It’s been a rough journey for the cryptocurrency market in 2022. By November the market was down by 70% from its previous peak at the end of November. Just when the market was going downhill, the FTX crash made them look even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many dips in the past. Every time, it’s bounced back with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. However, in 2017, it broke the record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. In 2020, it broke through the resistance, and reached a record highest of $68,000 in November 2021. Then, just like that we’ve seen another dip. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a prolonged bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries adopting it, its usage and acceptance is rising. From banking to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case can lead to increasing participation in the crypto market which could increase the price.
The rise in interest of institutions in crypto
In recent years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the potential for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and could lead to more expensive prices.
Government regulations
As the crypto market is maturing as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This is likely to attract more investors as well as increase the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, has a wide range of possible applications beyond just financial transactions. From supply chain management to voting systems, more and more industries are starting to explore how they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will increase. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty caused by the COVID-19 pandemic as well as other factors many investors are looking for safe haven assets such as cryptocurrency and gold. Because the global economic climate is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the crypto market. With increasing numbers of everyday people learn about crypto and how to invest in it this could result in more demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto grows as more and more people are beginning to learn about and understand it. As the awareness and acceptance of crypto grows it could result in more people purchasing and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services developed upon blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow as more and more businesses are starting to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned investments, are now beginning to explore crypto as a potential asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits 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, 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 increase it will be easier for individuals to purchase and store crypto, which will drive up demand and prices.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like real estate or stock, are a rapidly growing segment of the cryptocurrency market. As more security tokens are issued and traded, it could lead to increased demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants start accepting crypto as a form of payment, this will make it easier for people to utilize and store cryptocurrency, which will increase demand and price.
Will crypto be on the increase in 2023? It’s only time to find out. With these things in mind, it’s likely that the crypto market could have a rebound by 2023. For those in it for the long-term Being patient and disciplined is crucial.