It’s been a tough experience for the crypto market in 2022. By November, the market had dipped by more than 70 percent from its previous high at the end of November. And just when things were going downhill and down, the FTX crash turned them even worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips over the years. Every time, it’s bounced back by a massive rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. However, in 2017 it broke that record, and hit a new highest of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, the price broke that resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve seen another dip. But history shows us that following 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 overcomes the resistance set by the market’s previous highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more companies and industries embracing the technology, its use and acceptance is rising. From finance to gaming cryptocurrency is being utilized in a variety of ways. And this growing use case can lead to more people getting involved in the crypto market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are beginning to investigate the potential in crypto currencies. The increasing interest from institutions could bring more stability to the market for crypto and lead to higher prices.
Regulations of the government
As the crypto market is maturing as it matures, governments all over the world are beginning to establish more favorable regulations for crypto. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrency, blockchain, has a wide range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many 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 at the very beginning of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will continue to increase. This could lead to more use and increase in prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty caused by the COVID-19 pandemic, as well as other causes, more and more investors are starting to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world is 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, also known as individual investors are also beginning to participate in the crypto market. As more and more people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature, more and more people are starting to learn about and appreciate it. As understanding and acceptance grows of crypto, this could lead to more people purchasing and holding crypto, which could increase prices.
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services developed on top of blockchain technology. As DeFi grows and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are starting using crypto to be a form of payment. This could lead to increased usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned instruments for investing, are starting to look at crypto as an asset class. As more funds devote a percentage of their assets to digital currencies, this could result in a rise in demand and increased prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses start to utilize cryptocurrency for international transactions this could lead to increased demand and higher prices.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto continue to grow it will be easier for consumers to purchase and keep cryptocurrency, which can increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that signify 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 consequently higher costs for cryptocurrency.
More adoption by merchants
In the event that more merchants start accepting crypto as a means of payment, this makes it easier for people to use and hold crypto, which could increase demand and price.
So, will crypto increase in 2023? The only way to know is time. But with these factors to consider, it’s possible that the cryptocurrency market will see a recovery in 2023. And for those who are in it for the long run patience and discipline is essential.