It’s been a rough journey for the cryptocurrency market in 2022. As of November the market had dropped by more than 70 percent from its previous high on November 20, 2021. And just when things were looking down, the FTX crash turned things even more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of drops in the past. And every time, it’s bounced back with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year, reaching a low of $150. But, in 2017, it broke the record and reached a new record high of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck through that resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us that at the end of every dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips tend to be followed by a lengthy bull run that finally surpasses the resistance created by the previous market’s highest price. This pattern is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more companies and industries taking to it, its usage and acceptance is growing. From banking to gaming, crypto is being used in a variety of ways. The growing popularity of crypto could result in more people getting involved in the market which could drive the prices up.
The rise in interest of institutions in cryptocurrency
In recent times, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are starting to explore the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the crypto market and result in greater prices.
Regulations of the government
As the market for crypto continues to mature as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This could help attract more investors and boost the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, is a broad range of applications that go beyond the realm of financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can make use of blockchain technology, which could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas like security and scalability, the potential of crypto assets will expand. This could result in more acceptance and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on by the COVID-19 pandemic, as well as other causes many investors are starting to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. With increasing numbers of people become aware of cryptocurrency and investing in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market is maturing, more and more people are starting to learn about and understand the concept. As the awareness and acceptance of cryptocurrency grows it could result in more people buying as well as holding the crypto that can drive up prices.
val crypto
Decentralized finance (DeFi) is an emerging area of the crypto market, which allows financial services to be created using blockchain technology. As DeFi expands and more platforms and projects become available, this will lead to a rise in adoption and increased prices for crypto.
Developments in crypto payment methods
As the crypto market is growing as more and more businesses are beginning to accept crypto as a method of payment. This could lead to increased use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investment vehicles, are starting to look at crypto as an asset class. As more of these funds devote a percentage of their portfolio to crypto, this could result in a rise in demand and more expensive prices.
Use of crypto for international payments
One of the major benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of ATMs for crypto increase, it will become easier for consumers to purchase and keep crypto, which could increase demand and price.
Development of security tokens
Security tokens, or digital assets that represent ownership in an asset like stock or real estate is a fast-growing 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 consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, it makes it easier for customers to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the grow in 2023? It’s only time to find out. However, with these aspects being considered, it’s possible that the cryptocurrency market will see a recovery in 2023. And for those who are committed to the long run patience and discipline will be key.