It’s been a difficult journey for the cryptocurrency market through 2022. By November the market was down by more than 70 percent from the previous high at the end of November. When things were going downhill and down, the FTX crash made them look more dire. The question is, can 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 with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before reaching a bottom of $150. However, in 2017, it broke the record and hit a record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in the year 2020 it struck that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a lengthy bull run that finally overcomes the resistance set by the previous market’s highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and better companies and industries adopting the technology, its use and acceptance is rising. From finance to gaming cryptocurrency is being utilized in a variety of ways. This growing demand can lead to increasing participation in the crypto 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 beginning to investigate the possibilities in crypto currencies. The increased interest of institutions could provide more stability to the crypto market and result in more expensive prices.
Government regulations
As the market for crypto is maturing, governments around the world are beginning to establish more favorable rules for crypto. This is likely to attract more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that underlies many cryptocurrencies, blockchain, has a wide range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can benefit from blockchain technology, which could stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will grow. This could lead to greater acceptance and higher prices.
Global economic uncertainty is growing
Due to the constant instability in the economy caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven assets like cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, or even individual investors are also beginning to participate in the market for crypto. With increasing numbers of people become aware of crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market continues to mature increasing numbers of people are beginning to learn about and understand the concept. As awareness and acceptance grows of crypto, it will lead to more people buying 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 that allows financial services to be created using blockchain technology. As DeFi grows and more projects and platforms come online, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow, more and more companies are beginning accepting crypto payments as a form of payment. This could lead to an increase in the usage of crypto in daily transactions, and a rise in prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are now beginning to show interest in cryptocurrency as a possible asset class. As more funds dedicate a part of their assets to digital currencies, this could increase demand and higher prices.
Use of crypto for cross-border payments
One of the biggest benefits of cryptocurrency is its ability to make fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of crypto for international transactions, this could lead to increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of ATMs for crypto continue to increase it will be more convenient for consumers to purchase and keep crypto, which could increase demand and price.
The development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, it could result in a rise in demand and consequently higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
As more and more retailers accept crypto as a form of payment, this will make it more convenient for people to hold and use crypto, which could increase demand and price.
So, is crypto likely to grow in 2023? The only way to know is time. However, with these aspects in mind, it’s likely that the crypto market will see a recovery in 2023. And for those who are in it for the long haul, being patient and disciplined is crucial.