It’s been a rough journey for the cryptocurrency market through 2022. As of November the market had dropped by more than 70% from its previous peak on November 20, 2021. And just when things were going downhill after the FTX crash made them look worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips in the past. And every time, it’s bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before hitting a low of $150. However, in 2017, it broke that record, and hit a new record high of $19,600. In 2018, it was trading at $3,100. And in 2020, the price broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve had another dip. However, history has shown us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips are usually followed by a long bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and more businesses and industries embracing it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in many ways. And this growing use case could result in increasing participation in the market and, in turn, drive the prices up.
The rise in interest of institutions in crypto
In recent years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are beginning to investigate the possibilities in crypto currencies. The increasing interest from institutions could bring more stability to the crypto market and lead to higher prices.
Regulations from the Government
As the crypto market is maturing and mature, governments across the globe 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.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can benefit from blockchain technology, which could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain and cryptocurrency technology is 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 more acceptance and higher prices.
Uncertainty in the global economy
In the current instability in the economy caused through the COVID-19 pandemic and other factors many investors are starting to look for safe haven investments like bitcoin and even gold. As the global economic situation is uncertain it could result in more demand for crypto as well as increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or individual investors, are also starting to get involved in the cryptocurrency market. In the future, as more everyday people are educated about crypto and how to invest in it This could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto is maturing increasing numbers of people are beginning to learn about and appreciate the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying and holding crypto, which could increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that enables finance services developed upon blockchain technology. As DeFi continues to grow 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 crypto market is growing as more and more businesses are starting accepting crypto payments as a method of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned investment vehicles, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds allocate a portion of their assets to digital currencies, this could result in a rise in demand and increased prices.
Utilization of crypto to make cross-border payments
One of the main advantages of crypto is the capability to perform fast and cheap cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
As the number of ATMs that accept crypto continue to increase, it will become easier for people to buy and store crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stock or real estate is a fast-growing sector of the crypto market. As more security tokens are issued and traded, it can lead to a higher demand, and thus higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of merchants accept crypto as a form of payment, it will make it easier for consumers to use and hold cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to rise in 2023? Only time will tell. However, with these aspects to consider, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are in it for the long haul patience and discipline is crucial.