It’s been a difficult journey for the cryptocurrency market until 2022. As of November the market was down by more than 70 percent from its previous high on November 20, 2021. And just when things were looking down, the FTX crash turned things 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 had its fair share of dips in the past. Every time, it has bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. However, in 2017, it broke that record and hit a record highest of $19,600. In 2018, it was trading at $3,100. In 2020, the price broke that resistance, and reached a record highest of $68,000 in November 2021. Then, just like that we’ve seen another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips 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 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 taking to it, its usage and acceptance is rising. From finance to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto can lead to increasing participation in the crypto market, which in turn could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times we’ve noticed a growing interest from institutional investors in crypto. From hedge funds to banks, many large institutions are now exploring the potential for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and lead to higher prices.
As the market for crypto grows and mature, governments across the globe are beginning to establish more favorable regulations for crypto. This will help draw more investors and boost the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can benefit from blockchain technology. This could drive more investment and interest in cryptocurrency.
Blockchain technology and cryptography are still in the early stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will increase. This could result in more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused by the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven investments like cryptocurrency and gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or individual investors are also beginning to invest in the crypto market. With increasing numbers of everyday people are educated about crypto and how to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market continues to mature increasing numbers of people are beginning to learn about it and comprehend the concept. As the awareness and acceptance grows of crypto, it will lead to more people buying and holding crypto, which can drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market, which allows financial services to be built on top of blockchain technology. As DeFi expands and more projects and platforms become available, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning using crypto to be a method of payment. This could result in increased use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investment vehicles, are beginning to explore cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, it could increase demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more and more people and businesses start to utilize cryptocurrency for international transactions it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of crypto ATM’s continue to increase it will be more convenient for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing sector of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more retailers begin accepting crypto as a form of payment, it will make it more convenient for customers to hold and use 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 in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. For those in it for the long-term, being patient and disciplined will be key.