It’s been a tough ride for the crypto market in 2022. As of November the market was down by 70 percent from its previous high on November 20, 2021. Just when the market was getting worse after the FTX crash made them look even worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many dips in the past. Each time, it’s bounced back by a massive increase.
For example, 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 reached a new highest of $19,600. Then, in 2018, and it was trading at $3,100. And in the year 2020 it struck that resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us that following 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 prolonged bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent 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. And this growing use case could lead to increasing participation in the market and, in turn, boost prices.
A rise in the interest of institutions for crypto
In recent times we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks, many large institutions are starting to explore the possibilities of crypto assets. The increasing interest from institutions could provide more stability to the crypto market and lead to more expensive prices.
Regulations of the government
As the crypto market is maturing as it matures, governments all over the world are starting to create more favorable regulations for crypto. This could help attract more investors as well as increase the acceptance of crypto in general.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems companies are starting to explore how they can benefit from blockchain technology. This will drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the beginning stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will expand. This could result in more use and increase in prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like cryptocurrency and gold. Because the global economic climate remains uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people are educated about crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the market for crypto continues to mature, more and more people are beginning to become aware about it and comprehend the concept. As the awareness and acceptance of crypto grows, this could lead to more people purchasing as well as holding the crypto that can drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market, which allows the provision of financial services developed on top of blockchain technology. As DeFi continues to grow and more projects and platforms become available, this could result in increased use and increased prices for crypto.
The development of crypto payment methods
As the market for crypto grows increasing numbers of companies are starting using crypto to be a form of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investments, are now beginning to look at cryptocurrency as a possible asset class. As more funds allocate a portion of their portfolio to crypto, it could increase demand and higher prices.
Use of crypto for cross-border payments
One of the biggest benefits of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions this could lead to increased demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto continue to grow it will be easier for individuals to purchase and store crypto, which could increase demand and price.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like stocks or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, it could lead to increased demand and higher prices for crypto.
Merchants are more likely to adopt the concept.
As more and more merchants start accepting crypto as a form of payment, it will make it more convenient for consumers to hold and use crypto, which could boost demand and increase prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market will be able to see a rebound in 2023. And for those who are committed to the long haul, being patient and disciplined is crucial.