It’s been a difficult experience for the crypto market through 2022. By November, the market had dipped by 70% from its previous peak at the end of November. Just when the market was looking down after the FTX crash made them look more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of drops in the past. And every time, it’s rebounded 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 the record, and hit a new highest of $19,600. In 2018, the price was at $3,100. And in 2020, it broke through that resistance, and reached a record high of $68,000 in November 2021. 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
Similar to what we’ve witnessed previously, dips tend to be followed by a long bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From banking to gaming, crypto is being used in a variety of ways. The growing popularity of crypto can lead to more people being involved in the market which could increase the price.
Increased institutional interest in cryptocurrency
In recent years we’ve noticed a growing interest from institutional investors in cryptocurrency. From banks to hedge funds and even large corporations are starting to explore the potential for crypto-based assets. The increasing interest from institutions can bring stability to the market for crypto and could lead to higher prices.
Government regulations
As the market for crypto continues to mature, governments around the world are beginning to establish more favorable rules for cryptocurrency. This is likely to attract more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of possible applications that go beyond financial transactions. For example, from supply chain management and voting, many companies are starting to explore how they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will continue to increase. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets such as cryptocurrency and gold. As the global economic situation remains uncertain it could result in increased demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or individual investors, are also starting to get involved in the crypto market. In the future, as more everyday people are educated about crypto and how to invest in it This could result in more demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows increasing numbers of people are starting to learn about it and comprehend it. As understanding and acceptance grows of crypto, this could lead to more people purchasing as well as holding the crypto that can drive up prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that allows finance services built using blockchain technology. As DeFi continues to grow and more platforms and projects come online, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow increasing numbers of companies are starting to accept crypto as a form of payment. This could lead to an increase in the use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
These funds are state-owned investment vehicles, are now beginning to look at crypto as a potential asset class. As more funds devote a percentage of their portfolio to crypto, this could lead to increased demand and more expensive prices.
Utilization of crypto to make international payments
One of the biggest benefits of crypto is the ability to make fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto continue to increase, it will become easier for consumers to purchase and keep crypto, which will increase demand and price.
Development of security tokens
Security tokens, or digital assets that represent ownership of an asset, such as real estate or stock is a fast-growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, this could lead to increased demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more businesses start accepting crypto as a form of payment, this will make it more convenient for people to hold and use crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? The only way to know is time. With these things being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re looking to invest for the long run, being patient and disciplined will be key.