It’s been a tough ride for the crypto market until 2022. In November the market had dropped by more than 70% from its previous peak at the end of November. And just when things were getting worse after the FTX crash turned things even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced many dips over the years. Each time, it’s rebounded by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. In 2017, it broke that record and reached a new record high of $19,600. Then, in 2018, the price was at $3,100. In the year 2020 it struck through the resistance and hit a new peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. But history shows us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips tend to be followed by a lengthy bull run that finally breaks through the resistance created by the market’s previous highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in many ways. The growing popularity of crypto could lead to more people getting involved in the crypto market and, in turn, drive the prices up.
Increased institutional interest in cryptocurrency
In recent years we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds and even large corporations are starting to explore the potential in crypto currencies. This increased interest from institutions can bring stability to the crypto market and could lead to greater prices.
Government regulations
As the market for crypto continues to mature, governments around the world are starting to create more favorable rules for cryptocurrency. This could help attract more investors as well as increase the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrency, blockchain, has a wide range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can benefit from blockchain technology, which could stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As progress is made in areas such as security and scalability, the potential of crypto assets will continue to grow. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on through the COVID-19 pandemic, as well as other causes increasing numbers of investors are looking for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and higher prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. In the future, as more everyday people learn about crypto and the best ways to invest in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows, more and more people are beginning to become aware about it and comprehend the concept. As the awareness and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services built upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could result in increased use and increased 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 method of payment. This could lead to an increase in the 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 owned by the state as investment vehicles, are starting to look at cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could increase demand and more expensive prices.
Use of crypto for cross-border payments
One of the major benefits of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto increase it will be more convenient for people to buy and hold crypto, which could drive up demand and prices.
Security tokens are developed for development
Security tokens, also known as digital assets that signify ownership of an asset, such as stocks or real estate is a fast-growing area of the crypto market. As more security tokens are issued and traded, this can lead to a higher demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
As more and more businesses start accepting crypto as a form of payment, it makes it easier for consumers to use and hold cryptocurrency, which will increase demand and price.
Will crypto be on the grow in 2023? Only time will tell. However, with these aspects being considered, it’s likely that the crypto market will have a rebound by 2023. And for those who are in it for the long run Being patient and disciplined is crucial.