It’s been a difficult ride for the crypto market through 2022. In November the market had dropped by 70% from its previous peak at the end of November. When things were looking down after the FTX crash made them look worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of drops in the past. Every time, it’s bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. However, in 2017, it broke the record and reached a new high of $19,600. In 2018, the price was at $3,100. And in the year 2020 it struck that resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve seen another dip. However, the past has proven that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a long bull run that eventually breaks through the resistance created by the previous market’s highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a myriad of ways. This growing demand could result in increasing participation in the crypto market and, in turn, drive the prices up.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the possibilities for crypto-based assets. The increasing interest from institutions could provide more stability to the crypto market and could lead to greater prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, has a wide range of potential use cases that go beyond financial transactions. From supply chain management to voting systems, more and more industries are beginning to look at ways they can utilize blockchain technology. This could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As advances continue to be made in areas such as scalability and security, the potential of crypto assets will continue to increase. This could lead to more use and increase in prices.
Rising global economic uncertainty
In the current economic uncertainty caused through the COVID-19 pandemic, as well as other causes, more and more investors are beginning to look for safe haven assets like cryptocurrency and gold. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or individual investors, are also starting to participate in the market for crypto. As more and more everyday people learn about crypto and the best ways to invest in it this could result in more demand and higher prices.
The 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 the awareness and acceptance of crypto grows, this could lead to more people purchasing and holding crypto, which can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables financial services to be created on top of blockchain technology. As DeFi grows and more platforms and projects come online, this will lead to a rise in adoption and higher prices for crypto.
Developments in crypto payment methods
As the crypto market 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 everyday transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are government-owned instruments for investing, are starting to look at crypto as a potential asset class. As more of these funds dedicate a part of their assets to digital currencies, it could lead to increased demand and increased prices.
Utilization of crypto to make cross-border payments
One of the major benefits of crypto is the ability to make quick and inexpensive cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of crypto ATM’s continue to grow, it will become easier for consumers to purchase and keep cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as real estate or stock are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, this can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more retailers start accepting crypto as a form of payment, this will make it easier for customers to utilize and store crypto, which can boost demand and increase prices.
So, is crypto likely to grow in 2023? Only time will tell. With these things being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re committed to the long run patience and discipline is essential.