It’s been a difficult journey for the cryptocurrency market in 2022. As of November, the market had dipped by more than 70% from its previous peak in November 2021. And just when things were getting worse after the FTX crash made them look more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips over the years. Each time, it has bounced back with a huge rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before hitting a low of $150. However, in 2017, it broke the record and hit a record highest of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are usually followed by a lengthy bull run that finally breaks through the resistance created by the previous market’s highest price. This pattern is evident in more than 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 more businesses and industries adopting the technology, its use and acceptance is increasing. From finance to gaming the use of crypto is increasing in many ways. The growing popularity of crypto could lead to more people getting involved in the market which could increase the price.
A rise in the interest of institutions for crypto
In the last few years we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions could bring more stability to the crypto market and lead to higher prices.
Government regulations
As the market for crypto grows as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that is the basis of many cryptocurrency, blockchain, has a wide range of applications that go beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will continue to expand. This could lead to more adoption and higher prices.
Rising global economic uncertainty
With the ongoing instability in the economy caused through the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven investments like gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors are also beginning to get involved in the market for crypto. With increasing numbers of people are educated about crypto and the best ways to invest in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market is maturing increasing numbers of people are starting to learn about and appreciate the concept. As understanding and acceptance of cryptocurrency grows it could result in more people purchasing as well as holding the crypto that can raise prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services built on top of blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows, more and more companies are beginning to accept crypto as a means of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are beginning to look at crypto as an asset class. As more of these funds dedicate a part of their assets to digital currencies, this could increase demand and higher prices.
Utilization of crypto to make payment across borders
One of the major benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more individuals and businesses start to utilize crypto for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of crypto ATM’s continue to increase it will be more convenient for people to buy and store crypto, which could boost demand and increase prices.
Security tokens are developed for development
Security tokens, which are digital assets that represent ownership in an asset such as stock or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be created and traded, this could lead to increased demand and consequently higher costs for cryptocurrency.
Merchants are more likely to adopt the concept.
In the event that more merchants start accepting crypto as a means of payment, it will make it more convenient for customers to hold and use cryptocurrency, which will boost demand and increase prices.
Will crypto be on the increase in 2023? It’s only time to find out. With these things in mind, it’s likely that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long run, being patient and disciplined will be key.