It’s been a difficult journey for the cryptocurrency market until 2022. In November, the market had dipped by more than 70 percent from the previous high on November 20, 2021. When things were looking down and down, the FTX crash turned things more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many dips over the years. And every time, it’s bounced back with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. In 2017, it broke the record, and hit a new record high of $19,600. Fast forward to 2018, the price was at $3,100. And in 2020, it broke through that resistance, and reached a record high of $68,000 in November 2021. Just like that, we’ve had another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a long bull run that eventually breaks through the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From banking to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could result in more people getting involved in the market, which in turn could boost prices.
Increased institutional interest in cryptocurrency
In recent times we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and could lead to greater prices.
Regulations of the government
As the market for crypto continues to mature and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrency, blockchain, has a wide range of applications that go beyond just financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can utilize blockchain technology, which could drive more investment and interest in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As progress is made in areas such as scalability and security, the potential of cryptocurrency assets will continue to expand. This could result in more use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused through the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven assets such as cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. With increasing numbers of people learn about cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto is maturing as more and more people are beginning to become aware about and appreciate it. As the awareness and acceptance of cryptocurrency grows it could result in more people buying and holding crypto, which could raise prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be built upon blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing increasing numbers of companies are beginning to accept crypto as a form of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are government-owned instruments for investing, are now beginning to show interest in crypto as a potential asset class. As more funds allocate a portion of their portfolio to crypto, it could result in a rise in demand and more expensive prices.
Utilization of crypto to make cross-border payments
One of the major benefits of crypto is its ability to make swift and affordable cross-border transactions. As more and more people and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto increase it will be easier for consumers to purchase and hold crypto, which could increase demand and price.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, such as stocks or real estate, are a rapidly growing area of the crypto market. Since more and more security tokens will be issued and traded, it could result in a rise in demand and consequently higher prices for crypto.
More adoption by merchants
As more and more businesses start accepting cryptocurrency as a method of payment, this will make it easier for people to use and hold crypto, which can boost demand and increase prices.
So, will crypto rise in 2023? Only time will tell. With these things in mind, it’s likely that the crypto market could be able to see a rebound in 2023. If you’re in it for the long-term, being patient and disciplined will be key.