It’s been a difficult ride 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. And just when things were going downhill after the FTX crash made them look worse. What is the likelihood that 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 in the past. Each time, it’s bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. But, in 2017, it broke that record and hit a record highest of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke through the resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. But history shows us that following each 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 prolonged bull run that eventually surpasses the resistance created by the previous market’s highest price. This pattern is evident in not just 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 increasing. From finance to gaming the use of crypto is increasing in a variety of ways. The growing popularity of crypto can lead to more people getting involved in the market, which in turn could increase the price.
Increased institutional interest in cryptocurrency
In recent times we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the potential in crypto currencies. This increased interest from institutions can bring stability to the market for crypto and could lead to greater prices.
Regulations of the government
As the crypto market continues to mature and mature, governments across the globe are starting to create more favorable regulations for crypto. This could help attract more investors and boost the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrency, blockchain, offers a variety of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are beginning to look at ways they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas such as security and scalability, potential of crypto assets will expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on by the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven investments like bitcoin and even gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, also known as individual investors, are also starting to invest in the market for crypto. With increasing numbers of people are educated about crypto and how to invest in it this could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows as more and more people are beginning to learn about it and comprehend it. As understanding and acceptance of crypto grows, it will lead to more people buying as well as holding the crypto that could increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that allows financial services to be built using blockchain technology. As DeFi grows and more projects and platforms come online, this could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow as more and more businesses are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are starting to show interest in crypto as an asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and higher prices.
Cryptocurrency is used for payment across borders
One of the major benefits of cryptocurrency is its capability to perform swift and affordable cross-border transactions. As more businesses and individuals begin to use cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto continue to increase, it will become easier for people to buy and store cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as real estate or stock, are a rapidly growing segment of the cryptocurrency market. Since more and more security tokens will be created and traded, it could result in a rise in demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
In the event that more merchants begin accepting crypto as a means of payment, this will make it easier for consumers to use and hold crypto, which can drive up demand and prices.
Will crypto be on the increase in 2023? The only way to know is time. With these things being considered, it’s possible that the crypto market will see a recovery in 2023. For those looking to invest for the long-term Being patient and disciplined is essential.