It’s been a rough ride for the crypto market in 2022. By November the market was down by 70 percent from its previous high in November 2021. And just when things were going downhill after the FTX crash turned them even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many drops in the past. And every time, it has bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. In 2017 it broke that record, and hit a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in 2020, the price broke through the resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. However, history has shown us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are usually followed by a prolonged bull run that finally overcomes the resistance set by the previous high price. This pattern is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries taking to the technology, its use and acceptance is increasing. From banking to gaming, crypto is being used in a myriad of ways. The growing popularity of crypto can lead to increasing participation 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 noticed a growing curiosity from institutions investing in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the possibilities of crypto assets. The increased interest of institutions could provide more stability to the market for crypto and result in higher prices.
Regulations from the Government
As the crypto market continues to mature as it matures, governments all over the world are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are starting to explore how they can utilize blockchain technology, which could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to increase. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
Due to the constant instability in the economy caused through the COVID-19 pandemic, as well as other causes many investors are starting to look for safe haven investments like bitcoin and even gold. Because the global economic climate remains uncertain and uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or even individual investors, are also starting to participate in the cryptocurrency market. With increasing numbers of people become aware of cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market grows increasing numbers of people are beginning to become aware about it and comprehend the concept. As awareness and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this could drive up prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be built on top of blockchain technology. As DeFi grows and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow, more and more companies are beginning accepting crypto payments as a form of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are government-owned instruments for investing, are starting to show interest in crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, it could result in a rise in demand and more expensive prices.
Use of crypto for international payments
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more businesses and individuals are beginning to make use of crypto for international transactions, this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
As the number of ATMs for crypto increase it will be more convenient for people to buy and hold crypto, which could drive up demand and prices.
The development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as real estate or stock, are a rapidly growing area of the crypto market. Since more and more security tokens will be issued and traded, it could lead to increased demand and consequently higher rates for the crypto.
More adoption by merchants
As more and more businesses begin accepting crypto as a form of payment, this will make it more convenient for people to hold and use crypto, which can boost demand and increase prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects in mind, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. For those in it for the long-term Being patient and disciplined is essential.