It’s been a difficult ride for the crypto market through 2022. By November, the market had dipped by 70% from its previous peak in November 2021. And just when things were getting worse, the FTX crash turned them more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. And every time, it’s rebounded with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. But, in 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, and it was trading at $3,100. And 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. 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
Just like we’ve seen previously, dips tend to be followed by a lengthy bull run that finally overcomes the resistance set 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 technology and cryptography have progressed a lot in recent years. With more and better companies and industries embracing the technology, its use and acceptance is increasing. From banking to gaming, crypto is being used in many ways. This growing demand can lead to more people getting involved in the crypto market, which in turn could boost prices.
Increased institutional interest in crypto
In recent times, we’ve seen a growing interest from institutional investors in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the potential in crypto currencies. This increased interest from institutions could provide more stability to the market for crypto and lead to higher prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This could help attract more investors and boost the adoption rate of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, has a wide range of possible applications that go beyond financial transactions. From supply chain management to voting systems, more and more industries are exploring ways they can utilize blockchain technology. This will drive more investment and interest in crypto.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to grow. This could lead to greater use and increase in prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused due to the COVID-19 pandemic and other factors many investors are starting to look for safe haven assets like gold and crypto. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or individual investors are also beginning to invest in the crypto market. With increasing numbers of people are educated about crypto and the best ways to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature increasing numbers of people are starting to learn about and understand the concept. As awareness and acceptance grows of crypto, this could lead to more people buying as well as holding the crypto that could increase prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows financial services to be built using blockchain technology. As DeFi expands and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing increasing numbers of companies are starting to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are starting to show interest in crypto as an asset class. As more of these funds devote a percentage of their portfolio to crypto, it could lead to increased demand and higher prices.
Cryptocurrency is used for payment across borders
One of the major benefits of cryptocurrency 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 this can lead to a rise in the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of ATMs that accept crypto continue to increase, it will become easier for consumers to purchase and store crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, like real estate or stock, are a rapidly growing segment of the cryptocurrency market. Since more and more security tokens will be created and traded, it could lead to increased demand and higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more retailers accept crypto as a form of payment, this will make it more convenient for customers to hold and use crypto, which could boost demand and increase prices.
Will crypto be on the grow in 2023? It’s only time to find out. But with these factors to consider, it’s possible that the crypto market could see a recovery in 2023. And for those who are committed to the long haul, being patient and disciplined is essential.