It’s been a rough ride for the crypto market through 2022. By November the market was down by 70% from its previous peak at the end of November. And just when things were looking down after the FTX crash turned them even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips in the past. And every time, it’s rebounded with a big increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. But, in 2017 it broke that record, and hit a new high of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, the price broke that resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve seen another dip. 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
Just like we’ve seen before, fall-offs are typically followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and more businesses and industries taking to it, its usage and acceptance is increasing. From finance to gaming cryptocurrency is being utilized in many ways. And this growing use case could result in increasing participation in the market which could drive the prices up.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing demand from investors of institutional scale in crypto. From banks to hedge funds numerous large institutions are starting to explore the potential of crypto assets. This increased interest from institutions can bring stability to the market for crypto and lead to more expensive prices.
As the crypto market continues to mature as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This could help attract more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain is a broad range of possible applications that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can make use of blockchain technology. This could drive more investment and interest in crypto.
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic, as well as other causes, more and more investors are beginning to look for safe haven assets like gold and crypto. As the global economic situation is uncertain it could result in increased demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to invest in the crypto market. In the future, as more everyday people become aware of crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the market for crypto grows as more and more people are starting to learn about it and comprehend it. As the awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
Decentralized finance (DeFi) is an emerging area of the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi grows and more platforms and projects are launched, it could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing, more and more companies are starting accepting crypto payments as a method of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could increase demand and increased prices.
Utilization of crypto to make payment across borders
One of the main advantages of crypto is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto increase it will be more convenient for people to buy and keep crypto, which could drive up demand and prices.
The development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like real estate or stock are rapidly expanding area of the crypto market. As more security tokens are issued and traded, this can lead to a higher demand and higher rates for the crypto.
Merchants are more likely to adopt the concept.
In the event that more merchants start accepting crypto as a means of payment, this will make it more convenient for customers to use and hold cryptocurrency, which will increase demand and price.
So, will crypto increase in 2023? It’s only time to find out. However, with these aspects to consider, it’s likely that the crypto market will see a recovery in 2023. If you’re in it for the long haul patience and discipline will be key.