It’s been a rough journey for the cryptocurrency market through 2022. By November, the market had dipped by more than 70 percent from its previous high on November 20, 2021. When things were getting worse, the FTX crash turned them more dire. The question is, can the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of drops in the past. Each time, it’s bounced back with a huge rise.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. In 2017, it broke that record and reached a new high of $19,600. Then, in 2018, the price was at $3,100. And in 2020, it broke that resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. However, the past has proven that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are typically followed by a long bull run that finally surpasses the resistance created by the previous high price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more companies and industries embracing the technology, its use and acceptance is rising. From gaming to finance the use of crypto is increasing in many ways. This growing demand can lead to increasing participation in the market, which in turn could increase the price.
Increased institutional interest in crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are starting to explore the potential in crypto currencies. The increased interest of institutions can bring stability to the crypto market and lead to higher prices.
Government regulations
As the market for crypto continues to mature and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This is likely to attract more investors and boost the adoption rate of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of potential use cases 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 drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to grow. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused through the COVID-19 pandemic, as well as other causes increasing numbers of investors are looking for safe haven investments like cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, or individual investors, are also starting to invest in the crypto market. With increasing numbers of people are educated about crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market continues to mature, more and more people are beginning to become aware about and appreciate it. As understanding and acceptance of cryptocurrency grows, it will lead to more people buying and holding crypto, which could drive up prices.
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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 come online, this could result in increased use 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 method of payment. This could lead to an increase in the 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 government-owned instruments for investing, are starting to explore crypto as an asset class. As more of these funds dedicate a part of their assets to digital currencies, this could increase demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of crypto is its capability to perform fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of crypto for international transactions, this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
As the number of ATMs for crypto increase it will be easier for individuals to purchase and keep crypto, which could increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing area of the crypto market. As more security tokens are issued and traded, this could lead to increased demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more retailers accept crypto as a means of payment, it will make it easier for consumers to utilize and store cryptocurrency, which will boost demand and increase prices.
Will crypto be on the grow in 2023? It’s only time to find out. With these things in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those looking to invest for the long run patience and discipline will be key.