It’s been a tough journey for the cryptocurrency market until 2022. As of November, the market had dipped by 70 percent from the previous high at the end of November. And just when things were going downhill after the FTX crash turned things more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of dips in the past. Each time, it’s rebounded with a huge increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. But, in 2017, it broke the record and reached a new record high of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, it broke through that resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve seen another dip. However, the past has proven that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are usually followed by a prolonged bull run, which eventually breaks through the resistance created by the market’s previous highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more companies and industries adopting it, its usage and acceptance is rising. From finance to gaming, crypto is being used in a variety of ways. And this growing use case can lead to increasing participation in the crypto market and, in turn, boost prices.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing curiosity from institutions investing in crypto. From hedge funds to banks, many large institutions are now exploring the possibilities of crypto assets. The increased interest of institutions can bring stability to the market for crypto and lead to greater prices.
Regulations from the Government
As the crypto market continues to mature and mature, governments across the globe are beginning to establish more favorable rules for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can utilize blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is 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.
Uncertainty in the global economy
Due to the constant instability in the economy caused by the COVID-19 pandemic, as well as other causes, more and more investors are beginning 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 more expensive 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, or individual investors are also beginning to invest in the crypto market. With increasing numbers of people become aware of cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto grows increasing numbers of people are beginning to learn about it and comprehend it. As awareness and acceptance grows of crypto, this could lead to more people buying and holding crypto, which can drive up 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 developed using blockchain technology. As DeFi grows and more projects and platforms are launched, it could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows as more and more businesses are beginning using crypto to be a form of payment. This could result in increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
These funds are state-owned investment vehicles, are now beginning to look at crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, this could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more individuals and businesses are beginning to make use of crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of crypto ATM’s continue to increase it will be more convenient for individuals to purchase and store cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, also known as 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 lead to increased demand, and thus higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
As more and more merchants accept crypto as a form of payment, it will make it more convenient for people to use and hold cryptocurrency, which will increase demand and price.
So, is crypto likely to grow in 2023? The only way to know is time. However, with these aspects being considered, it’s likely that the crypto market will see a recovery in 2023. If you’re looking to invest for the long run patience and discipline is essential.