It’s been a difficult journey for the cryptocurrency market in 2022. By November the market was down by 70% from its previous peak at the end of November. When things were getting worse and down, the FTX crash made them look even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of dips in the past. Every time, it has bounced back with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before hitting a low of $150. In 2017, it broke the record, and hit a new highest of $19,600. Then, in 2018, it was trading at $3,100. And in the year 2020 it struck that resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve seen another dip. But history shows us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips tend to be followed by a prolonged bull run that finally breaks through the resistance created by the previous high price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent years. With more and better companies and industries taking to the technology, its use and acceptance is rising. From finance to gaming, crypto is being used in many ways. And this growing use case could lead to increasing participation in the market which could drive the prices up.
The rise in interest of institutions in crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are starting to explore the potential for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and result in more expensive prices.
Government regulations
As the crypto market is maturing, governments around the world are beginning to develop more favorable rules for cryptocurrency. This is likely to attract more investors as well as increase the adoption rate 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 potential use cases beyond just financial transactions. From supply chain management to voting systems, more and more industries are beginning to look at ways they can make use of blockchain technology. This could drive more investment and interest in cryptocurrency.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas such as security and scalability, the potential of cryptocurrency assets will continue to increase. This could result in more use and increase in prices.
Rising global economic uncertainty
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 investments like cryptocurrency and gold. As the global economic situation is uncertain, this could lead to more demand for crypto as well as higher 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 starting to participate in the cryptocurrency market. With increasing numbers of people are educated about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are starting to learn about and appreciate it. As understanding and acceptance of cryptocurrency grows it could result in more people purchasing or holding cryptocurrency, and this could increase prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services built upon blockchain technology. As DeFi grows and more platforms and projects are launched, it could result in increased use 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 method of payment. This could result in increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
These funds are owned by the state as investments, are starting to show interest in cryptocurrency as a possible asset class. As more funds allocate a portion of their portfolio to crypto, it could increase demand and more expensive prices.
Utilization of crypto to make international payments
One of the main advantages of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses begin to use cryptocurrency for international transactions this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to grow it will be easier for people to buy and hold crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stock or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, it could result in a rise in demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
As more and more merchants accept crypto as a means of payment, this makes it easier for consumers to use and hold cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to grow in 2023? The only way to know is time. But with these factors being considered, it’s likely that the crypto market will have a rebound by 2023. For those looking to invest for the long-term, being patient and disciplined is crucial.