It’s been a difficult ride for the crypto market in 2022. By November the market was down by 70% from its previous peak at the end of November. When things were getting worse and down, the FTX crash turned things even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips over the years. And every time, it’s bounced back with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before hitting a low of $150. But, in 2017 it broke that record, and hit a new high of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, it broke through that 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 following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are typically followed by a long bull run, which eventually breaks through the resistance created by the previous high price. This is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more companies and industries taking to the technology, its use and acceptance is rising. From gaming to finance, crypto is being used in a variety of ways. And this growing use case could lead to increasing participation in the crypto market and, in turn, boost prices.
A rise in the interest of institutions for crypto
In the last few years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks numerous large institutions are now exploring the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and result in greater prices.
Government regulations
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 and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrencies, blockchain, offers a variety of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many industries are beginning to look at ways they can make use of blockchain technology. This could drive more investment and interest in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to expand. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty caused through the COVID-19 pandemic, as well as other causes, more and more investors are beginning to look for safe haven investments like bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. With increasing numbers of people become aware of crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature increasing numbers of people are beginning to become aware about it and comprehend the concept. As the awareness and acceptance of crypto grows it could result in more people purchasing and holding crypto, which could raise prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that enables finance services created on top of blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto grows increasing numbers of companies are beginning 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.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned investments, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could increase demand and more expensive prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more and more people and businesses begin to use crypto for international transactions, this could lead to increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto continue to grow it will be easier for people to buy and hold crypto, which will boost demand and increase prices.
Security tokens are developed for development
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 rates for the crypto.
More adoption by merchants
With the increasing number of retailers begin accepting crypto as a means of payment, it makes it easier for people to use and hold cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to rise in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market could be able to see a rebound in 2023. For those looking to invest for the long run Being patient and disciplined is essential.