It’s been a difficult journey for the cryptocurrency market in 2022. By November the market was down by 70 percent from its previous high in November 2021. When things were getting worse after the FTX crash made them look worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many dips in the past. Every time, it’s rebounded with a huge rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year before hitting a low of $150. But, in 2017 it broke that record and reached a new highest of $19,600. In 2018, it was trading at $3,100. And in 2020, the price broke that resistance and reached a new highest of $68,000 in November 2021. Then, 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
As we’ve seen before, fall-offs tend to be followed by a long bull run, which eventually surpasses the resistance created by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and better companies and industries taking to the technology, its use and acceptance is growing. From banking to gaming the use of crypto is increasing in a myriad of ways. This growing demand could lead to more people getting involved in the market, which in turn could increase the price.
A rise in the interest of institutions for crypto
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are now exploring the possibilities of crypto assets. The increased interest of institutions can bring stability to the market for crypto and lead to higher prices.
Regulations of the government
As the market for crypto grows as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This could help attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain is a broad range of applications that go beyond just financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can benefit from blockchain technology. This will drive more investment and interest in cryptocurrency.
Technology advancements
Blockchain technology and cryptography are still in the early stages of development. As advances continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to grow. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused by the COVID-19 pandemic as well as other factors, more and more investors are beginning to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to increased demand for crypto and higher prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or even individual investors are also beginning to get involved in the crypto market. With increasing numbers of everyday people become aware of cryptocurrency and investing 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 cryptocurrency
As the crypto market continues to mature increasing numbers of people are beginning to learn about and appreciate the concept. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing and holding crypto, which can raise prices.
font crypto
The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows finance services developed using blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow, more and more companies are starting to accept crypto as a means of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are now beginning to show interest in crypto as an asset class. As more of these funds allocate a portion of their assets to digital currencies, it could increase demand and increased prices.
Cryptocurrency is used for international payments
One of the main advantages of cryptocurrency is its capability to perform swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency 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 for crypto increase it will be easier for consumers to purchase and store crypto, which could boost demand and increase prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership in 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, it could result in a rise in demand, and thus higher rates for the crypto.
More adoption by merchants
With the increasing number of businesses accept cryptocurrency as a method of payment, it will make it easier for people to use and hold crypto, which can increase demand and price.
Will crypto be on the increase in 2023? The only way to know is time. However, with these aspects in mind, it’s likely that the crypto market will be able to see a rebound in 2023. If you’re looking to invest for the long haul, being patient and disciplined will be key.