It’s been a rough journey for the cryptocurrency market through 2022. By November, the market had dipped by 70% from its previous peak in November 2021. And just when things were looking down after the FTX crash made them look even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen many drops in the past. Each time, it’s bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. In 2017, it broke that record and reached a new record high of $19,600. In 2018, and it was trading at $3,100. In the year 2020 it struck through the resistance and hit a new highest of $68,000 in 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
As we’ve seen previously, dips are usually followed by a long bull run, which eventually breaks through the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and better companies and industries taking to it, its usage and acceptance is increasing. From gaming to finance, crypto is being used in a variety of ways. This growing demand could result in more people being involved in the market and, in turn, increase the price.
Increased institutional interest in crypto
In recent times, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the potential of crypto assets. The increasing interest from institutions could provide more stability to the crypto market and lead to more expensive prices.
Regulations from the Government
As the crypto market is maturing and mature, governments across the globe are beginning to develop more favorable regulations for cryptocurrency. This could help attract more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can utilize blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of cryptocurrency assets will continue to increase. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty caused by the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets such as gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or individual investors are also beginning to invest in the market for crypto. In the future, as more people become aware of cryptocurrency and investing in it this could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are starting to learn about and appreciate it. As understanding and acceptance of crypto grows it could result in more people buying and holding crypto, which can raise prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market, which allows finance services built on top of blockchain technology. As DeFi grows and more projects and platforms come online, this could result in increased use and increased prices for crypto.
The development of crypto payment methods
As the crypto market is growing increasing numbers of companies are starting using crypto to be a method of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are now beginning to show interest in crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, this could increase demand and higher prices.
Utilization of crypto to make international payments
One of the biggest benefits of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more individuals and businesses start to utilize crypto for international transactions, it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto continue to grow it will be more convenient for individuals to purchase and store crypto, which will increase demand and price.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, like stock or real estate, are a rapidly growing area of the crypto market. As more security tokens are issued and traded, it could lead to increased demand and consequently higher prices for crypto.
More adoption by merchants
In the event that more businesses begin accepting crypto as a form of payment, it will make it easier for people to use and hold crypto, which can increase demand and price.
So, is crypto likely to grow in 2023? Only time will tell. With these things to consider, it’s likely that the crypto market will have a rebound by 2023. If you’re looking to invest for the long haul patience and discipline will be key.