It’s been a rough ride for the crypto market in 2022. As of November, the market had dipped by 70 percent from its previous high at the end of November. When things were going downhill after the FTX crash made them look worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of drops in the past. Each time, it’s bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. However, 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, it broke through the resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve seen another dip. But history shows us that at the end of every dip the bull runs.
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 long bull run, which eventually surpasses the resistance created by the previous market’s highest price. This pattern can be seen not only in 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 adopting it, its usage and acceptance is growing. From gaming to finance the use of crypto is increasing in a myriad of ways. And this growing use case can lead to increasing participation in the market, which in turn could boost prices.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds and even large corporations are starting to explore the possibilities in crypto currencies. The increasing interest from institutions can bring stability to the market for crypto and could lead to greater prices.
Regulations of the government
As the market for crypto grows and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This will help draw more investors and boost the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can benefit from blockchain technology. This could increase investment and enthusiasm in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas such as 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 looking for safe haven assets such as gold and crypto. Because the global economic climate remains uncertain and uncertain, this could lead to increased demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, also known as individual investors, are also starting to invest in the market for crypto. As more and more everyday people become aware of crypto and how to invest in it This could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are beginning to learn about it and comprehend the concept. As awareness and acceptance grows of crypto it could result in more people buying as well as holding the crypto that can raise prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market, which allows finance services developed on top of blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the market for crypto grows, more and more companies are starting using crypto to be a method of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are starting to explore cryptocurrency as a possible asset class. As more funds devote a percentage of their portfolio to crypto, this could result in a rise in demand and more expensive prices.
Use of crypto for cross-border payments
One of the main advantages of cryptocurrency is its ability to facilitate fast and cheap cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions, this can lead to a rise in demand and higher prices.
An increasing number of crypto ATM’s
With the amount of crypto ATM’s continue to increase, it will become easier for consumers to purchase and store crypto, which could increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership of an asset, such as stocks or real estate is a fast-growing area of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more merchants accept cryptocurrency as a method of payment, this will make it easier for people to hold and use crypto, which can increase demand and price.
Will crypto be on the grow in 2023? Only time will tell. But with these factors being considered, it’s likely that the crypto market could see a recovery in 2023. And for those who are in it for the long run, being patient and disciplined will be key.