It’s been a rough journey for the cryptocurrency market in 2022. As of November the market had dropped by more than 70 percent from the previous high on November 20, 2021. And just when things were looking down, the FTX crash turned them worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many drops in the past. And every time, it has bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. However, in 2017, it broke the record, and hit a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in the year 2020 it struck through that resistance and hit a new highest of $68,000 in November 2021. Just like that, we’ve had another dip. However, the past has proven that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a lengthy bull run that eventually surpasses the resistance created by the previous market’s highest 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 the last few years. With more and better companies and industries adopting the technology, its use and acceptance is rising. From finance to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto can lead to more people being involved in the crypto market, which in turn could boost prices.
Increased institutional interest in crypto
In recent years we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds, many large institutions are starting to explore the possibilities for crypto-based assets. The increased interest of institutions could bring more stability to the crypto market and could lead to more expensive prices.
Regulations from the Government
As the crypto market grows as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This will help draw more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrencies, blockchain, offers a variety of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology, which could drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could result in more adoption and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty caused due to the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven investments like cryptocurrency and gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, or even individual investors are also beginning to invest in the crypto market. With increasing numbers of people are educated about crypto and the best ways to invest in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market is maturing, more and more people are beginning to become aware about and appreciate it. As the awareness and acceptance grows of crypto, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be built on top of blockchain technology. As DeFi grows and more projects and platforms are launched, it could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning accepting crypto payments as a method of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are owned by the state as investments, are beginning to look at cryptocurrency as a possible asset class. As more funds dedicate a part of their portfolio to crypto, it could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is its ability to facilitate swift and affordable cross-border transactions. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, this could lead to increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto increase, it will become easier for individuals to purchase and hold cryptocurrency, which can drive up demand and prices.
Security tokens are developed for development
Security tokens, or digital assets that represent ownership of an asset, like real estate or stock, are a rapidly growing sector of the crypto market. With the increasing number of security tokens being created and traded, this could result in a rise in demand, and thus higher prices for crypto.
More adoption by merchants
With the increasing number of retailers start accepting cryptocurrency as a method of payment, this will make it easier for customers to use and hold crypto, which can drive up demand and prices.
So, will crypto increase in 2023? The only way to know is time. However, with these aspects to consider, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long-term, being patient and disciplined will be key.