It’s been a tough journey for the cryptocurrency market in 2022. In 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, the FTX crash turned them even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many dips in the past. Every time, it’s rebounded by a massive rise.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before reaching a bottom of $150. But, in 2017, it broke that record and reached a new record high of $19,600. Then, in 2018, the price was at $3,100. In 2020, the price broke through that resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve had another dip. However, the past has proven that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are usually followed by a long bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and better companies and industries taking to the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case could lead to more people being involved in the crypto market which could increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are starting to explore the possibilities of crypto assets. The increasing interest from institutions can bring stability to the market for crypto and result in more expensive prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors and boost the mainstream adoption of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of applications that go beyond just financial transactions. From supply chain management to voting systems, more companies are beginning to look at ways they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as security and scalability, potential of crypto assets will continue to grow. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as increased prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, also known as individual investors are also beginning to invest in the cryptocurrency market. In the future, as more everyday people become aware of crypto and how to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows increasing numbers of people are beginning to learn about and understand the concept. As the awareness and acceptance of crypto grows, it will lead to more people buying and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that enables the provision of financial services developed using blockchain technology. As DeFi grows and more projects and platforms are launched, it could lead to increased adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow as more and more businesses 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.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as state-owned investment vehicles, are starting to show interest in crypto as an asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, it could result in a rise in demand and higher prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the ability to make quick and inexpensive cross-border payments. As more businesses and individuals start to utilize crypto for international transactions, it could result in increased demand and higher prices.
Increasing numbers of crypto ATM’s
As the number of crypto ATM’s continue to grow it will be more convenient for individuals to purchase and hold cryptocurrency, which can increase demand and price.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset like stock or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, it can lead to a higher demand and consequently higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
With the increasing number of retailers begin accepting crypto as a means of payment, it will make it more convenient for consumers to hold and use crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? It’s only time to find out. However, with these aspects to consider, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. If you’re looking to invest for the long haul Being patient and disciplined will be key.