It’s been a rough experience for the crypto market through 2022. As of November the market was down by more than 70 percent from the previous high at the end of November. And just when things were looking down, the FTX crash turned things even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many dips in the past. And every time, it’s bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. In 2017, it broke that record and hit a record highest of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, the price broke that resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve witnessed another drop. But history shows us that at the end of every dip the bull runs.
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 high price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and more companies and industries adopting it, its usage and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the market and, in turn, increase the price.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are now exploring the possibilities for crypto-based assets. The increasing interest from institutions could provide more stability to the market for crypto and lead to more expensive prices.
Regulations from the Government
As the market for crypto is maturing, governments around the world are starting to create more favorable regulations for crypto. This is likely to attract more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications beyond just financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can make use of blockchain technology. This could drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages 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 more adoption and higher prices.
Global economic uncertainty is growing
In the current economic uncertainty caused due to the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world remains uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to participate in the cryptocurrency market. With increasing numbers of people become aware of crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market is maturing, more and more people are beginning to learn about it and comprehend the concept. As understanding and acceptance grows of crypto, this could lead to more people purchasing or holding cryptocurrency, and this could drive up prices.
crypto tax compliance
Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services developed using blockchain technology. As DeFi continues to grow and more projects and platforms become available, this will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow increasing numbers of companies are beginning using crypto to be a means of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned investments, are beginning to explore crypto as a potential asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could increase demand and increased prices.
Use of crypto for international payments
One of the major benefits of crypto is its ability to make quick and inexpensive cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions, this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto increase it will be more convenient for individuals to purchase and keep crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset such as stocks or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be issued and traded, this could result in a rise in demand and higher rates for the crypto.
A greater adoption rate by merchants
In the event that more retailers begin accepting crypto as a form of payment, it will make it easier for people to use and hold crypto, which could increase demand and price.
So, will crypto rise in 2023? The only way to know is time. With these things to consider, it’s likely that the crypto market will be able to see a rebound in 2023. For those looking to invest for the long run Being patient and disciplined is essential.