It’s been a difficult ride for the crypto market through 2022. In November the market was down by 70 percent from the previous high in November 2021. Just when the market was looking down and down, the FTX crash turned things even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips over the years. Each time, it’s bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. But, in 2017, it broke the record and hit a record highest of $19,600. Fast forward to 2018, the price was at $3,100. And in 2020, the price broke that resistance and hit a new high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips tend to be followed by a lengthy bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and better companies and industries embracing it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case could lead to more people being involved in the market, which in turn could boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks, many large institutions are beginning to investigate the potential for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and could lead to higher prices.
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are beginning to look at ways they can make use of blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be 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
Due to the constant economic uncertainty brought on through the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven assets like bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to an increase in demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to invest in the market for crypto. In the future, as more people are educated about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing as more and more people are starting to learn about it and comprehend it. As awareness and acceptance of cryptocurrency grows it could result in more people buying and holding crypto, which can drive up prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services built on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market grows, more and more companies are beginning to accept crypto as a form of payment. This could lead to an increase in the usage of crypto in daily transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could result in a rise in demand and increased prices.
Utilization of crypto to make cross-border payments
One of the major benefits of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions it could result in increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
As the number of ATMs that accept crypto continue to increase, it will become easier for individuals to purchase and store crypto, which will increase demand and price.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, such as stocks or real estate is a fast-growing segment of the cryptocurrency market. As more security tokens are created and traded, it can lead to a higher demand, and thus higher prices for crypto.
A greater adoption rate by merchants
As more and more merchants accept cryptocurrency as a method of payment, this will make it more convenient for people to use and hold crypto, which can drive up demand and prices.
So, is crypto likely to rise in 2023? The only way to know is time. But with these factors in mind, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. And for those who are looking to invest for the long run Being patient and disciplined is crucial.