It’s been a tough ride for the crypto market in 2022. As of November the market was down by more than 70 percent from its previous high in November 2021. And just when things were looking down, the FTX crash turned things more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many dips in the past. And every time, it’s rebounded by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before hitting a low of $150. However, in 2017 it broke that record and reached a new high of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, it broke that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that after 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 prolonged bull run, which eventually surpasses the resistance created by the previous market’s highest price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and better companies and industries embracing the technology, its use and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in a variety of ways. And this growing use case could result in increasing participation in the market and, in turn, increase the price.
A rise in the interest of institutions for crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increased interest of institutions could provide more stability to the market for crypto and lead to higher prices.
Regulations from the Government
As the crypto market grows as it matures, governments all over the world are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies many cryptocurrency, blockchain, offers a variety of possible applications 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 benefit from blockchain technology, which could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, potential of crypto assets will grow. This could result in more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused through the COVID-19 pandemic as well as other factors, more and more investors are beginning to look for safe haven investments like gold and crypto. As the global economic situation is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to participate in the cryptocurrency market. In the future, as more everyday people are educated about crypto and how to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market grows increasing numbers of people are beginning to learn about and understand it. As the awareness and acceptance of crypto grows, this could lead to more people buying or holding cryptocurrency, and this could drive up prices.
silo crypto
Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services developed upon blockchain technology. As DeFi grows and more platforms and projects become available, this could lead to increased adoption and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are beginning to accept crypto as a method of payment. This could lead to increased usage of crypto in daily transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could increase demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is the ability to make fast and cheap cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions, this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
The number of crypto ATM’s continue to grow, it will become easier for people to buy and hold 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 in an asset like real estate or stock are rapidly expanding sector of the crypto market. As more security tokens are created and traded, it can lead to a higher demand, and thus higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of businesses start accepting crypto as a means of payment, this will make it easier for consumers to hold and use cryptocurrency, which will drive up demand and prices.
Will crypto be on the rise in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long haul, being patient and disciplined is crucial.