It’s been a tough journey for the cryptocurrency market in 2022. By November, the market had dipped by 70 percent from the previous high at the end of November. When things were getting worse and down, 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 cryptocurrency market, specifically Bitcoin, has seen many drops in the past. Each time, it’s bounced back with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. In 2017, it broke the record and hit a record highest of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, it broke through that resistance and hit a new high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a lengthy bull run that finally surpasses the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and better companies and industries taking to it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in many ways. This growing demand can lead to more people being involved in the market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are beginning to investigate the possibilities in crypto currencies. The increasing interest from institutions can bring stability to the market for crypto and result in higher prices.
As the market for crypto is maturing as it matures, governments all over the world are starting to create more favorable regulations for crypto. This could help attract more investors as well as increase the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications that go beyond financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to grow. This could lead to more use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on by the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets like gold and crypto. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to participate in the cryptocurrency market. As more and more everyday people are educated about cryptocurrency and investing in it, this could lead to more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are starting to learn about it and comprehend the concept. As the awareness and acceptance grows of crypto it could result in more people purchasing and holding crypto, which can drive up prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows finance services created using blockchain technology. As DeFi expands and more projects and platforms come online, this will lead to a rise in adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows as more and more businesses are beginning using crypto to be a means of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are owned by the state as investments, are beginning to show interest in crypto as an asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could result in a rise in demand and increased prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is the ability to facilitate fast and cheap cross-border payments. As more and more people and businesses begin to use 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 crypto ATM’s continue to grow, it will become easier for consumers to purchase and store crypto, which will increase demand and price.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like real estate or stock, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, it could result in a rise in demand and higher rates for the crypto.
A greater adoption rate by merchants
In the event that more merchants start accepting crypto as a means of payment, this will make it easier for customers to use and hold crypto, which could boost demand and increase prices.
Will crypto be on the rise in 2023? It’s only time to find out. But with these factors in mind, it’s possible that the crypto market could be able to see a rebound in 2023. And for those who are committed to the long-term, being patient and disciplined is essential.