It’s been a tough journey for the cryptocurrency market in 2022. As of November the market had dropped by more than 70 percent from its previous high at the end of November. Just when the market was getting worse and down, the FTX crash turned things even worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically 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 a full year before reaching a bottom of $150. But, in 2017 it broke that record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, it broke through the resistance and reached a new peak of $68,000 in the month of November 2021. And just like that, we’ve seen another dip. But history shows us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a long bull run that finally surpasses the resistance created by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent 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 a variety of ways. The growing popularity of crypto could lead to more people getting involved in the crypto market and, in turn, boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks, many large institutions are starting to explore the possibilities for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and result in higher prices.
Regulations of the government
As the crypto market continues to mature and mature, governments across the globe are beginning to establish more favorable rules for crypto. This is likely to attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology. This will stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is 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 more acceptance and higher prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on by the COVID-19 pandemic and other factors many investors are starting to look for safe haven assets such as bitcoin and even gold. As the global economic situation is uncertain it could result in increased demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the crypto market. With increasing numbers of everyday people become aware of cryptocurrency and investing in it This could result in more demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature increasing numbers of people are starting to learn about and understand the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people purchasing or holding cryptocurrency, and this could raise prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables finance services created using blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows increasing numbers of companies are starting using crypto to be a method of payment. This could result in increased usage of crypto in daily transactions and higher prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned investments, are beginning to show interest in cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, this could result in a rise in demand and increased prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses begin to use crypto for international transactions, this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto increase it will be more convenient for individuals to purchase and store crypto, which could increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing area of the crypto market. With the increasing number of security tokens being created and traded, this could result in a rise in demand and consequently higher rates for the crypto.
More adoption by merchants
With the increasing number of merchants start accepting cryptocurrency as a method of payment, this will make it easier for consumers to use and hold crypto, which can boost demand and increase prices.
So, is crypto likely to increase in 2023? Only time will tell. But with these factors being considered, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those in it for the long-term, being patient and disciplined will be key.