It’s been a tough experience for the crypto market through 2022. In November the market was down by more than 70% from its previous peak in November 2021. When things were looking down, the FTX crash turned them worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips over the years. And every time, it’s bounced back with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. But, in 2017, it broke the record and hit a record high of $19,600. In 2018, and it was trading at $3,100. 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. However, history has shown us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are usually followed by a long bull run that eventually surpasses the resistance created by the previous market’s highest price. This pattern is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more businesses and industries embracing the technology, its use and acceptance is growing. From finance to gaming, crypto is being used in a myriad of ways. This growing demand can lead to more people getting involved in the market, which in turn could increase the price.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are starting to explore the possibilities of crypto assets. The increasing interest from institutions could provide more stability to the crypto market and result in higher prices.
Regulations from the Government
As the market for crypto grows, governments around the world are beginning to establish more favorable regulations for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies many cryptocurrency, blockchain, has a wide range of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are at the very beginning of development. As progress is made in areas like security and scalability, the potential of crypto assets will increase. This could lead to more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused through the COVID-19 pandemic and other factors many investors are starting to look for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to participate in the crypto market. As more and more everyday people are educated about crypto and how to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing, more and more people are starting to learn about it and comprehend it. As understanding and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which could drive up prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services developed upon blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow as more and more businesses are starting using crypto to be a method of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are now beginning to show interest in cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, this could increase demand and more expensive prices.
Use of crypto for international payments
One of the main advantages of cryptocurrency is its capability to perform swift and affordable cross-border transactions. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of crypto ATM’s increase, it will become easier for consumers to purchase and store cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset such as stock or real estate, are a rapidly growing area of the crypto market. With the increasing number of security tokens being issued and traded, this could result in a rise in demand and consequently higher prices for crypto.
More adoption by merchants
In the event that more businesses begin accepting cryptocurrency as a method of payment, this will make it easier for consumers to utilize and store crypto, which could increase demand and price.
So, will crypto increase in 2023? The only way to know is time. However, with these aspects to consider, it’s likely that the crypto market could be able to see a rebound in 2023. If you’re in it for the long run patience and discipline is crucial.