It’s been a tough journey for the cryptocurrency market through 2022. By November, the market had dipped by more than 70 percent from its previous high in November 2021. Just when the market was going downhill and down, the FTX crash turned them even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. Every time, it’s bounced back by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. It then plummeted for more than a year, reaching a low of $150. However, in 2017 it broke that record, and hit a new record high of $19,600. In 2018, the price was at $3,100. In the year 2020 it struck that resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve seen another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are typically followed by a lengthy bull run that eventually overcomes the resistance set by the previous high price. This pattern can be seen not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could lead to more people getting involved in the market which could drive the prices up.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are starting to explore the potential for crypto-based assets. The increased interest of institutions could bring more stability to the market for crypto and lead to higher prices.
Government regulations
As the crypto market grows, governments around the world are beginning to develop more favorable rules for crypto. This is likely to attract more investors and increase the adoption rate of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, has a wide range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many industries are beginning to look at ways they can benefit from blockchain technology, which could increase investment and enthusiasm in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas like scalability and security, the potential of crypto assets will grow. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on through the COVID-19 pandemic and other factors many investors are looking for safe haven investments like gold and crypto. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, or individual investors, are also starting to participate in the market for crypto. As more and more people become aware of crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market continues to mature, more and more people are beginning to learn about and understand it. As the awareness and acceptance grows of crypto, it will lead to more people purchasing or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that allows financial services to be built using blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto grows, more and more companies are beginning accepting crypto payments as a means of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are starting to explore crypto as an asset class. As more funds devote a percentage of their portfolio to crypto, it could increase demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of cryptocurrency is its ability to make fast and cheap cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto continue to increase it will be more convenient for people to buy and store cryptocurrency, which can increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that signify ownership of an asset, such as stock or real estate are rapidly expanding sector of the crypto market. As more security tokens are created and traded, this could result in a rise in demand and consequently higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of merchants accept crypto as a form of payment, this will make it easier for customers to hold and use cryptocurrency, which will drive up demand and prices.
So, will crypto grow in 2023? Only time will tell. But with these factors to consider, it’s possible that the crypto market will be able to see a rebound in 2023. If you’re looking to invest for the long-term, being patient and disciplined will be key.