It’s been a rough journey for the cryptocurrency market in 2022. In November, the market had dipped by 70 percent from the previous high in November 2021. And just when things were looking down, the FTX crash made them look more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips in the past. Every time, it’s bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. In 2017, it broke the record and reached a new high of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, it broke that resistance and reached a new highest of $68,000 in November 2021. And just like that, we’ve seen another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and better companies and industries embracing the technology, its use and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could lead to more people being involved in the market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve noticed a growing curiosity from institutions investing in crypto. From banks to hedge funds numerous large institutions are now exploring the possibilities of crypto assets. The increased interest of institutions can bring stability to the crypto market and lead to more expensive prices.
Regulations of the government
As the crypto market continues to mature, governments around the world are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of applications that go 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 make use of blockchain technology, which could drive more investment and interest in crypto.
Technology advancements
Blockchain technology and cryptography are still in the beginning stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will grow. This could lead to greater adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused due to the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets like cryptocurrency and gold. Because the global economic climate remains uncertain and uncertain, this could lead to an increase in demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the crypto market. With increasing numbers of people learn about crypto and how to invest in it this could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto continues to mature increasing numbers of people are starting to learn about it and comprehend it. As awareness and acceptance of crypto grows it could result in more people purchasing and holding crypto, which can raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows finance services developed using blockchain technology. As DeFi grows and more projects and platforms become available, this could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are beginning to accept crypto as a means of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are starting to explore crypto as a potential asset class. As more funds dedicate a part of their portfolio to crypto, this could increase demand and higher prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency for international transactions this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto increase, it will become easier for consumers to purchase and store crypto, which will increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership of an asset, such as real estate or stock are rapidly expanding area of the crypto market. As more security tokens are created and traded, this can lead to a higher demand, and thus higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more businesses accept crypto as a means of payment, it makes it easier for customers to hold and use crypto, which could increase demand and price.
So, is crypto likely to grow in 2023? Only time will tell. With these things being considered, it’s likely that the crypto market will be able to see a rebound in 2023. If you’re committed to the long run, being patient and disciplined is essential.