It’s been a difficult journey for the cryptocurrency market through 2022. In November, the market had dipped by 70 percent from its previous high on November 20, 2021. And just when things were going downhill after the FTX crash turned things worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips over the years. Every time, it has bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. But, in 2017, it broke that record, and hit a new record high of $19,600. Then, in 2018, it was trading at $3,100. In the year 2020 it struck that resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve had another dip. However, the past has proven that after 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 breaks through the resistance created by the previous market’s highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and more companies and industries embracing it, its usage and acceptance is increasing. From gaming to finance the use of crypto is increasing in many ways. This growing demand could result in increasing participation in the crypto market and, in turn, increase the price.
Increased institutional interest in crypto
In recent times, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the potential for crypto-based assets. The increased interest of institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Regulations from the Government
As the market for crypto grows, governments around the world are starting to create more favorable regulations for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of possible applications that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can benefit from blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like security and scalability, the potential of cryptocurrency assets will continue to increase. This could result in more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty caused through the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets like bitcoin and even gold. Because the global economic climate remains uncertain it could result in increased demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to participate in the market for crypto. With increasing numbers of everyday people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto is maturing increasing numbers of people are beginning to learn about and understand it. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing as well as holding the crypto that could raise prices.
Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be created upon blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the crypto market grows, more and more 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.
The increased investment of sovereign wealth funds
These funds are government-owned investment vehicles, are beginning to look at cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, this could increase demand and increased prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is the ability to facilitate fast and cheap cross-border payments. As more individuals and businesses begin to use crypto for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to increase, it will become easier for people to buy and hold crypto, which will increase demand and price.
The development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like stocks or real estate are rapidly expanding segment of the cryptocurrency market. As more security tokens are created and traded, this can lead to a higher demand and higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
With the increasing number of retailers accept cryptocurrency as a method of payment, this will make it easier for people to use and hold crypto, which can drive up demand and prices.
So, will crypto rise in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market could be able to see a rebound in 2023. If you’re in it for the long haul, being patient and disciplined is essential.