It’s been a difficult journey for the cryptocurrency market in 2022. By November the market was down by 70 percent from the previous high on November 20, 2021. When things were getting worse, the FTX crash turned things 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. Every time, it has bounced back with a big rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year before reaching a bottom of $150. However, in 2017, it broke that record, and hit a new high of $19,600. In 2018, and it was trading at $3,100. And in 2020, it broke that resistance, and reached a record highest of $68,000 in November 2021. And just like that, we’ve had another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips tend to be followed by a prolonged bull run, which eventually surpasses the resistance created by the previous high price. This pattern is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more companies and industries adopting it, its usage and acceptance is growing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in more people being involved in the crypto market and, in turn, boost prices.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds, many large institutions are now exploring the possibilities for crypto-based assets. The increased interest of institutions could provide more stability to the market for crypto and result in greater prices.
Regulations from the Government
As the market for crypto continues to mature and mature, governments across the globe are starting to create more favorable rules for crypto. This is likely to attract more investors as well as increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of possible applications that go beyond financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to grow. This could result in more use and increase in prices.
Rising global economic uncertainty
Due to the constant economic uncertainty brought on by the COVID-19 pandemic, as well as other causes, more and more investors are beginning to look for safe haven investments like bitcoin and even gold. Because the global economic climate is uncertain it could result in increased demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in crypto. Retail investors, also known as individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people learn about crypto and the best ways to invest in it this could result in increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing, more and more people are starting to learn about and appreciate it. As awareness and acceptance grows of crypto it could result in more people buying as well as holding the crypto that could increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services created on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market grows as more and more businesses are starting using crypto to be a means of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are government-owned instruments for investing, are beginning to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part of their portfolio to crypto, it could increase demand and increased prices.
Use of crypto for cross-border 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 start to utilize crypto for international transactions, this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
With the amount of ATMs for crypto continue to grow it will be easier for consumers to purchase and keep cryptocurrency, which can increase demand and price.
Security tokens are developed for development
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stocks or real estate are rapidly expanding segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, it could lead to increased demand and consequently higher rates for the crypto.
More adoption by merchants
As more and more businesses start accepting cryptocurrency as a method of payment, it will make it easier for consumers to hold and use crypto, which can increase demand and price.
Will crypto be on the rise in 2023? Only time will tell. However, with these aspects being considered, it’s likely that the cryptocurrency market will have a rebound by 2023. And for those who are looking to invest for the long-term, being patient and disciplined will be key.