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. Just when the market was going downhill, the FTX crash turned things even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many dips over the years. Each time, it has bounced back by a massive rally.
For instance, 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 highest of $19,600. Then, in 2018, it was trading at $3,100. And in 2020, the price broke that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are typically followed by a long bull run that finally overcomes the resistance set by the previous market’s highest price. This is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in a variety of ways. And this growing use case could lead to more people getting involved in the market, which in turn could boost prices.
The rise in interest of institutions in crypto
In the last few years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the possibilities for crypto-based assets. This increased interest from institutions could provide more stability to the crypto market and result in greater prices.
Regulations of the government
As the crypto market is maturing and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrency, blockchain, offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can benefit from blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Blockchain technology and cryptography are still in the beginning stages of development. As advancements continue to be made in areas such as security and scalability, potential of crypto assets will grow. This could result in more adoption and higher prices.
Global economic uncertainty is growing
With the ongoing instability in the economy caused through the COVID-19 pandemic and other factors many investors are looking for safe haven assets like cryptocurrency and gold. As the global economic situation is uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, or even individual investors, are also starting to get involved in the market for crypto. With increasing numbers of people are educated about crypto and how to invest in it This could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature increasing numbers of people are starting to learn about and understand it. As awareness and acceptance of cryptocurrency grows it could result in more people purchasing as well as holding the crypto that can raise prices.
The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built on top of blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning accepting crypto payments as a form of payment. This could lead to an increase in the use of crypto in everyday transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are state-owned investments, are starting to look at crypto as a potential asset class. As more of these funds allocate a portion of their assets to digital currencies, this could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto increase, it will become easier for individuals to purchase and keep cryptocurrency, which can increase demand and price.
Development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, like stock or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being created and traded, this could lead to increased demand, and thus higher prices for crypto.
More adoption by merchants
In the event that more merchants accept crypto as a means of payment, this will make it easier for consumers to use and hold cryptocurrency, which will drive up demand and prices.
So, will crypto increase in 2023? The only way to know is time. But with these factors in mind, it’s possible that the crypto market will see a recovery in 2023. And for those who are committed to the long run, being patient and disciplined is crucial.