It’s been a difficult ride for the crypto market in 2022. As of November, the market had dipped by 70 percent from the previous high on November 20, 2021. When things were looking down after the FTX crash made them look even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips in the past. Every time, it’s rebounded with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year, reaching a low of $150. But, in 2017, it broke the record, and hit a new high of $19,600. In 2018, the price was at $3,100. And in the year 2020 it struck through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. However, history has shown us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a prolonged bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen not only in 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 companies and industries taking to it, its usage and acceptance is increasing. From finance to gaming the use of crypto is increasing in a myriad of ways. This growing demand could result in more people being involved in the market and, in turn, drive the prices up.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the possibilities of crypto assets. This increased interest from institutions could provide more stability to the market for crypto and lead to greater prices.
Government regulations
As the market for crypto is maturing and mature, governments across the globe are beginning to develop more favorable rules for crypto. This will help draw more investors as well as increase the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems companies are starting to explore how they can benefit from blockchain technology. This could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As advances continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to expand. This could result in more adoption and higher prices.
Global economic uncertainty is growing
Due to the constant instability in the economy caused due to the COVID-19 pandemic as well as other factors, more and more investors are beginning 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 increased prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the crypto market. With increasing numbers of everyday people become aware of crypto and how to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market is maturing as more and more people are beginning to become aware about it and comprehend the concept. As awareness and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables finance services developed on top of blockchain technology. As DeFi expands and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow increasing numbers of companies are starting using crypto to be a method of payment. This could lead to increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investments, are starting to explore crypto as an asset class. As more of these funds dedicate a part of their portfolio to crypto, it could result in a rise in demand and higher prices.
Utilization of crypto to make payment across borders
One of the major benefits of crypto is the ability to make 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 the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto continue to grow, it will become easier for individuals to purchase and hold crypto, which could increase demand and price.
Development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as stocks or real estate, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, this can lead to a higher demand, and thus higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more retailers start accepting crypto as a form of payment, this will make it easier for consumers to hold and use cryptocurrency, which will increase demand and price.
Will crypto be on the grow in 2023? Only time will tell. But with these factors to consider, it’s possible that the crypto market will see a recovery in 2023. And for those who are in it for the long-term patience and discipline is crucial.