It’s been a difficult experience for the crypto market in 2022. As of November, the market had dipped by more than 70 percent from the previous high at the end of November. When things were looking down, the FTX crash turned them even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. Every time, it’s bounced back with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. However, in 2017, it broke that record and reached a new record high of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, the price broke through the resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve witnessed another drop. However, the past has proven that after each dip the bull runs.
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 that finally surpasses the resistance created by the previous market’s highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrency.
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 adopting it, its usage and acceptance is rising. From banking to gaming, crypto is being used in a myriad of ways. And this growing use case can lead to more people getting involved in the market and, in turn, drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are starting to explore the potential for crypto-based assets. The increased interest of institutions can bring stability to the market for crypto and result in more expensive prices.
Government regulations
As the market for crypto grows, governments around the world are beginning to develop more favorable rules for crypto. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are starting to explore how they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to increase. This could lead to more adoption and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused due to the COVID-19 pandemic and other factors, more and more investors are looking for safe haven assets like bitcoin and even gold. Since the economic outlook for the world is 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 ones showing interest in crypto. Retail investors, or even individual investors are also beginning to get involved 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.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows increasing numbers of people are beginning to learn about and understand it. As awareness and acceptance of cryptocurrency grows, it will lead to more people buying and holding crypto, which could increase prices.
move to earn crypto projects
Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows the provision of financial 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.
Advances in crypto-based payment methods
As the crypto market is growing, more and more companies are beginning accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in everyday transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are owned by the state as instruments for investing, are now beginning to explore crypto as an asset class. As more of these funds allocate a portion of their portfolio to crypto, this could increase demand and higher prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto increase it will be more convenient for individuals to purchase and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, such as real estate or stock, are a rapidly growing area of the crypto market. With the increasing number of security tokens being created and traded, it could result in a rise in demand and consequently higher prices for crypto.
More adoption by merchants
In the event that more merchants begin accepting cryptocurrency as a method of payment, this will make it easier for consumers to hold and use crypto, which could drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. With these things being considered, it’s likely that the crypto market could see a recovery in 2023. And for those who are committed to the long run patience and discipline will be key.