It’s been a difficult ride for the crypto market in 2022. In November the market was down by 70 percent from its previous high on November 20, 2021. Just when the market was looking down, the FTX crash turned things even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips over the years. Each time, it’s rebounded with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year before hitting a low of $150. However, in 2017 it broke that record and reached a new highest of $19,600. Fast forward to 2018, it was trading at $3,100. In the year 2020 it struck through that resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve seen another dip. However, the past has proven that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a lengthy bull run, which eventually overcomes the resistance set by the previous market’s highest price. This is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in recent years. With more and better companies and industries adopting it, its usage and acceptance is increasing. From banking to gaming, crypto is being used in a myriad of ways. This growing demand can lead to more people getting involved in the market, which in turn could boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in crypto. From banks to hedge funds, many large institutions are now exploring the potential of crypto assets. The increasing interest from institutions can bring stability to the crypto market and result in greater prices.
Government regulations
As the market for crypto grows as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This could help attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrency, blockchain, offers a variety of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can make use of blockchain technology. This could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain and cryptocurrency technology is 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 grow. This could lead to greater use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven investments like gold and crypto. As the global economic situation remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in cryptocurrency. Retail investors, or individual investors are also beginning to get involved in the crypto market. As more and more everyday people are educated about crypto and how to invest in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows as more and more people are beginning to learn about and appreciate it. As understanding and acceptance of crypto grows, it will lead to more people purchasing or holding cryptocurrency, and this could increase prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built upon blockchain technology. As DeFi expands and more platforms and projects come online, this will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing as more and more businesses are beginning to accept crypto as a means 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 state-owned instruments for investing, are beginning to explore crypto as an asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Utilization of crypto to make international payments
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of crypto for international transactions, it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto continue to grow, it will become easier for people to buy and hold crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, like stock or real estate is a fast-growing area of the crypto market. With the increasing number of security tokens being issued and traded, it can lead to a higher demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, it will make it more convenient for consumers to use and hold crypto, which could drive up demand and prices.
So, will crypto rise in 2023? The only way to know is time. With these things in mind, it’s possible that the crypto market could be able to see a rebound in 2023. And for those who are looking to invest for the long-term, being patient and disciplined is essential.