It’s been a rough journey for the cryptocurrency market in 2022. As of November the market had dropped by 70 percent from its previous high in November 2021. And just when things were getting worse and down, the FTX crash turned things even more dire. What is the likelihood that 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. And every time, it has bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. But, in 2017, it broke the record and reached a new high of $19,600. In 2018, the price was at $3,100. In the year 2020 it struck through that resistance, and reached a record peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, the past has proven that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips are usually followed by a prolonged bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and better companies and industries embracing it, its usage and acceptance is increasing. From banking to gaming, crypto is being used in a myriad of ways. And this growing use case could lead to more people getting involved in the crypto market, which in turn could boost prices.
Increased institutional interest in crypto
In recent years we’ve noticed a growing interest from institutional investors in crypto. From hedge funds to banks, many large institutions are beginning to investigate the potential in crypto currencies. This increased interest from institutions can bring stability to the market for crypto and lead to 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 regulations for crypto. This is likely to attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain is a broad range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many and more industries are exploring ways they can make use of blockchain technology. This could drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will expand. This could result in more adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused through the COVID-19 pandemic as well as other factors, more and more investors are looking for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people learn about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto continues to mature as more and more people are beginning to become aware about and appreciate it. As awareness and acceptance of crypto grows, this could lead to more people buying or holding cryptocurrency, and this can drive up prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows finance services developed upon blockchain technology. As DeFi grows and more projects and platforms come online, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market is growing, more and more companies are beginning accepting crypto payments as a form of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned investments, are starting to show interest in crypto as a potential asset class. As more funds dedicate a part of their portfolio to crypto, this could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of cryptocurrency is its ability to facilitate fast and cheap cross-border payments. As more businesses and individuals begin to use crypto for international transactions, this could lead to increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
The number of crypto ATM’s continue to increase, it will become easier for individuals to purchase and store crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset like stocks or real estate is a fast-growing segment of the cryptocurrency market. Since more and more security tokens will be created and traded, it could lead to increased demand and consequently higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of retailers accept crypto as a form of payment, this will make it more convenient for customers to use and hold cryptocurrency, which will boost demand and increase prices.
So, will crypto grow in 2023? Only time will tell. But with these factors in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. And for those who are committed to the long haul patience and discipline is crucial.