It’s been a rough ride for the crypto market in 2022. In November the market had dropped by 70 percent from the previous high in November 2021. And just when things were looking down and down, the FTX crash turned them even worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips in the past. And every time, it’s rebounded with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. However, in 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. In 2020, the price broke that resistance and reached a new peak of $68,000 in the month of November 2021. Then, 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
Just like we’ve seen before, fall-offs tend to be followed by a prolonged bull run that eventually surpasses the resistance created by the previous market’s highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and better companies and industries taking to it, its usage and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. And this growing use case 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 crypto
In recent years, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the potential of crypto assets. This increased interest from institutions could bring more stability to the market for crypto and result in more expensive prices.
Government regulations
As the market for crypto grows and mature, governments across the globe are beginning to establish more favorable rules for cryptocurrency. This could help attract more investors and increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond the realm of financial transactions. From supply chain management to voting systems, more industries are exploring ways they can benefit from blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the beginning stages of development. As advancements continue to be made in areas such as security and scalability, potential of crypto assets will expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
Due to the constant instability in the economy caused due to the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven assets such as gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors are also beginning to get involved in the crypto market. In the future, as more everyday 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 starting to learn about and appreciate it. As understanding and acceptance of crypto grows, it will lead to more people buying or holding cryptocurrency, and this can increase prices.
substack crypto
The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be developed using blockchain technology. As DeFi expands and more projects and platforms become available, this could result in increased use and higher 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 lead to increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are beginning to show interest in crypto as a potential asset class. As more of these funds allocate a portion of their assets to digital currencies, it could result in a rise in demand and higher prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is its ability to make fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency for international transactions, it could result in increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto increase it will be more convenient for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that signify ownership of an asset, such as real estate or stock are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
With the increasing number of businesses accept crypto as a form of payment, it will make it more convenient for consumers to hold and use crypto, which could drive up demand and prices.
So, will crypto rise in 2023? The only way to know is time. But with these factors in mind, it’s possible that the crypto market will be able to see a rebound in 2023. For those in it for the long-term patience and discipline will be key.