It’s been a difficult experience for the crypto market through 2022. As of November the market was down by 70 percent from its previous high on November 20, 2021. When things were going downhill and down, the FTX crash made them look worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips in the past. Each time, it’s bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. In 2017, it broke that record, and hit a new highest of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, it broke that resistance and reached a new highest of $68,000 in November 2021. Just like that, we’ve seen another dip. However, history has shown 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 before, fall-offs tend to be followed by a prolonged bull run that finally overcomes the resistance set by the previous high price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries embracing it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in increasing participation in the market, which in turn could drive the prices up.
The rise in interest of institutions in crypto
In recent times we’ve noticed a growing curiosity from institutions investing in crypto. From hedge funds to banks numerous large institutions are starting to explore the potential for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and lead to more expensive prices.
Regulations of the government
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrency, blockchain, offers a variety of possible applications that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can benefit from blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will continue to expand. This could lead to greater use and increase in prices.
Uncertainty in the global economy
In the current economic uncertainty caused by the COVID-19 pandemic and other factors, more and more investors are looking for safe haven assets like gold and crypto. Because the global economic climate remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to get involved in the market for crypto. With increasing numbers of people become aware of cryptocurrency and investing in it this could result in an increase in demand and consequently higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing, more and more people are beginning to become aware about and appreciate it. As awareness and acceptance of cryptocurrency grows, this could lead to more people buying and holding crypto, which can drive up prices.
spell crypto token
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows financial services to be built using blockchain technology. As DeFi continues to grow and more projects and platforms become available, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow as more and more businesses are starting accepting crypto payments as a means of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as investment vehicles, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage of their assets to digital currencies, this could increase demand and more expensive prices.
Cryptocurrency is used for international payments
One of the main advantages of crypto is the ability to make quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of crypto for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of crypto ATM’s continue to increase, it will become easier for individuals to purchase and keep crypto, which will increase demand and price.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like stocks or real estate are rapidly expanding segment of the cryptocurrency market. As more security tokens are created and traded, it can lead to a higher demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more businesses accept cryptocurrency as a method of payment, it makes it easier for consumers to use and hold crypto, which could drive up demand and prices.
So, is crypto likely to grow in 2023? Only time will tell. However, with these aspects to consider, it’s likely that the crypto market will see a recovery in 2023. For those committed to the long haul, being patient and disciplined is essential.