It’s been a difficult journey for the cryptocurrency market until 2022. As of November the market was down by more than 70% from its previous peak at the end of November. And just when things were going downhill and down, the FTX crash turned things even worse. What is the likelihood that 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. Every time, it’s bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. In 2017, it broke the record, and hit a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, the price broke that resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. However, history has shown us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are typically followed by a prolonged bull run, which eventually breaks through the resistance created by the previous market’s highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent years. With more and better companies and industries taking to it, its usage and acceptance is increasing. From banking to gaming, crypto is being used in a myriad of 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 recent years, we’ve seen a growing curiosity from institutions investing in crypto. From hedge funds to banks and even large corporations are beginning to investigate the potential in crypto currencies. The increased interest of institutions can bring stability to the market for crypto and could lead to greater prices.
Regulations from the Government
As the crypto market grows and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This could help attract more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of potential use cases that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas like scalability and security, the potential of crypto assets will continue to grow. This could lead to more use and increase in prices.
Uncertainty in the global economy
In the current instability in the economy caused by the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. With increasing numbers of everyday people learn about cryptocurrency and investing in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing increasing numbers of people are starting to learn about it and comprehend the concept. As the awareness and acceptance of cryptocurrency grows it could result in more people purchasing or holding cryptocurrency, and this can raise prices.
Financial decentralization (DeFi) is an emerging area of the crypto market that allows finance services built using blockchain technology. As DeFi expands and more projects and platforms come online, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows as more and more businesses are starting using crypto to be a means of payment. This could result in increased use of crypto in everyday 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 explore crypto as an asset class. As more of these funds allocate a portion of their portfolio to crypto, this could result in a rise in demand and higher prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is its ability to facilitate fast and cheap cross-border payments. As more businesses and individuals start to utilize crypto for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow it will be easier for people to buy and hold crypto, which will drive up demand and prices.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership of an asset, such as real estate or stock is a fast-growing area of the crypto market. As more security tokens are created and traded, this could lead to increased demand and higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of retailers start accepting crypto as a form of payment, it makes it easier for people to hold and use crypto, which could boost demand and increase prices.
So, is crypto likely to increase in 2023? Only time will tell. However, with these aspects being considered, it’s possible that the cryptocurrency market will have a rebound by 2023. If you’re in it for the long run patience and discipline is crucial.