It’s been a tough experience for the crypto market in 2022. By November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were getting worse, the FTX crash turned things even worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many dips in the past. Every time, it’s bounced back with a huge increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year before hitting a low of $150. In 2017, it broke that record and reached a new highest of $19,600. Fast forward to 2018, the price was at $3,100. In the year 2020 it struck through that resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve witnessed another drop. 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 in the past, dips are usually followed by a lengthy bull run, which eventually surpasses the resistance created by the previous high price. This pattern can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and more businesses and industries adopting it, its usage and acceptance is rising. From gaming to finance cryptocurrency is being utilized in many ways. The growing popularity of crypto could result in more people getting involved in the market which could increase the price.
A rise in the interest of institutions for cryptocurrency
In recent years we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From banks to hedge funds numerous large institutions are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and could lead to more expensive prices.
Regulations of the government
As the market for crypto grows as it matures, governments all over the world are starting to create more favorable rules for cryptocurrency. This could help attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can make use of blockchain technology. This will drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to grow. This could result in more use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused due to the COVID-19 pandemic and other factors increasing numbers of investors are beginning to look for safe haven investments like bitcoin and even gold. As the global economic situation is uncertain it could result in more demand for crypto as well as 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 even individual investors, are also starting to get involved in the cryptocurrency market. In the future, as more everyday people are educated about crypto and how to invest in it This could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto is maturing as more and more people are starting to learn about it and comprehend it. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows finance services developed using blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market is growing as more and more businesses are starting using crypto to be a method of payment. This could result in increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to look at crypto as an asset class. As more of these funds devote a percentage of their assets to digital currencies, it could result in a rise in demand and increased prices.
Utilization of crypto to make payment across borders
One of the major benefits of crypto is its capability to perform fast and cheap cross-border payments. As more individuals and businesses start to utilize crypto for international transactions, this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of crypto ATM’s increase it will be easier for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like stocks or real estate are rapidly expanding area of the crypto market. As more security tokens are issued and traded, this could lead to increased demand, and thus higher costs for cryptocurrency.
A greater adoption rate by merchants
As more and more merchants accept crypto as a form of payment, it will make it easier for customers to utilize and store crypto, which can increase demand and price.
Will crypto be on the rise in 2023? Only time will tell. However, with these aspects 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, being patient and disciplined is essential.