It’s been a difficult ride for the crypto market through 2022. By November the market was down by 70 percent from the previous high on November 20, 2021. Just when the market was 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 market for crypto, particularly Bitcoin has experienced many drops in the past. Each time, it has bounced back with a huge increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. However, in 2017 it broke that record, and hit a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, it broke that resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve witnessed another drop. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a lengthy bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. This growing demand can lead to increasing participation in the market which could increase the price.
Increased institutional interest in cryptocurrency
In the last few years we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds and even large corporations are now exploring the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the crypto market and lead to more expensive prices.
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable regulations for cryptocurrency. This could help attract more investors as well as 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 applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to expand. This could result in more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on due to the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven assets such as bitcoin and even gold. As the global economic situation is uncertain, this could lead to increased demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to invest in the crypto market. In the future, as more everyday people become aware of crypto and how to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto is maturing increasing numbers of people are beginning to become aware about and appreciate it. As understanding and acceptance of crypto grows it could result in more people purchasing and holding crypto, which can drive up prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built on top of blockchain technology. As DeFi grows and more projects and platforms come online, this could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing, more and more companies are starting using crypto to be a form of payment. This could lead to increased use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are owned by the state as investment vehicles, are starting to show interest in crypto as a potential asset class. As more of these funds allocate a portion of their portfolio to crypto, it could lead to increased demand and more expensive prices.
Utilization of crypto to make cross-border payments
One of the main advantages of crypto is its ability to make fast and cheap cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions this could lead to increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto continue to increase it will be more convenient for consumers to purchase and hold crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, or digital assets that represent ownership of an asset, such as stocks or real estate are rapidly expanding sector of the crypto market. As more security tokens are created and traded, this can lead to a higher demand and higher rates for the crypto.
More adoption by merchants
With the increasing number of businesses begin accepting cryptocurrency as a method of payment, this will make it easier for people to use and hold cryptocurrency, which will increase demand and price.
Will crypto be on the grow in 2023? It’s only time to find out. However, with these aspects to consider, it’s likely that the crypto market could see a recovery in 2023. For those looking to invest for the long-term patience and discipline is crucial.