It’s been a rough experience for the crypto market until 2022. In November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were going downhill and down, the FTX crash turned them more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. Every time, it’s rebounded with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year before hitting a low of $150. In 2017, it broke that record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. And in 2020, it broke that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve seen another dip. 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 prolonged bull run, which eventually surpasses the resistance created by the market’s previous highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and better companies and industries adopting the technology, its use and acceptance is increasing. From finance to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could result in increasing participation in the crypto market which could increase the price.
Increased institutional interest in crypto
In recent times, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are starting to explore the possibilities for crypto-based assets. The increased interest of institutions could provide more stability to the market for crypto and could lead to higher prices.
As the market for crypto continues to mature, governments around the world are beginning to develop more favorable rules for crypto. This will help draw more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of possible applications that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can make use of blockchain technology. This will increase investment and enthusiasm in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like scalability and security, the potential of cryptocurrency assets will continue to expand. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or even individual investors, are also starting to participate in the crypto market. In the future, as more people become aware of crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the market for crypto is maturing increasing numbers of people are starting to learn about and understand the concept. As understanding and acceptance grows of crypto, it will lead to more people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services created using blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows increasing numbers of companies are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are beginning to look at crypto as a potential asset class. As more of these funds allocate a portion of their assets to digital currencies, it could increase demand and more expensive prices.
Use of crypto for international payments
One of the major benefits of crypto is the ability to facilitate fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto increase, it will become easier for people to buy and hold 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, like real estate or stock are rapidly expanding area of the crypto market. With the increasing number of security tokens being created and traded, this can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more businesses start accepting cryptocurrency as a method of payment, this will make it easier for consumers to hold and use cryptocurrency, which will increase demand and price.
Will crypto be on the rise in 2023? It’s only time to find out. With these things in mind, it’s possible that the crypto market could see a recovery in 2023. If you’re looking to invest for the long run patience and discipline is crucial.