It’s been a difficult experience for the crypto market through 2022. By November the market was down by more than 70% from its previous peak in November 2021. When things were looking down after the FTX crash made them look more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips over the years. Every time, it has bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. But, in 2017, it broke the record, and hit a new high of $19,600. In 2018, the price was at $3,100. In 2020, it broke through the resistance, and reached a record peak of $68,000 in the month of November 2021. And just like that, we’ve witnessed another drop. However, history has shown us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are typically followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more companies and industries adopting the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in a myriad of ways. And this growing use case could result in more people getting involved in the crypto market, which in turn could boost prices.
Increased institutional interest in crypto
In recent times, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the possibilities for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and could 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 rules for crypto. This could help attract more investors and increase the adoption rate of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, has a wide range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can benefit from blockchain technology. This will stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the beginning stages of development. As progress is made in areas like security and scalability, the potential of crypto assets will continue to increase. This could lead to more adoption and higher prices.
Rising global economic uncertainty
In the current economic uncertainty caused due to the COVID-19 pandemic and other factors, more and more investors are beginning to look for safe haven assets such as gold and crypto. As the global economic situation is uncertain, this could lead to increased demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, also known as individual investors are also beginning to get involved in the crypto market. With increasing numbers of people are educated about crypto and the best ways to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the market for crypto continues to mature, more and more people are beginning to learn about it and comprehend it. As awareness and acceptance of crypto grows, it will lead to more people purchasing and holding crypto, which could raise prices.
Decentralized finance (DeFi) is an emerging area of the crypto market, which allows financial services to be built on top of blockchain technology. As DeFi continues to grow and more platforms and projects 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 grows as more and more businesses are starting to accept crypto as a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are now beginning to show interest in crypto as a potential asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, it could lead to increased demand and increased prices.
Utilization of crypto to make international payments
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. As more and more people and businesses begin to use cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto continue to increase it will be easier for consumers to purchase and keep crypto, which will increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership of an asset, such as stock or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be issued and traded, it could result in a rise in demand, and thus higher prices for crypto.
More adoption by merchants
With the increasing number of businesses begin accepting crypto as a means of payment, it makes it easier for consumers to use and hold crypto, which could increase demand and price.
So, will crypto increase in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the cryptocurrency market will have a rebound by 2023. If you’re looking to invest for the long run, being patient and disciplined will be key.