It’s been a rough experience for the crypto market through 2022. As of November, the market had dipped by more than 70% from its previous peak at the end of November. When things were going downhill and down, the FTX crash turned things worse. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many dips in the past. And every time, it’s rebounded with a huge rise.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. But, in 2017, it broke that record, and hit a new high of $19,600. In 2018, and it was trading at $3,100. And in the year 2020 it struck that resistance, and reached a record high of $68,000 in November 2021. Just like that, we’ve seen another dip. But history shows us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a lengthy bull run that eventually surpasses the resistance created by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more companies and industries adopting the technology, its use and acceptance is growing. From finance to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could lead to more people being involved in the crypto market and, in turn, drive the prices up.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the possibilities of crypto assets. The increased interest of institutions could provide more stability to the crypto market and lead to greater prices.
Regulations from the Government
As the crypto market continues to mature, governments around the world are beginning to develop more favorable rules for crypto. This will help draw more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, has a wide range of applications that go beyond just financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology. This could drive more investment and interest in crypto.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas such as scalability and security, the potential of crypto assets will continue to increase. This could result in more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant instability in the economy caused by the COVID-19 pandemic as well as other factors increasing numbers of investors are beginning to look for safe haven investments like cryptocurrency and gold. Because the global economic climate is uncertain it could result in increased demand for crypto and more expensive 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 starting to get involved in the cryptocurrency market. In the future, as more people learn about crypto and how to invest in it This could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market is maturing increasing numbers of people are starting to learn about and appreciate it. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows finance services developed using blockchain technology. As DeFi expands and more projects and platforms become available, this will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows, more and more companies are beginning accepting crypto payments as a means of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are now beginning to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part of their portfolio to crypto, this could lead to increased demand and more expensive prices.
Use of crypto for cross-border 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 start to utilize cryptocurrency for international transactions, it could result in increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of crypto ATM’s increase it will be more convenient for people to buy and hold crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership in an asset such as real estate or stock are rapidly expanding segment of the cryptocurrency market. As more security tokens are issued and traded, this could result in a rise in demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
In the event that more retailers accept cryptocurrency as a method of payment, this will make it more convenient for customers to hold and use cryptocurrency, which will drive up demand and prices.
So, will crypto grow in 2023? The only way to know is time. With these things in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. And for those who are looking to invest for the long run patience and discipline is crucial.