It’s been a difficult journey for the cryptocurrency market through 2022. In November the market was down by more than 70% from its previous peak in November 2021. When things were getting worse after the FTX crash turned them more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips in the past. Each time, it’s rebounded with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before hitting a low of $150. However, in 2017, it broke that record and hit a record high of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, the price broke through the resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve had 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
Similar to what we’ve witnessed in the past, dips are typically followed by a lengthy bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more companies and industries taking to the technology, its use and acceptance is increasing. From banking to gaming, crypto is being used in many ways. The growing popularity of crypto can lead to more people getting involved in the market, which in turn could drive the prices up.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks, many large institutions are beginning to investigate the potential for crypto-based assets. The increased interest of institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Regulations from the Government
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas like scalability and security, the potential of cryptocurrency assets will continue to grow. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
In the current instability in the economy caused due to the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets such as cryptocurrency and gold. Because the global economic climate remains uncertain it could result in 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, or even individual investors, are also starting to participate in the market for crypto. As more and more people are educated about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing as more and more people are beginning to learn about and understand the concept. As understanding and acceptance of cryptocurrency grows it could result in more people purchasing and holding crypto, which could drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built using blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing, more and more companies are starting using crypto to be a form of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are owned by the state as investments, are now beginning to explore cryptocurrency as a possible asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could result in a rise in demand and increased prices.
Cryptocurrency is used for international payments
One of the major benefits of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more individuals and businesses begin to use crypto for international transactions, this can lead to a rise in demand and higher prices.
An increasing number of crypto ATM’s
With the amount of crypto ATM’s continue to grow it will be more convenient for people to buy and keep crypto, which will increase demand and price.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, such as real estate or stock, are a rapidly growing area of the crypto market. As more security tokens are issued and traded, this could result in a rise in demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
With the increasing number of businesses start accepting cryptocurrency as a method of payment, this will make it easier for consumers to hold and use crypto, which can boost demand and increase prices.
So, is crypto likely to increase in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. And for those who are in it for the long run Being patient and disciplined will be key.