It’s been a rough ride for the crypto market in 2022. As of November the market had dropped by more than 70 percent from its previous high at the end of November. Just when the market was getting worse and down, the FTX crash turned them even more dire. What is the likelihood that 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 dips in the past. And every time, it has bounced back by a massive rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before hitting a low of $150. In 2017 it broke that record and hit a record highest of $19,600. In 2018, it was trading at $3,100. And in 2020, it broke through that 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, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a long bull run that eventually overcomes the resistance set by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and more companies and industries embracing the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in a variety of ways. And this growing use case could lead to more people getting involved in the crypto market which could boost prices.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in crypto. From hedge funds to banks, many large institutions are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the crypto market and lead to greater prices.
Regulations from the Government
As the market for crypto grows 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 acceptance of crypto in general.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain technology and cryptography are still in the early stages of development. As advances continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to increase. This could lead to greater adoption and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic and other factors many investors are looking for safe haven investments like cryptocurrency and gold. As the global economic situation is uncertain, this could lead to an increase in demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to participate in the cryptocurrency market. With increasing numbers of everyday people are educated about crypto and how to invest in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature as more and more people are beginning to learn about and understand it. As understanding and acceptance grows of crypto, it will lead to more people buying or holding cryptocurrency, and this could increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi expands and more projects and platforms are launched, it could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning to accept crypto as a form of payment. This could lead to an increase in the use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are government-owned investment vehicles, are beginning to look at crypto as an asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is its ability to make swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of crypto for international transactions, this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto continue to increase it will be easier for people to buy and hold cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, which are digital assets that signify ownership of an asset, like stocks 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 higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of retailers accept cryptocurrency as a method of payment, this makes it easier for people to utilize and store crypto, which can increase demand and price.
Will crypto be on the 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. And for those who are looking to invest for the long haul Being patient and disciplined is essential.