It’s been a rough experience 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 turned things even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips in the past. Every time, it has bounced back with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. However, in 2017 it broke that record and hit a record highest of $19,600. Fast forward to 2018, the price was at $3,100. In the year 2020 it struck through the resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. However, the past has proven that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are typically followed by a lengthy bull run that finally overcomes the resistance set by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries taking to it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a variety of ways. This growing demand can lead to more people getting involved in the market and, in turn, boost prices.
Increased institutional interest in cryptocurrency
In the last few years we’ve witnessed a rising curiosity from institutions investing in crypto. From banks to hedge funds, many large institutions are beginning to investigate the potential in crypto currencies. The increasing interest from institutions could bring more stability to the market for crypto and lead to more expensive prices.
Regulations of the government
As the crypto market continues to mature and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This could help 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, has a wide range of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advances continue to be made in areas like scalability and security, the potential of cryptocurrency assets will continue to expand. This could lead to greater 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 increasing numbers of investors are starting to look for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, also known as individual investors are also beginning to get involved in the market for crypto. With increasing numbers of people learn about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are starting to learn about and understand it. As understanding and acceptance of cryptocurrency grows, this could lead to increasing numbers of people purchasing and holding crypto, which could drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows finance services created on top of blockchain technology. As DeFi continues to grow and more platforms and projects become available, this will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows as more and more businesses are beginning using crypto to be a method of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
These funds are owned by the state as investments, are beginning to show interest in crypto as a potential asset class. As more of these funds dedicate a part of their assets to digital currencies, it could result in a rise in demand and more expensive prices.
Use of crypto for payment across borders
One of the biggest benefits of crypto is its capability to perform swift and affordable cross-border transactions. As more and more people and businesses start to utilize crypto for international transactions, it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and hold crypto, which will increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that signify ownership of an asset, such as stock or real estate, are a rapidly growing sector of the crypto market. As more security tokens are issued and traded, this could result in a rise in demand, and thus higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
As more and more retailers accept crypto as a means of payment, it makes it easier for consumers to utilize and store cryptocurrency, which will 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 have a rebound by 2023. For those looking to invest for the long run, being patient and disciplined will be key.