It’s been a rough experience for the crypto market through 2022. As of November, the market had dipped by more than 70% from its previous peak on November 20, 2021. Just when the market was going downhill, the FTX crash turned them even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips over the years. Each time, it’s bounced back with a huge rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it 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. Fast forward to 2018, and it was trading at $3,100. In the year 2020 it struck through that resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve had another dip. However, history has shown us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a long bull run that finally breaks through the resistance created by the previous market’s highest price. This is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more companies and industries embracing it, its usage and acceptance is growing. From finance to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could lead to more people getting involved in the market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are now exploring the potential in crypto currencies. The increased interest of institutions could provide more stability to the market for crypto and could lead to more expensive 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 could help attract more investors and boost the acceptance of crypto in general.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of possible applications that go beyond financial transactions. From supply chain management to voting systems, more companies are beginning to look at ways they can utilize blockchain technology. This could drive more investment and interest in crypto.
Advancements in technology
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will grow. This could lead to greater use and increase in prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic and other factors, more and more investors are looking for safe haven assets such as cryptocurrency and gold. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to get involved in the cryptocurrency market. With increasing numbers of 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 crypto market grows, more and more people are beginning to become aware about and appreciate the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying or holding cryptocurrency, and this could drive up prices.
equity in crypto
Financial decentralization (DeFi) is an emerging area of the crypto market that allows finance services built upon blockchain technology. As DeFi grows and more platforms and projects become available, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing, more and more companies are starting using crypto to be a method of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are starting to show interest in crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses start to utilize cryptocurrency 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 crypto ATM’s continue to grow, it will become easier for individuals to purchase and store crypto, which could boost demand and increase prices.
The development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset such as stock or real estate are rapidly expanding area of the crypto market. With the increasing number of security tokens being created and traded, this could lead to increased demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants accept cryptocurrency as a method of payment, it makes it easier for people to hold and use cryptocurrency, which will boost demand and increase prices.
Will crypto be on the increase in 2023? The only way to know is time. However, with these aspects being considered, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. And for those who are looking to invest for the long haul, being patient and disciplined will be key.