It’s been a tough ride for the crypto market in 2022. In November the market was down by more than 70 percent from the previous high on November 20, 2021. When things were looking down after the FTX crash turned them worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of drops in the past. Every time, it has bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year, reaching a low of $150. But, in 2017, it broke the record and reached a new highest of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, the price broke through the resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are usually followed by a lengthy bull run that eventually breaks through the resistance created by the previous market’s highest price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and more companies and industries embracing it, its usage and acceptance is growing. From gaming to finance the use of crypto is increasing in a myriad of ways. This growing demand can lead to more people being involved in the market which could increase the price.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the possibilities for crypto-based assets. This increased interest from institutions could bring more stability to the crypto market and result in greater prices.
Regulations of the government
As the market for crypto is maturing and mature, governments across the globe are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, has a wide range of potential use cases beyond just financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can benefit from blockchain technology. This will stimulate more investment and excitement in crypto.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas like scalability and security, the potential of cryptocurrency assets will continue to increase. This could lead to more use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on by the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets like bitcoin and even gold. Because the global economic climate remains uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, also known as individual investors, are also starting to participate in the market for crypto. As more and more people become aware of cryptocurrency and investing in it This could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market is maturing, more and more people are beginning to become aware about and appreciate it. As awareness and acceptance of cryptocurrency grows, it will lead to more people buying as well as holding the crypto that can raise 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 on top of blockchain technology. As DeFi expands and more projects and platforms are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are beginning to accept crypto as a means 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
The sovereign wealth fund, also known as government-owned investments, are beginning to look at crypto as a potential asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could increase demand and more expensive prices.
Use of crypto for international payments
One of the main advantages of cryptocurrency is its capability to perform swift and affordable cross-border transactions. As more individuals and businesses start to utilize crypto for international transactions, this could lead to increased demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto continue to increase it will be easier for individuals to purchase and keep cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as real estate or stock are rapidly expanding sector of the crypto market. Since more and more security tokens will be created and traded, it could result in a rise in demand, and thus higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more merchants start accepting crypto as a form of payment, it will make it more convenient for people to utilize and store crypto, which can boost demand and increase prices.
So, is crypto likely to grow in 2023? The only way to know is time. With these things to consider, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those committed to the long-term patience and discipline will be key.