It’s been a rough experience for the crypto market through 2022. As of November the market had dropped by 70 percent from its previous high at the end of November. And just when things were looking down, the FTX crash turned them even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many dips over the years. Each time, it’s rebounded by a massive increase.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. In 2017, it broke the record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. In the year 2020 it struck that resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips tend to be followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in many ways. The growing popularity of crypto could result in more people getting involved in the crypto market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent years we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are now exploring the possibilities of crypto assets. This increased interest from institutions could provide more stability to the market for crypto and lead to more expensive prices.
As the market for crypto continues to mature as it matures, governments all over the world are starting to create more favorable rules for crypto. This will help draw more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can benefit from blockchain technology. This could drive more investment and interest in crypto.
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as scalability and security, the potential of cryptocurrency assets will continue to expand. This could lead to more use and increase in prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on through the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or even individual investors are also beginning to invest in the crypto market. With increasing numbers of everyday people learn about crypto and how to invest in it This could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market continues to mature as more and more people are beginning to learn about it and comprehend it. As the awareness and acceptance grows of crypto, it will lead to more people purchasing and holding crypto, which could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows finance services created on top of blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing as more and more businesses are starting accepting crypto payments as a method of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to explore crypto as an asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could result in a rise in demand and increased 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 individuals and businesses begin to use crypto for international transactions, it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of crypto ATM’s increase it will be easier for consumers to purchase and hold crypto, which will drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that represent ownership in an asset like real estate or stock, are a rapidly growing sector of the crypto market. Since more and more security tokens will be created and traded, this could result in a rise in demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
In the event that more businesses begin accepting cryptocurrency as a method of payment, this makes it easier for people to use and hold crypto, which could boost demand and increase prices.
So, will crypto rise in 2023? The only way to know is time. With these things being considered, it’s likely that the crypto market will be able to see a rebound in 2023. If you’re committed to the long haul, being patient and disciplined will be key.