It’s been a tough journey for the cryptocurrency market through 2022. As of November the market had dropped by 70% from its previous peak on November 20, 2021. 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 crypto market, especially Bitcoin has had its fair share of dips over the years. Every time, it has bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for over a year, reaching a low of $150. In 2017, it broke that record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. In 2020, the price broke that resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. However, history has shown us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips tend to be followed by a long bull run that finally overcomes the resistance set by the previous high price. This pattern is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more companies and industries taking to the technology, its use and acceptance is growing. From finance to gaming the use of crypto is increasing in many ways. The growing popularity of crypto can lead to increasing participation in the market, which in turn could boost prices.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are now exploring the possibilities of crypto assets. This increased interest from institutions could provide more stability to the crypto market and lead to higher prices.
Government regulations
As the crypto market grows as it matures, governments all over the world are starting to create more favorable rules for cryptocurrency. This will help draw more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications that go beyond financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As advances 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 adoption and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused through the COVID-19 pandemic, as well as other causes increasing numbers of investors are looking for safe haven investments like bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people learn about 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 cryptocurrency
As the market for crypto grows, more and more people are starting to learn about it and comprehend it. As awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing as well as holding the crypto that can raise prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows the provision of financial services created using blockchain technology. As DeFi expands and more platforms and projects come online, this could result in increased use and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto grows increasing numbers of companies are beginning to accept crypto as a form of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned investment vehicles, are beginning to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could increase demand and increased prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto continue to grow it will be more convenient for individuals to purchase and keep cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset like real estate or stock are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, this could lead to increased demand and higher rates for the crypto.
More adoption by merchants
As more and more retailers start accepting crypto as a means of payment, this will make it more convenient for customers to utilize and store crypto, which could boost demand and increase prices.
So, is crypto likely to increase in 2023? It’s only time to find out. But with these factors in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. If you’re in it for the long haul patience and discipline will be key.