It’s been a rough journey for the cryptocurrency market in 2022. In November the market was down by more than 70% from its previous peak at the end of November. When things were getting worse after the FTX crash turned things even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips in the past. Each time, it has bounced back with a huge rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year, reaching a low of $150. But, in 2017, it broke the record and reached a new high of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck through the resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve had another dip. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a long bull run that eventually overcomes the resistance set by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and better companies and industries embracing it, its usage and acceptance is increasing. From banking to gaming the use of crypto is increasing in a variety of ways. The growing popularity of crypto could lead to increasing participation in the market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in cryptocurrency. From banks to hedge funds numerous large institutions are now exploring the potential for crypto-based assets. The increasing interest from institutions can bring stability to the market for crypto and lead to greater prices.
Regulations from the Government
As the market for crypto grows and mature, governments across the globe are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies many cryptocurrencies, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas such as security and scalability, potential of crypto assets will continue to grow. This could result in more use and increase in prices.
Uncertainty in the global economy
In the current economic uncertainty caused due to the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven assets like bitcoin and even gold. Since the economic outlook for the world is uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors are also beginning to invest in the crypto market. With increasing numbers of people learn about cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows as more and more people are beginning to become aware about it and comprehend it. As awareness and acceptance of crypto grows it could result in more people buying or holding cryptocurrency, and this can increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows financial services to be built using blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow increasing numbers of companies are beginning using crypto to be a means of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned instruments for investing, are beginning to look at crypto as an asset class. As more funds allocate a portion of their portfolio to crypto, this could result in a rise in demand and higher prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
With the amount of ATMs for crypto continue to grow, it will become easier for consumers to purchase and keep crypto, which will drive up demand and prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership in an asset like stocks or real estate are rapidly expanding sector of the crypto market. As more security tokens are issued and traded, it could result in a rise in demand and consequently higher rates for the crypto.
More adoption by merchants
In the event that more retailers begin accepting cryptocurrency as a method of payment, this will make it easier for people to use and hold crypto, which could drive up demand and prices.
Will crypto be on the rise in 2023? Only time will tell. However, with these aspects in mind, it’s possible that the crypto market could be able to see a rebound in 2023. If you’re in it for the long-term Being patient and disciplined will be key.