It’s been a tough ride for the crypto market until 2022. In November the market was down by 70 percent from its previous high on November 20, 2021. Just when the market was getting worse and down, the FTX crash turned them even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips in the past. Every time, it’s bounced back with a huge rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before reaching a bottom of $150. However, in 2017, it broke that record and reached a new highest of $19,600. In 2018, it was trading 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 following each 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 usually followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and more companies and industries adopting the technology, its use and acceptance is rising. From gaming to finance the use of crypto is increasing in a variety of ways. This growing demand could lead to more people getting involved in the market, which in turn could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are now exploring the potential for crypto-based assets. The increasing interest from institutions could provide more stability to the market for crypto and could lead to greater prices.
Regulations of the government
As the crypto market continues to mature as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This is likely to attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of possible applications beyond just financial transactions. From supply chain management to voting systems, more companies are exploring ways they can benefit from blockchain technology, which could drive more investment and interest in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas like security and scalability, potential of crypto assets will continue to grow. This could lead to more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused by the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets like bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as increased prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors are also beginning to invest in the cryptocurrency market. As more and more people learn about crypto and the best ways to invest in it this could result in increased demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are starting to learn about and understand the concept. As understanding and acceptance of cryptocurrency grows it could result in more people purchasing or holding cryptocurrency, and this can drive up prices.
Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows financial services to be created using blockchain technology. As DeFi expands and more projects and platforms are launched, it could lead to increased adoption and higher prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow increasing numbers of companies are beginning to accept crypto as a means of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are now beginning to show interest in crypto as a potential asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency for international transactions this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
As the number of crypto ATM’s increase it will be easier for individuals 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, such as stock or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, this can lead to a higher demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more retailers accept crypto as a means of payment, it will make it more convenient for consumers to hold and use crypto, which can boost demand and increase prices.
So, is crypto likely to grow in 2023? The only way to know is time. But with these factors being considered, it’s likely that the crypto market could see a recovery in 2023. For those looking to invest for the long run, being patient and disciplined is essential.