareness and acceptance grows of crypto, it will lead to more people buying or holding cryptocurrency, and this could raise prices.
Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could lead to increased adoption and higher prices for crypto.
The development of crypto payment methods
As the market for crypto grows increasing numbers of companies are beginning using crypto to be a method of payment. This could lead to an increase in the usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned investment vehicles, are beginning to explore cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, this could increase demand and higher prices.
Utilization of crypto to make payment across borders
One of the major benefits of crypto is its ability to facilitate fast and cheap cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto increase, it will become easier for individuals to purchase and store cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, or digital assets that represent ownership of an asset, like real estate or stock is a fast-growing sector of the crypto market. Since more and more security tokens will be issued and traded, this could lead to increased demand and higher rates for the crypto.
More adoption by merchants
With the increasing number of retailers start accepting crypto as a form of payment, this makes it easier for consumers to utilize and store cryptocurrency, which will drive up demand and prices.
So, is crypto likely to grow in 2023? Only time will tell. But with these factors to consider, it’s likely that the crypto market could have a rebound by 2023. And for those who are in it for the long-term patience and discipline will be key.