It’s been a tough experience for the crypto market in 2022. By November the market had dropped by more than 70% from its previous peak at the end of November. And just when things were looking down after the FTX crash turned things even worse. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips over the years. And every time, it’s rebounded by a massive rise.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. But, in 2017, it broke that record, and hit a new highest of $19,600. Then, in 2018, the price was at $3,100. And 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 witnessed another drop. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are typically followed by a prolonged bull run that eventually breaks through the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also 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 businesses and industries taking to it, its usage and acceptance is increasing. From gaming to finance, crypto is being used in many ways. The growing popularity of crypto can lead to increasing participation in the crypto market and, in turn, drive the prices up.
The rise in interest of institutions in cryptocurrency
In recent times we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the market for crypto and lead to more expensive prices.
Regulations from the Government
As the market for crypto grows and mature, governments across the globe are starting to create more favorable regulations for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, offers a variety of possible applications that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology. This will stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas such as scalability and security, the potential of cryptocurrency assets will continue to expand. This could lead to more acceptance and higher prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on by the COVID-19 pandemic, as well as other causes increasing numbers of investors are looking for safe haven investments like gold and crypto. As the global economic situation is uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the market for crypto. With increasing numbers of everyday people become aware of crypto and how to invest in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market grows as more and more people are beginning to learn about and appreciate the concept. As understanding and acceptance of cryptocurrency grows, this could lead to more people buying or holding cryptocurrency, and this can drive up prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services built upon blockchain technology. As DeFi grows and more projects and platforms become available, this could result in increased use and higher prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow, more and more companies are beginning to accept crypto as a method of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investment vehicles, are starting to show interest in crypto as a potential asset class. As more funds dedicate a part of their portfolio to crypto, it could lead to increased demand and more expensive prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more individuals and businesses begin to use crypto for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to grow it will be more convenient for consumers to purchase and keep cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, such as real estate or stock, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, this could lead to increased demand and higher rates for the crypto.
Merchants are more likely to adopt the concept.
In the event that more businesses start accepting crypto as a means of payment, this will make it easier for customers to hold and use cryptocurrency, which will boost demand and increase prices.
So, will crypto increase in 2023? It’s only time to find out. However, with these aspects being considered, it’s possible that the crypto market could have a rebound by 2023. And for those who are in it for the long haul patience and discipline is crucial.