It’s been a difficult journey for the cryptocurrency market through 2022. As of November, the market had dipped by 70% from its previous peak in November 2021. And just when things were looking down, the FTX crash made them look even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips over the years. Every time, it’s bounced back with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year before reaching a bottom of $150. But, in 2017, it broke the record, and hit a new high of $19,600. Then, in 2018, the price was at $3,100. In 2020, the price broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. But history shows 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 before, fall-offs are typically followed by a long bull run that finally surpasses the resistance created by the market’s previous highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and better companies and industries adopting it, its usage and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. This growing demand could result in increasing participation in the market which could drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the possibilities in crypto currencies. The increased interest of institutions could bring more stability to the crypto market and lead to greater prices.
Regulations from the Government
As the crypto market is maturing 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 mainstream adoption of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, is a broad range of potential use cases beyond just financial transactions. From supply chain management to voting systems, more companies are beginning to look at ways they can benefit from blockchain technology, which could drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas such as scalability and security, the potential of crypto assets will continue to expand. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused through the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to participate in the crypto market. In the future, as more people are educated about crypto and the best ways 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 market for crypto grows as more and more people are beginning to learn about and understand the concept. As the awareness and acceptance of cryptocurrency grows it could result in more people purchasing or holding cryptocurrency, and this can increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi grows and more platforms and projects come online, this could result in increased use and higher prices for crypto.
Developments in crypto payment methods
As the crypto market is growing increasing numbers of companies are beginning accepting crypto payments as a method of payment. This could result in increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are now beginning to look at crypto as a potential asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could increase demand and more expensive prices.
Use of crypto for international payments
One of the biggest benefits of crypto is the ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto continue to increase it will be more convenient for consumers to purchase and hold crypto, which will boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership in an asset like stocks or real estate are rapidly expanding sector of the crypto market. As more security tokens are created and traded, this can lead to a higher demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
As more and more merchants begin accepting cryptocurrency as a method of payment, it will make it easier for people to use and hold crypto, which can drive up demand and prices.
Will crypto be on the grow in 2023? It’s only time to find out. But with these factors in mind, it’s likely that the crypto market could see a recovery in 2023. If you’re committed to the long run patience and discipline will be key.