It’s been a rough ride for the crypto market through 2022. In November, the market had dipped by 70 percent from the previous high on November 20, 2021. When things were going downhill after the FTX crash turned them even worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of drops in the past. Each time, it’s bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. However, in 2017, it broke that record and hit a record high of $19,600. In 2018, it was trading at $3,100. And in the year 2020 it struck through that resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve had another dip. However, history has shown us that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are usually followed by a long bull run that finally surpasses the resistance created by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and better companies and industries embracing the technology, its use and acceptance is growing. From gaming to finance the use of crypto is increasing in a myriad of ways. The growing popularity of crypto could lead to more people getting involved in the market, which in turn could boost prices.
A rise in the interest of institutions for cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the potential in crypto currencies. The increased interest of institutions can bring stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and boost the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like security and scalability, potential of cryptocurrency assets will continue to grow. This could result in more acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused by the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to an increase in demand for crypto and higher 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, also known as individual investors, are also starting to participate in the market for crypto. As more and more people learn about crypto and how to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto grows as more and more people are beginning to learn about and understand the concept. As awareness and acceptance grows of crypto, 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, which allows the provision of financial services built using blockchain technology. As DeFi expands and more projects and platforms come online, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing, more and more companies are starting to accept crypto as a means of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are now beginning to show interest in crypto as an asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could increase demand and increased prices.
Utilization of crypto to make international payments
One of the biggest benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs for crypto continue to grow, it will become easier for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing sector of the crypto market. As more security tokens are created and traded, it can lead to a higher demand and higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more retailers accept cryptocurrency as a method of payment, this makes it easier for people to utilize and store crypto, which can drive up demand and prices.
Will crypto be on the grow in 2023? The only way to know is time. But with these factors to consider, it’s likely that the crypto market will be able to see a rebound in 2023. And for those who are in it for the long run patience and discipline will be key.