It’s been a rough ride for the crypto market in 2022. By November the market had dropped by more than 70% from its previous peak in November 2021. And just when things were going downhill, the FTX crash turned them even more dire. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of drops in the past. And every time, it’s bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before hitting a low of $150. In 2017 it broke that record, and hit a new highest of $19,600. Then, in 2018, it was trading at $3,100. And in the year 2020 it struck that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve seen another dip. However, the past has proven that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips tend to be followed by a long bull run, which eventually overcomes the resistance set by the previous market’s highest price. This pattern can be seen in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in the last few years. With more and more companies and industries taking to it, its usage and acceptance is rising. From finance to gaming, crypto is being used in a variety of ways. And this growing use case can lead to increasing participation in the crypto market which could increase the price.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising demand from investors of institutional scale in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the potential in crypto currencies. This increased interest from institutions could provide more stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto grows as it matures, governments all over the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors and boost the acceptance of crypto in general.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can make use of blockchain technology. This 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 such as security and scalability, the potential of crypto assets will continue to increase. This could lead to more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on through the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world remains uncertain and uncertain, this could lead to increased demand for crypto and more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, also known as individual investors are also beginning to get involved in the crypto market. In the future, as more everyday people become aware of crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto continues to mature increasing numbers of people are starting to learn about it and comprehend the concept. As the awareness and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which can drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built using blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it could lead to increased adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow as more and more businesses are starting using crypto to be a method of payment. This could lead to increased usage of crypto in daily transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned instruments for investing, are now beginning to look at crypto as an asset class. As more funds allocate a portion of their assets to digital currencies, this could increase demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the major benefits of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses begin to use cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
As the number of ATMs for crypto continue to increase, it will become easier for individuals to purchase and hold 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 real estate or stock, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, it could lead to increased demand, and thus higher prices for crypto.
More adoption by merchants
With the increasing number of retailers start accepting crypto as a means of payment, this will make it easier for consumers to hold and use crypto, which can drive up demand and prices.
So, will crypto rise in 2023? It’s only time to find out. With these things to consider, it’s likely that the crypto market will be able to see a rebound in 2023. For those looking to invest for the long run patience and discipline will be key.