It’s been a tough journey for the cryptocurrency market in 2022. In November the market had dropped by 70 percent from its previous high on November 20, 2021. And just when things were getting worse, the FTX crash made them look more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many drops in the past. Each time, it’s bounced back with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. However, in 2017, it broke the record and hit a record high of $19,600. In 2018, it was trading at $3,100. And in 2020, the price broke that 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 at the end of every dip, there’s a bull run.
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, which eventually breaks through the resistance created by the previous high price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries taking to it, its usage and acceptance is growing. From gaming to finance, crypto is being used in a myriad of ways. The growing popularity of crypto can lead to more people being involved in the crypto market and, in turn, increase the price.
Increased institutional interest in cryptocurrency
In recent times we’ve noticed a growing curiosity from institutions investing in crypto. From hedge funds to banks and even large corporations are now exploring the possibilities of crypto assets. The increased interest of institutions could bring more stability to the market for crypto and lead to greater prices.
Government regulations
As the crypto market continues to mature, governments around the world are beginning to establish more favorable regulations for crypto. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can utilize blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technology advancements
Blockchain technology and cryptography are still in the beginning stages of development. As advancements continue to be made in areas such as security and scalability, potential of cryptocurrency assets will continue to expand. This could lead to greater adoption and higher prices.
Global economic uncertainty is growing
With the ongoing instability in the economy caused through the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation remains uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or even individual investors, are also starting to participate in the crypto market. As more and more everyday people learn about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market is maturing as more and more people are starting to learn about and understand it. As the awareness and acceptance of crypto grows, this could lead to more people purchasing as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows finance services created on top of blockchain technology. As DeFi expands and more platforms and projects become available, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing increasing numbers of companies are beginning using crypto to be a form of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are starting to look at crypto as an asset class. As more of these funds allocate a portion of their portfolio to crypto, this could lead to increased demand and more expensive prices.
Utilization of crypto to make cross-border payments
One of the biggest benefits of crypto is the capability to perform swift and affordable cross-border transactions. 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
The number of ATMs that accept crypto increase, it will become easier for people to buy and keep cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as stock or real estate is a fast-growing sector of the crypto market. With the increasing number of security tokens being created and traded, it could result in a rise in demand, and thus higher rates for the crypto.
More adoption by merchants
As more and more retailers accept crypto as a means of payment, this makes it easier for consumers to hold and use cryptocurrency, which will drive up demand and prices.
So, is crypto likely to increase in 2023? Only time will tell. However, with these aspects to consider, it’s possible that the crypto market will be able to see a rebound in 2023. If you’re committed to the long-term Being patient and disciplined is crucial.