It’s been a rough ride for the crypto market in 2022. By November, the market had dipped by 70% from its previous peak at the end of November. When things were looking down and down, the FTX crash turned things 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 dips over the years. Each time, it’s bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for a full year before hitting a low of $150. However, in 2017 it broke that record and hit a record high of $19,600. Fast forward to 2018, it was trading at $3,100. In the year 2020 it struck through that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are typically followed by a long bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern can be seen in not just 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 more businesses and industries adopting it, its usage and acceptance is increasing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the market, which in turn could drive the prices up.
A rise in the interest of institutions for crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the possibilities for crypto-based assets. This increased interest from institutions could bring more stability to the market for crypto and lead to greater prices.
As the market for crypto continues to mature as it matures, governments all over the world are beginning to establish more favorable regulations for cryptocurrency. This could help attract more investors as well as increase the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can benefit from blockchain technology. This could stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the early stages of development. As advancements continue to be made in areas such as security and scalability, potential of cryptocurrency assets will continue to expand. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused due to the COVID-19 pandemic and other factors many investors are looking for safe haven assets like bitcoin and even gold. Because the global economic climate is uncertain it could result in more demand for crypto as well as more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to participate in the cryptocurrency market. As more and more everyday people learn about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto is maturing increasing numbers of people are beginning to learn about and understand it. As understanding and acceptance of crypto grows, it will lead to more people purchasing and holding crypto, which could raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be built using blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow increasing numbers of companies are beginning to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are beginning to show interest in crypto as a potential asset class. As more funds dedicate a part of their assets to digital currencies, it could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is the ability to make fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto continue to grow it will be easier for consumers to purchase and store crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, like real estate or stock is a fast-growing segment of the cryptocurrency market. As more security tokens are issued and traded, it could result in a rise in demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
In the event that more businesses start accepting cryptocurrency as a method of payment, this will make it more convenient for customers to use and hold crypto, which could boost demand and increase prices.
Will crypto be on the grow in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the crypto market could see a recovery in 2023. And for those who are looking to invest for the long run, being patient and disciplined is crucial.