It’s been a rough ride for the crypto market until 2022. By November, the market had dipped by more than 70 percent from the previous high at the end of November. And just when things were looking down after the FTX crash turned things even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many dips in the past. And every time, it has bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. In 2017, it broke that record and hit a record highest of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, the price broke through that resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve seen another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a long bull run that eventually surpasses the resistance created by the previous market’s highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
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 adopting it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in a variety of ways. The growing popularity of crypto could result in more people getting involved in the crypto market which could drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are beginning to investigate the potential of crypto assets. The increased interest of institutions could provide more stability to the crypto market and result in higher prices.
Regulations from the Government
As the crypto market is maturing, governments around the world are beginning to develop more favorable rules for crypto. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of potential use cases beyond just financial transactions. For example, from supply chain management and voting, many and more industries are exploring ways they can make use of blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to increase. This could lead to more acceptance and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. In the future, as more people become aware of crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto grows as more and more people are starting to learn about and understand it. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing and holding crypto, which can raise prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built on top of blockchain technology. As DeFi expands and more platforms and projects come online, this could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are beginning accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are beginning to show interest in cryptocurrency as a possible asset class. As more funds dedicate a part of their portfolio to crypto, this could increase demand and more expensive prices.
Use of crypto for payment across borders
One of the major benefits of cryptocurrency is its ability to make quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
The number of ATMs for crypto continue to increase, it will become easier for people to buy and keep cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that represent ownership in an asset like stock or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be issued and traded, this could result in a rise in demand and higher prices for crypto.
A greater adoption rate by merchants
As more and more merchants start accepting crypto as a form of payment, it will make it more convenient for customers to hold and use crypto, which could increase demand and price.
So, is crypto likely to increase in 2023? It’s only time to find out. With these things in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those looking to invest for the long haul, being patient and disciplined is crucial.