It’s been a difficult journey for the cryptocurrency market through 2022. In November, the market had dipped by 70 percent from its previous high on November 20, 2021. When things were looking down, the FTX crash made them look even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips in the past. Each time, it’s bounced back with a huge rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. However, in 2017 it broke that record, and hit a new 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 highest of $68,000 in November 2021. Just like that, we’ve witnessed another drop. 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
As we’ve seen before, fall-offs tend to be followed by a long bull run, which eventually overcomes the resistance set by the previous high price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and better companies and industries embracing it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could lead to more people being involved in the crypto market which could increase the price.
The rise in interest of institutions in crypto
In the last few years we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds and even large corporations are starting to explore the possibilities of crypto assets. The increased interest of institutions could provide more stability to the market for crypto and could lead to greater prices.
Government regulations
As the market for crypto continues to mature, governments around the world are starting to create more favorable regulations for cryptocurrency. This could help attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, has a wide range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can benefit from blockchain technology, which could stimulate more investment and excitement in cryptocurrency.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advances continue to be made in areas such as security and scalability, potential of crypto assets will expand. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on through the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven assets like bitcoin and even gold. As the global economic situation is uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. With increasing numbers of people learn about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature, more and more people are beginning to become aware about and appreciate the concept. As the awareness and acceptance of crypto grows, this could lead to more people buying or holding cryptocurrency, and this can drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows the provision of financial services developed using blockchain technology. As DeFi continues to grow and more projects and platforms come online, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing as more and more businesses are starting to accept crypto as a form of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
These funds are state-owned investment vehicles, are starting to look at crypto as an asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could result in a rise in demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of crypto is its ability to make swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions, it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of crypto ATM’s continue to grow, it will become easier for consumers to purchase and keep cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as stock or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, it can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more merchants start accepting crypto as a form of payment, this will make it easier for people to use and hold crypto, which could increase demand and price.
So, is crypto likely to rise in 2023? Only time will tell. With these things being considered, it’s likely that the cryptocurrency market will have a rebound by 2023. For those in it for the long-term Being patient and disciplined is essential.