It’s been a difficult ride for the crypto market through 2022. In November, the market had dipped by 70% from its previous peak at the end of November. And just when things were going downhill and down, the FTX crash made them look more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many dips in the past. Every time, it has bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for a full year, reaching a low of $150. But, in 2017 it broke that record and reached a new record high of $19,600. In 2018, and it was trading at $3,100. In 2020, it broke through the resistance, and reached a record highest of $68,000 in November 2021. Just like that, we’ve had another dip. But history shows us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are typically followed by a long bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent years. With more and more companies and industries adopting the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. And this growing use case could result in increasing participation in the crypto market which could drive the prices up.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising interest from institutional investors in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the possibilities in crypto currencies. This increased interest from institutions could bring more stability to the crypto market and result in higher prices.
As the market for crypto grows as it matures, governments all over the world are beginning to establish more favorable rules for crypto. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain is a broad range of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can benefit from blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas such as security and scalability, potential of crypto assets will grow. This could result in more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused through the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven investments like bitcoin and even gold. Because the global economic climate is uncertain, this could lead to increased demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors, are also starting to participate in the market for crypto. As more and more everyday people become aware of crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows as more and more people are starting to learn about and understand it. As understanding and acceptance grows of crypto, this could lead to increasing numbers of people purchasing and holding crypto, which could raise prices.
crypto trade smith
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services created upon blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are beginning using crypto to be 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 government-owned investments, are starting to explore crypto as a potential asset class. As more of these funds allocate a portion of their assets to digital currencies, this could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of cryptocurrency is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs for crypto increase it will be more convenient for consumers to purchase and keep crypto, which will boost demand and increase prices.
Security tokens are developed for development
Security tokens, or digital assets that represent ownership of an asset, like stocks or real estate is a fast-growing segment of the cryptocurrency market. As more security tokens are created and traded, this could lead to increased demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
In the event that more merchants accept crypto as a form of payment, this makes it easier for people to utilize and store crypto, which can drive up demand and prices.
So, is crypto likely to grow in 2023? The only way to know is time. But with these factors in mind, it’s possible that the cryptocurrency market will have a rebound by 2023. For those in it for the long haul Being patient and disciplined will be key.