It’s been a rough journey for the cryptocurrency market through 2022. By November, the market had dipped by more than 70% from its previous peak at the end of November. Just when the market was looking down after the FTX crash made them look worse. The question is, can the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many drops in the past. Each time, it’s rebounded with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. In 2017, it broke the record and reached a new high of $19,600. In 2018, it was trading at $3,100. And in the year 2020 it struck that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve seen another dip. However, the past has proven that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are typically followed by a lengthy bull run that eventually surpasses the resistance created by the market’s previous highest price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and better companies and industries adopting the technology, its use and acceptance is rising. From gaming to finance the use of crypto is increasing in many ways. The growing popularity of crypto could result in increasing participation in the crypto market, which in turn could increase the price.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising interest from institutional investors in cryptocurrency. From banks to hedge funds and even large corporations are now exploring the possibilities in crypto currencies. The increased interest of institutions could provide more stability to the market for crypto and lead to higher prices.
Government regulations
As the market for crypto grows and mature, governments across the globe are beginning to develop more favorable rules for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of applications that go beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas such as security and scalability, the potential of cryptocurrency assets will continue to grow. This could lead to greater adoption and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven investments like gold and crypto. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. In the future, as more people are educated about crypto and how to invest 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 grows, more and more people are beginning to become aware about and appreciate it. As awareness and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows financial services to be built on top of blockchain technology. As DeFi grows and more platforms and projects become available, this could lead to increased adoption and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow, more and more companies are starting accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are starting to explore cryptocurrency as a possible asset class. As more of these funds allocate a portion of their assets to digital currencies, it could result in a rise in demand and increased prices.
Use of crypto for payment across borders
One of the major benefits of crypto is its capability to perform quick and inexpensive cross-border payments. 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.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto increase it will be easier for people to buy and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stocks or real estate, are a rapidly growing sector of the crypto market. As more security tokens are created and traded, this could result in a rise in demand, and thus higher prices for crypto.
More adoption by merchants
With the increasing number of businesses start accepting crypto as a form of payment, it makes it easier for consumers to utilize and store crypto, which can drive up demand and prices.
Will crypto be on the increase in 2023? Only time will tell. But with these factors in mind, it’s possible that the crypto market could see a recovery in 2023. And for those who are in it for the long haul patience and discipline is crucial.