It’s been a tough journey for the cryptocurrency market through 2022. As of November the market was down by 70% from its previous peak in November 2021. When things were looking down after the FTX crash made them look even worse. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips over the years. And every time, it’s rebounded with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. But, in 2017, it broke that record and reached a new high of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, it broke through the resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve seen another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are usually followed by a prolonged bull run that finally overcomes the resistance set by the previous market’s highest price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in many ways. The growing popularity of crypto can lead to more people being involved in the market, which in turn could boost prices.
The rise in interest of institutions in cryptocurrency
In recent times we’ve witnessed a rising curiosity from institutions investing in crypto. From banks to hedge funds numerous large institutions are now exploring the possibilities of crypto assets. The increasing interest from institutions can bring stability to the market for crypto and could lead to greater prices.
Government regulations
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable rules for crypto. This is likely to attract more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can make use of blockchain technology, which could drive more investment and interest in crypto.
Technology advancements
Blockchain technology and cryptography are still in the beginning stages of development. As advancements continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on due to the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven assets such as cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to increased demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors are also beginning to participate in the cryptocurrency market. In the future, as more people become aware of crypto and how to invest 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 is maturing, more and more people are beginning to learn about it and comprehend it. As awareness and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that enables finance services developed on top of blockchain technology. As DeFi grows and more platforms and projects come online, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows, more and more companies are beginning using crypto to be a form of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are starting to look at crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, this could lead to increased demand and more expensive prices.
Use of crypto for international payments
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of crypto ATM’s continue to grow it will be easier for consumers to purchase and keep crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that signify ownership in an asset like real estate or stock, are a rapidly growing area of the crypto market. As more security tokens are issued and traded, it could lead to increased demand and consequently higher prices for crypto.
A greater adoption rate by merchants
In the event that more businesses begin accepting cryptocurrency as a method of payment, it will make it more convenient for people to utilize and store crypto, which can drive up demand and prices.
Will crypto be on the grow in 2023? Only time will tell. But with these factors to consider, it’s likely that the cryptocurrency market will have a rebound by 2023. If you’re committed to the long run patience and discipline will be key.