It’s been a tough journey for the cryptocurrency market until 2022. As of November the market had dropped by more than 70 percent from its previous high at the end of November. When things were going downhill, the FTX crash made them look even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of dips over the years. And every time, it’s rebounded with a huge rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year before hitting a low of $150. However, in 2017 it broke that record and reached a new record high of $19,600. In 2018, the price was at $3,100. In 2020, it broke through the resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us 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 tend to be followed by a prolonged bull run that finally breaks through the resistance created by the market’s previous highest price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and better companies and industries adopting it, its usage and acceptance is rising. From banking to gaming cryptocurrency is being utilized in a variety of ways. This growing demand can lead to more people being involved in the market and, in turn, drive the prices up.
Increased institutional interest in crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From banks to hedge funds and even large corporations are now exploring the possibilities in crypto currencies. This increased interest from institutions can bring stability to the crypto market and lead to greater prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, offers a variety of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can make use of blockchain technology. This will drive more investment and interest in cryptocurrency.
Technology advancements
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could lead to greater use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on by the COVID-19 pandemic and other factors many investors are beginning to look for safe haven assets such as cryptocurrency and gold. As the global economic situation is uncertain it could result in an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors, are also starting to invest in the crypto market. In the future, as more people learn about cryptocurrency and investing in it This could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market continues to mature increasing numbers of people are starting to learn about it and comprehend it. As the awareness and acceptance of cryptocurrency grows, it will lead to more people purchasing and holding crypto, which could raise prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows finance services developed upon 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 increasing numbers of companies are beginning accepting crypto payments as a means of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are starting to look at crypto as a potential asset class. As more funds devote a percentage of their assets to digital currencies, it could result in a rise in demand and higher prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is the ability to make quick and inexpensive cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s increase it will be more convenient for people to buy and hold crypto, which will increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership of an asset, like real estate or stock are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and consequently higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
With the increasing number of businesses start accepting crypto as a form of payment, it will make it easier for consumers to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? The only way to know is time. But with these factors being considered, it’s possible that the crypto market could have a rebound by 2023. If you’re looking to invest for the long run, being patient and disciplined is crucial.