It’s been a difficult experience for the crypto market through 2022. As of November the market had dropped by more than 70% from its previous peak at the end of November. And just when things were looking down and down, the FTX crash made them look even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many drops in the past. Each time, it’s bounced back with a huge increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year before hitting a low of $150. In 2017, it broke the record and hit a record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, it broke through the resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips tend to be followed by a prolonged bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and better companies and industries embracing it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a variety of ways. And this growing use case could result in increasing participation in the market, which in turn could drive the prices up.
The rise in interest of institutions in cryptocurrency
In recent times, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks, many large institutions are beginning to investigate the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Regulations from the Government
As the market for crypto is maturing as it matures, governments all over the world are starting to create more favorable rules for crypto. This could help attract more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, offers a variety of applications that go that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can benefit from blockchain technology, which could drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas like security and scalability, potential of crypto assets will continue to grow. This could result in more acceptance and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on through the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to invest in the cryptocurrency market. As more and more people learn about cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market continues to mature, more and more people are beginning to learn about it and comprehend it. As understanding and acceptance grows of crypto it could result in more people buying or holding cryptocurrency, and this can increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows the provision of financial services developed using blockchain technology. As DeFi continues to grow and more projects and platforms become available, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing, more and more companies are starting using crypto to be a form of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are beginning to look at crypto as a potential asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could increase demand and higher prices.
Utilization of crypto to make payment across borders
One of the major benefits of crypto is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s increase it will be easier for consumers to purchase and store cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, like stocks or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, this can lead to a higher demand and consequently higher rates for the crypto.
More adoption by merchants
As more and more businesses accept crypto as a means of payment, it will make it more convenient for consumers to utilize and store crypto, which can boost demand and increase prices.
So, is crypto likely to increase in 2023? The only way to know is time. With these things being considered, it’s likely that the cryptocurrency market will have a rebound by 2023. For those in it for the long haul patience and discipline is crucial.