It’s been a rough ride for the crypto market through 2022. By November the market had dropped by 70 percent from its previous high on November 20, 2021. Just when the market was looking down after the FTX crash turned them even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips over the years. And every time, it’s bounced back with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. But, in 2017 it broke that record, and hit a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. In the year 2020 it struck that resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve seen another dip. However, history has shown us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips are typically followed by a lengthy bull run that eventually breaks through the resistance created by the previous high price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and better companies and industries taking to it, its usage and acceptance is rising. From banking to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto can lead to more people being involved in the crypto market, which in turn could boost prices.
The rise in interest of institutions in crypto
In recent times we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the potential in crypto currencies. The increasing interest from institutions could bring more stability to the market for crypto and could lead to greater prices.
Government regulations
As the crypto market grows and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors and boost the adoption rate of crypto.
Blockchain has many more applications.
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems industries are starting to explore how they can make use of blockchain technology. This could drive more investment and interest in crypto.
Technology advancements
Blockchain and cryptocurrency technology is at the very beginning of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will grow. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused by the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation remains uncertain it could result in an increase in demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the market for crypto. As more and more everyday people become aware of cryptocurrency and investing in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature as more and more people are beginning to learn about and understand the concept. As understanding and acceptance of crypto grows, it will lead to more people purchasing as well as holding the crypto that can raise prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services created upon blockchain technology. As DeFi continues to grow and more projects and platforms become available, this could lead to increased adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow increasing numbers of companies are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are starting to look at crypto as an asset class. As more funds allocate a portion of their portfolio to crypto, this could increase demand and increased prices.
Use of crypto for payment across borders
One of the biggest benefits of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more businesses and individuals start to utilize cryptocurrency for international transactions it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of ATMs for crypto continue to increase it will be easier for people to buy and hold crypto, which could drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as stocks or real estate, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, it could lead to increased demand, and thus higher prices for crypto.
More adoption by merchants
In the event that more retailers start accepting cryptocurrency as a method of payment, it makes it easier for people to use and hold crypto, which could increase demand and price.
Will crypto be on the increase in 2023? Only time will tell. But with these factors in mind, it’s likely that the cryptocurrency market will see a recovery in 2023. For those looking to invest for the long haul Being patient and disciplined is crucial.