It’s been a rough journey for the cryptocurrency market through 2022. By November the market had dropped by 70% from its previous peak on November 20, 2021. 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 over the years. Every time, it’s bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year before reaching a bottom of $150. In 2017, it broke that record, and hit a new record high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in the year 2020 it struck through that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. 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
Just like we’ve seen before, fall-offs tend to be followed by a prolonged bull run that eventually 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 more businesses and industries embracing it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case can lead to more people getting involved in the market and, in turn, increase the price.
A rise in the interest of institutions for cryptocurrency
In the last few years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From banks to hedge funds, many large institutions are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Government regulations
As the crypto market is maturing, governments around the world are beginning to establish more favorable regulations for cryptocurrency. This could help attract more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of applications that go beyond just financial transactions. From supply chain management to voting systems, more companies are exploring ways they can benefit from blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
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 lead to greater acceptance and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the crypto market. With increasing numbers of people become aware of cryptocurrency and investing in it this could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows, more and more people are starting to learn about and understand it. As the awareness and acceptance grows of crypto, it will lead to more people purchasing and holding crypto, which could raise prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi expands and more projects and platforms are launched, it could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows increasing numbers of companies are beginning to accept crypto as a method of payment. This could lead to an increase in the use of crypto in everyday transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to look at crypto as an asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could lead to increased demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is its capability to perform fast and cheap cross-border payments. As more and more people and businesses start to utilize cryptocurrency for international transactions it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to increase, it will become easier for people to buy and keep crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset such as real estate or stock is a fast-growing area of the crypto market. Since more and more security tokens will be created and traded, it could result in a rise in demand and consequently higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, it will make it easier for people to utilize and store cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to increase in 2023? It’s only time to find out. With these things being considered, it’s likely that the crypto market could have a rebound by 2023. If you’re in it for the long run Being patient and disciplined is essential.