It’s been a rough experience for the crypto market in 2022. By November the market was down by more than 70 percent from its previous high in November 2021. And just when things were getting worse after the FTX crash turned things more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen many dips over the years. Each time, it has bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year before hitting a low of $150. But, in 2017, it broke that record, and hit a new highest of $19,600. Fast forward to 2018, the price was at $3,100. And in 2020, the price broke through the resistance, and reached a record highest of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs tend to be followed by a prolonged bull run, which eventually surpasses the resistance created by the previous high price. This pattern is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in the last few years. With more and better companies and industries adopting it, its usage and acceptance is growing. From gaming to finance the use of crypto is increasing in many ways. And this growing use case could lead to increasing participation in the market which could increase the price.
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 numerous large institutions are now exploring the potential of crypto assets. The increasing interest from institutions could provide more stability to the market for crypto and result in greater prices.
Regulations from the Government
As the crypto market continues to mature as it matures, governments all over the world are beginning to establish more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can make use of blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the early stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on due to the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven assets such as cryptocurrency and gold. Because the global economic climate is uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to get involved in the market for crypto. With increasing numbers of everyday 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 cryptocurrency
As the crypto market continues to mature, more and more people are beginning to learn about and understand it. As awareness and acceptance grows of crypto, this could lead to more people buying or holding cryptocurrency, and this could increase prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi grows 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 is growing as more and more businesses are starting accepting crypto payments as a means of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as investment vehicles, are beginning to look at crypto as an asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions this could lead to increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
With the amount of ATMs for crypto increase it will be more convenient for individuals to purchase and keep cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that represent ownership in an asset such as stock or real estate is a fast-growing area of the crypto market. With the increasing number of security tokens being issued and traded, this could lead to increased demand and consequently higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, this makes it easier for consumers to hold and use crypto, which can boost demand and increase prices.
So, is crypto likely to rise in 2023? Only time will tell. However, with these aspects being considered, it’s likely that the crypto market will be able to see a rebound in 2023. For those looking to invest for the long-term Being patient and disciplined is crucial.