It’s been a difficult journey for the cryptocurrency market in 2022. In November the market had dropped by 70 percent from the previous high on November 20, 2021. And just when things were going downhill and down, the FTX crash made them look even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips in the past. Every time, it’s bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. However, in 2017, it broke the record and reached a new highest of $19,600. Fast forward to 2018, and it was trading at $3,100. And in the year 2020 it struck through the resistance, and reached a record high of $68,000 in November 2021. Then, 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 previously, dips are usually followed by a prolonged bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is growing. From finance to gaming the use of crypto is increasing in a variety of ways. This growing demand could lead to more people being involved in the market, which in turn could increase the price.
The rise in interest of institutions in crypto
In recent years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds numerous large institutions are now exploring the potential of crypto assets. The increased interest of institutions can bring stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto grows and mature, governments across the globe are starting to create more favorable regulations for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can utilize blockchain technology, which could increase investment and enthusiasm in crypto.
Advancements in technology
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as security and scalability, the potential of crypto assets will continue to expand. This could lead to more use and increase in prices.
Global economic uncertainty is growing
Due to the constant instability in the economy caused through the COVID-19 pandemic as well as other factors many investors are looking for safe haven investments like gold and crypto. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors are also beginning to participate in the crypto market. As more and more people are educated about crypto and how to invest 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 crypto
As the crypto market is maturing as more and more people are starting to learn about and understand it. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing or holding cryptocurrency, and this could drive up prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi continues to grow and more platforms and projects come online, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing as more and more businesses are starting accepting crypto payments 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.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned investments, are beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, it could result in a rise in demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of crypto is the ability to facilitate 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
As the number of crypto ATM’s continue to increase it will be more convenient for individuals to purchase and keep cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like stocks or real estate is a fast-growing sector of the crypto market. With the increasing number of security tokens being created and traded, it can lead to a higher demand, and thus higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more merchants begin accepting crypto as a means of payment, this will make it easier for people to use and hold crypto, which can drive up demand and prices.
So, will crypto grow in 2023? The only way to know is time. With these things in mind, it’s possible that the crypto market will have a rebound by 2023. And for those who are committed to the long run, being patient and disciplined is crucial.