It’s been a rough experience for the crypto market through 2022. In November, the market had dipped by more than 70% from its previous peak on November 20, 2021. And just when things were looking down and down, the FTX crash turned things even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips in the past. Every time, it’s rebounded with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year before reaching a bottom of $150. But, in 2017, it broke that record, and hit a new highest of $19,600. Then, in 2018, the price was at $3,100. And in the year 2020 it struck through that resistance and reached a new peak of $68,000 in the month of November 2021. And just like that, we’ve seen another dip. But history shows us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs are typically followed by a long bull run that finally overcomes the resistance set by the previous high price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and more companies and industries taking to the technology, its use and acceptance is rising. From gaming to finance, crypto is being used in a variety of ways. This growing demand can lead to more people being involved in the market and, in turn, boost prices.
A rise in the interest of institutions for crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the possibilities of crypto assets. The increasing interest from institutions can bring stability to the crypto market and could lead to more expensive prices.
Regulations from the Government
As the market for crypto is maturing and mature, governments across the globe are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the early stages of development. As progress is made in areas like security and scalability, potential of crypto assets will expand. This could lead to greater acceptance and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to invest in the cryptocurrency market. With increasing numbers of people learn about crypto and how to invest in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto continues to mature increasing numbers of people are starting to learn about it and comprehend the concept. As understanding and acceptance of cryptocurrency grows, this could lead to more people buying and holding crypto, which could increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow as more and more businesses are starting accepting crypto payments as a form of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are now beginning to show interest in cryptocurrency as a possible asset class. As more funds allocate a portion of their assets to digital currencies, this could increase demand and more expensive prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to increase it will be easier for consumers to purchase and store cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like real estate or stock are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, it could result in a rise in demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
As more and more merchants begin accepting crypto as a means of payment, this will make it easier for people to use and hold cryptocurrency, which will increase demand and price.
So, will crypto increase in 2023? It’s only time to find out. However, with these aspects in mind, it’s likely that the cryptocurrency market will see a recovery in 2023. And for those who are committed to the long run, being patient and disciplined is crucial.