It’s been a difficult experience for the crypto market through 2022. By November the market was down by 70 percent from its previous high in November 2021. When things were going downhill, the FTX crash turned them even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen many dips in the past. Each time, it’s rebounded with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. However, in 2017, it broke the record, and hit a new highest of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke through the resistance and hit a new peak of $68,000 in the month of November 2021. Just like that, we’ve had 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
As we’ve seen in the past, dips are typically followed by a prolonged bull run that eventually surpasses 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
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more companies and industries embracing the technology, its use and acceptance is growing. From gaming to finance, crypto is being used in a variety of ways. This growing demand could lead to more people being involved in the market, which in turn could increase the price.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve witnessed a rising interest from institutional investors in crypto. From banks to hedge funds and even large corporations are beginning to investigate the potential in crypto currencies. This increased interest from institutions could provide more stability to the crypto market and could lead to higher prices.
Regulations of the government
As the market for crypto is maturing and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, 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 exploring ways they can utilize blockchain technology. This will drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas such as security and scalability, potential of cryptocurrency assets will continue to increase. This could result in more adoption and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven assets such as cryptocurrency and gold. As the global economic situation is uncertain it could result in increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors are also beginning to participate in the cryptocurrency market. As more and more everyday people learn about cryptocurrency and investing in it This could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows increasing numbers of 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 as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that allows finance services created on top of blockchain technology. As DeFi grows and more platforms and projects come online, this could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market is growing, more and more companies are starting using crypto to be a means of payment. This could result in increased use of crypto in everyday 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 beginning to look at crypto as a potential asset class. As more funds dedicate a part of their assets to digital currencies, it could lead to increased demand and more expensive prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses are beginning to make use of crypto for international transactions, this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and store crypto, which could increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset such as stock or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are created and traded, it could result in a rise in demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
In the event that more retailers begin accepting crypto as a means of payment, it will make it more convenient for customers to use and hold crypto, which could boost demand and increase prices.
So, is crypto likely to increase in 2023? It’s only time to find out. But with these factors in mind, it’s likely that the cryptocurrency market will see a recovery in 2023. And for those who are committed to the long-term, being patient and disciplined is essential.