It’s been a difficult ride for the crypto market through 2022. As of November the market had dropped by more than 70 percent from the previous high at the end of November. And just when things were looking down after the FTX crash made them look more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many drops in the past. And 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 a full year, reaching a low of $150. However, in 2017 it broke that record and reached a new high of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck that resistance, and reached a record peak of $68,000 in the month of November 2021. Just like that, we’ve had another dip. But history shows us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips tend to be followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and better companies and industries embracing the technology, its use and acceptance is rising. From gaming to finance, crypto is being used in a myriad of ways. The growing popularity of crypto can lead to more people getting involved in the market and, in turn, increase the price.
Increased institutional interest in crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks numerous large institutions are beginning to investigate the potential for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and result in higher prices.
Government regulations
As the crypto market grows as it matures, governments all over the world are beginning to develop more favorable rules for cryptocurrency. This could help attract more investors as well as increase the acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain offers a variety of potential use cases that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can make use of blockchain technology. This could drive more investment and interest in cryptocurrency.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will continue to increase. This could lead to greater acceptance and higher prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven assets such as cryptocurrency and gold. As the global economic situation remains uncertain it could result in more demand for crypto as well as increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors are also beginning to get involved in the cryptocurrency market. With increasing numbers of people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market is maturing, more and more people are beginning to learn about and understand the concept. As awareness and acceptance of cryptocurrency grows, this could lead to more people purchasing as well as holding the crypto that could drive up prices.
umee crypto
Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows financial services to be created upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow, more and more companies are starting using crypto to be a means of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, it could increase demand and increased prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is its ability to make quick and inexpensive cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
The number of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and keep crypto, which could drive up demand and prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, such as stock or real estate, are a rapidly growing sector of the crypto market. As more security tokens are issued and traded, this can lead to a higher demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
In the event that more retailers start accepting crypto as a form of payment, this will make it more convenient for people to use and hold crypto, which could boost demand and increase prices.
So, will crypto grow in 2023? Only time will tell. But with these factors being considered, it’s possible that the cryptocurrency market will see a recovery in 2023. For those in it for the long run patience and discipline is essential.