It’s been a tough journey for the cryptocurrency market through 2022. By November the market was down by 70% from its previous peak at the end of November. And just when things were looking down and down, the FTX crash made them look more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. Each time, it’s bounced back by a massive rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. In 2017 it broke that record and reached a new highest of $19,600. In 2018, and it was trading at $3,100. In the year 2020 it struck through that resistance, and reached a record highest of $68,000 in November 2021. And 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 before, fall-offs tend to be followed by a long bull run that eventually breaks through the resistance created by the previous market’s highest price. This pattern can be seen in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and better companies and industries adopting the technology, its use and acceptance is rising. From gaming to finance, crypto is being used in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the crypto market which could boost prices.
The rise in interest of institutions in crypto
In recent years, we’ve seen a growing interest from institutional investors in crypto. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increased interest of institutions can bring stability to the market for crypto and could lead to greater prices.
Government regulations
As the crypto market continues to mature as it matures, governments all over the world are starting to create more favorable regulations for crypto. This is likely to attract more investors as well as increase 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 industries are exploring ways they can benefit from blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas such as scalability and security, the potential of crypto assets will expand. This could lead to greater use and increase in prices.
Uncertainty in the global economy
In the current economic uncertainty caused through the COVID-19 pandemic, as well as other causes, more and more investors are starting to look for safe haven assets like gold and crypto. As the global economic situation is uncertain, this could lead to more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people learn about crypto and how to invest in it This could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows increasing numbers of people are beginning to learn about and appreciate the concept. As understanding and acceptance grows of crypto, this could lead to increasing numbers of people purchasing as well as holding the crypto that could raise prices.
escrow crypto
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows financial services to be created on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the market for crypto is growing increasing numbers of companies are beginning accepting crypto payments as a means of payment. This could result in increased usage of crypto in daily transactions and higher prices.
More investment from sovereign wealth funds
These funds are state-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of crypto is the ability to make swift and affordable cross-border transactions. As more businesses and individuals begin to use cryptocurrency for international transactions, it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto increase it will be easier for consumers to purchase and store crypto, which could increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership in an asset like stock or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, it could lead to increased demand and consequently higher prices for crypto.
More adoption by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, this will make it easier for consumers 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 being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re in it for the long-term, being patient and disciplined will be key.