It’s been a difficult ride for the crypto market through 2022. As of November the market was down by 70% from its previous peak at the end of November. Just when the market was going downhill, the FTX crash made them look more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips over the years. And every time, it’s bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. In 2017, it broke that record, and hit a new highest of $19,600. In 2018, it was trading at $3,100. In 2020, the price broke through that resistance, and reached a record highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, the past has proven that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a prolonged bull run, which eventually overcomes the resistance set by the previous high price. This pattern is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From gaming to finance cryptocurrency is being utilized in a variety of ways. The growing popularity of crypto could result in more people getting involved in the market, which in turn could increase the price.
A rise in the interest of institutions for crypto
In the last few years, we’ve seen a growing demand from investors of institutional scale in crypto. From banks to hedge funds, many large institutions are starting to explore the possibilities of crypto assets. The increased interest of institutions could bring more stability to the market for crypto and could lead to higher prices.
Government regulations
As the market for crypto is maturing, governments around the world are starting to create more favorable regulations for crypto. This could help attract more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of applications that go beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are starting to explore how they can make use of blockchain technology. This could drive more investment and interest in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to increase. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors are also beginning to get involved in the cryptocurrency market. In the future, as more everyday people are educated about crypto and how to invest in it, this could lead to more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto continues to mature, more and more people are beginning to become aware about it and comprehend it. As understanding and acceptance of crypto grows it could result in more people purchasing and holding crypto, which could increase prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built upon blockchain technology. As DeFi expands 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 market for crypto continues to grow as more and more businesses are beginning accepting crypto payments as a means of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned investment vehicles, are starting to look at cryptocurrency as a possible asset class. As more funds devote a percentage 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 biggest benefits of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow it will be easier for individuals to purchase and keep cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, or digital assets that signify ownership of an asset, such as stocks or real estate, are a rapidly growing sector of the crypto market. As more security tokens are issued and traded, this could result in a rise in demand, and thus higher costs for cryptocurrency.
A greater adoption rate by merchants
With the increasing number of retailers begin accepting crypto as a form of payment, it makes it easier for consumers to use and hold crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? Only time will tell. But with these factors in mind, it’s possible that the crypto market will see a recovery in 2023. For those in it for the long haul Being patient and disciplined is essential.