It’s been a difficult ride for the crypto market through 2022. By November, the market had dipped by more than 70 percent from its previous high at the end of November. Just when the market was looking down and down, the FTX crash turned things even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of drops in the past. And every time, it has bounced back with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. In 2017 it broke that record and reached a new record high of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, the price broke that resistance and reached a new highest of $68,000 in November 2021. Just like that, we’ve had another dip. However, the past has proven that after each dip the bull runs.
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 finally breaks through the resistance created by the market’s previous highest price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in recent years. With more and more businesses and industries adopting it, its usage and acceptance is rising. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case could lead to more people getting involved in the crypto market and, in turn, drive the prices up.
Increased institutional interest in crypto
In the last few years, we’ve seen a growing curiosity from institutions investing in crypto. From hedge funds to banks, many large institutions are now exploring the possibilities for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and result in higher prices.
Regulations of the government
As the crypto market grows, governments around the world are beginning to establish more favorable regulations for crypto. This will help draw more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrencies, blockchain, has a wide range of applications that go beyond the realm of financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Technology advancements
Blockchain technology and cryptography are still in the early stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to grow. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on through the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the market for crypto. With increasing numbers of everyday people become aware of crypto and how to invest in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market continues to mature increasing numbers of people are beginning to become aware about and understand the concept. As awareness and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can drive up prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows financial services to be built using blockchain technology. As DeFi continues to grow and more platforms and projects become available, this will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing increasing numbers of companies are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are beginning to look at crypto as an asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of crypto is its capability to perform swift and affordable cross-border transactions. As more individuals and businesses begin to use cryptocurrency for international transactions, this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and hold crypto, which could increase demand and price.
The development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, such as stocks or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being created and traded, it could result in a rise in demand and higher costs for cryptocurrency.
More adoption by merchants
As more and more retailers begin accepting crypto as a means of payment, this will make it easier for customers to hold and use crypto, which can boost demand and increase prices.
Will crypto be on the rise in 2023? Only time will tell. With these things in mind, it’s possible that the crypto market will see a recovery in 2023. And for those who are looking to invest for the long haul, being patient and disciplined is crucial.