It’s been a difficult ride for the crypto market until 2022. By November, the market had dipped by 70 percent from the previous high in November 2021. Just when the market was going downhill and down, the FTX crash turned things even worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips over the years. Every time, it has bounced back with a big rally.
In 2013, for instance, 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 reached a new record high of $19,600. In 2018, the price was at $3,100. And in the year 2020 it struck through that resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. But history shows us that at the end of every dip the bull runs.
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 that finally overcomes the resistance set by the previous high price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and more companies and industries adopting it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in many ways. This growing demand can lead to more people being involved in the crypto market which could increase the price.
Increased institutional interest in cryptocurrency
In the last few years we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds, many large institutions are beginning to investigate the potential of crypto assets. The increasing interest from institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are beginning to establish more favorable rules for crypto. This will help draw more investors as well as increase the acceptance of crypto in general.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, offers a variety of potential use cases beyond just financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can make use of blockchain technology. This will drive more investment and interest in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas such as security and scalability, the potential of crypto assets will grow. This could lead to greater adoption and higher prices.
Global economic uncertainty is growing
With the ongoing instability in the economy caused by the COVID-19 pandemic, as well as other causes many investors are looking for safe haven investments like gold and crypto. As the global economic situation is uncertain it could result in more demand for crypto as well as more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the market for crypto. In the future, as more everyday people learn about crypto and how to invest 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 crypto market grows increasing numbers of people are beginning to learn about and appreciate the concept. As understanding and acceptance grows of crypto, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services created on top of blockchain technology. As DeFi expands and more projects and platforms come online, this will lead to a rise in adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows increasing numbers of companies are starting using crypto to be a means of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are government-owned investments, are starting to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage of their portfolio to crypto, this could result in a rise in demand and more expensive prices.
Use of crypto for international payments
One of the main advantages of crypto is the ability to facilitate fast and cheap cross-border payments. As more businesses and individuals begin to use crypto for international transactions, this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to grow it will be easier for individuals to purchase and store crypto, which could increase demand and price.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as stocks or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, it could result in a rise in demand and higher rates for the crypto.
More adoption by merchants
In the event that more merchants accept crypto as a means of payment, it will make it easier for people to hold and use crypto, which can boost demand and increase prices.
So, is crypto likely to increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market will see a recovery in 2023. And for those who are committed to the long haul, being patient and disciplined will be key.