It’s been a rough ride for the crypto market in 2022. By November the market had dropped by more than 70% from its previous peak at the end of November. Just when the market was getting worse and down, the FTX crash turned them more dire. The question is, can the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of drops in the past. Every time, it’s bounced back with a big increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. But, in 2017, it broke the record and hit a record highest of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, the price broke through that resistance and hit a new peak of $68,000 in the month of November 2021. And just like that, we’ve had another dip. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips tend to be followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more businesses and industries embracing the technology, its use and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in a variety of ways. This growing demand could result in more people getting involved in the market and, in turn, boost prices.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the potential of crypto assets. The increased interest of institutions can bring stability to the crypto market and could lead to greater prices.
Regulations from the Government
As the crypto market grows as it matures, governments all over the world are starting to create more favorable rules for crypto. This is likely to attract more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrencies, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology, which could increase investment and enthusiasm in crypto.
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas like security and scalability, the potential of crypto assets will expand. This could result in more acceptance and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused through the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets like cryptocurrency and gold. Because the global economic climate remains uncertain and uncertain, this could lead to more demand for crypto as well as increased 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. In the future, as more everyday people are educated about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto grows, more and more people are beginning to become aware about and appreciate it. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing and holding crypto, which can drive up prices.
Decentralized finance (DeFi) is an emerging area of the crypto market that enables financial services to be built on top of blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market grows as more and more businesses are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular 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 now 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, it could increase demand and increased prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. 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 grow it will be easier for individuals to purchase and store cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, like stocks or real estate is a fast-growing area of the crypto market. With the increasing number of security tokens being created and traded, it can lead to a higher demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
In the event that more retailers accept crypto as a means of payment, it will make it more convenient for customers to utilize and store crypto, which could increase demand and price.
So, is crypto likely to grow in 2023? Only time will tell. But with these factors to consider, it’s possible that the crypto market could see a recovery in 2023. For those looking to invest for the long run patience and discipline is crucial.