It’s been a rough experience for the crypto market in 2022. By November the market was down by 70 percent from its previous high on November 20, 2021. Just when the market was looking down, the FTX crash turned things even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips over the years. Every time, it has bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before reaching a bottom of $150. However, in 2017 it broke that record and hit a record highest of $19,600. In 2018, and it was trading at $3,100. And in 2020, it broke through the resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve seen another dip. But history shows us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a lengthy bull run that eventually surpasses the resistance created by the previous high price. This pattern can be seen in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in recent years. With more and more businesses and industries taking to it, its usage and acceptance is rising. From gaming to finance, crypto is being used in a myriad of ways. And this growing use case could lead to more people getting involved in the crypto market, which in turn could boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing demand from investors of institutional scale in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the potential for crypto-based assets. This increased interest from institutions could provide more stability to the crypto market and could lead to greater prices.
Regulations of the government
As the market for crypto continues to mature, governments around the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, is a broad range of potential use cases that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can benefit from blockchain technology, which could increase investment and enthusiasm in crypto.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas like security and scalability, potential of crypto assets will grow. This could result in more use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on through the COVID-19 pandemic, as well as other causes many investors are looking for safe haven investments like gold and crypto. As the global economic situation is uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, also known as individual investors, are also starting to participate in the crypto market. In the future, as more everyday people become aware of cryptocurrency and investing in it this could result in increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature as more and more people are beginning to become aware about and understand it. As the awareness and acceptance of crypto grows it could result in more people buying and holding crypto, which can raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows financial services to be developed upon blockchain technology. As DeFi expands and more projects and platforms are launched, it could lead to increased adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow as more and more businesses are beginning using crypto to be a method of payment. This could lead to increased use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could lead to increased demand and higher prices.
Cryptocurrency is used for international payments
One of the main advantages of crypto is its capability to perform fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of crypto ATM’s increase it will be more convenient for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, or digital assets that signify ownership in an asset like stocks or real estate are rapidly expanding segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, it can lead to a higher demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more retailers accept cryptocurrency as a method of payment, it makes it easier for people to utilize and store crypto, which could drive up demand and prices.
So, will crypto rise in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the crypto market could see a recovery in 2023. If you’re in it for the long haul, being patient and disciplined will be key.