It’s been a difficult journey for the cryptocurrency market in 2022. As of November, the market had dipped by more than 70 percent from the previous high at the end of November. And just when things were going downhill after the FTX crash turned them even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many dips in the past. Each time, it’s bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before hitting a low of $150. But, in 2017 it broke that record and hit a record high of $19,600. In 2018, and it was trading at $3,100. In the year 2020 it struck through the resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve witnessed another drop. However, the past has proven that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are usually followed by a lengthy bull run that eventually breaks through the resistance created by the previous high price. This pattern can be seen in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more businesses and industries taking to it, its usage and acceptance is rising. From banking to gaming cryptocurrency is being utilized in a variety of ways. And this growing use case can 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 recent years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are now exploring the potential in crypto currencies. The increasing interest from institutions can bring stability to the market for crypto and lead to more expensive prices.
Regulations from the Government
As the market for crypto is maturing and mature, governments across the globe are beginning to establish more favorable rules for cryptocurrency. This is likely to attract more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, offers a variety of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems industries are starting to explore how they can utilize blockchain technology. This will increase investment and enthusiasm in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will expand. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
In the current instability in the economy caused by the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets like gold and crypto. As the global economic situation remains uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or even individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people become aware of crypto and the best ways to invest in it, this could lead to more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market is maturing as more and more people are starting to learn about and understand the concept. As awareness and acceptance grows of crypto it could result in more people buying as well as holding the crypto that can increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created on top of blockchain technology. As DeFi expands and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market grows, more and more companies are beginning to accept crypto as a means of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are starting to show interest in crypto as a potential asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could lead to increased demand and higher prices.
Use of crypto for cross-border payments
One of the biggest benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals 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
With the amount of ATMs that accept crypto continue to increase it will be easier for people to buy and keep cryptocurrency, which can increase demand and price.
Security tokens are developed for development
Security tokens, also known as digital assets that signify ownership in an asset like real estate or stock, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, it could result in a rise in demand and higher costs for cryptocurrency.
More adoption by merchants
As more and more merchants accept crypto as a means of payment, it makes it easier for customers to utilize and store crypto, which can increase demand and price.
So, will crypto grow in 2023? It’s only time to find out. However, with these aspects being considered, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long haul patience and discipline is essential.