It’s been a difficult journey for the cryptocurrency market through 2022. As of November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were going downhill and down, the FTX crash turned them even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many drops in the past. Every time, it’s rebounded by a massive increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year, reaching a low of $150. However, in 2017, it broke the record, and hit a new high of $19,600. Then, in 2018, the price was at $3,100. And in 2020, it broke through that resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve had another dip. 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
Similar to what we’ve witnessed in the past, dips are typically followed by a prolonged bull run that finally surpasses the resistance created by the market’s previous highest price. This pattern can be seen 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 the last few years. With more and more businesses and industries embracing it, its usage and acceptance is increasing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case could lead to increasing participation in the market and, in turn, drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the potential of crypto assets. The increased interest of institutions could provide more stability to the market for crypto and lead to greater prices.
Government regulations
As the crypto market grows and mature, governments across the globe are starting to create more favorable regulations for crypto. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, is a broad range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology. This will stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the early stages of development. As progress is made in areas like security and scalability, potential of cryptocurrency assets will continue to expand. This could result in more 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 starting to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, or individual investors, are also starting to participate in the cryptocurrency market. In the future, as more everyday people learn about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature increasing numbers of people are beginning to become aware about it and comprehend it. As awareness and acceptance of crypto grows it could result in more people buying or holding cryptocurrency, and this could drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows financial services to be created using blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing as more and more businesses are beginning accepting crypto payments as a method of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are now beginning to show interest in crypto as an asset class. As more funds dedicate a part of their assets to digital currencies, it could lead to increased demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions it could result in increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
As the number of crypto ATM’s continue to grow, it will become easier for people to buy and store cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that signify ownership of an asset, like stock or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, it can lead to a higher demand, and thus higher prices for crypto.
A greater adoption rate by merchants
In the event that more retailers start accepting crypto as a means of payment, this will make it more convenient for customers to use and hold crypto, which can boost demand and increase prices.
So, will crypto increase in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. If you’re committed to the long haul, being patient and disciplined is essential.