It’s been a rough journey for the cryptocurrency market through 2022. By November the market was down by more than 70 percent from its previous high at the end of November. When things were getting worse and down, 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 market for crypto, particularly Bitcoin, has seen many dips over the years. Every time, it’s bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. In 2017 it broke that record, and hit a new highest of $19,600. Fast forward to 2018, the price was at $3,100. And in 2020, it broke through the resistance and reached a new highest of $68,000 in November 2021. And just like that, we’ve had another dip. But history shows us that at the end of every dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips tend to be followed by a lengthy bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From finance to gaming cryptocurrency is being utilized in a myriad of ways. This growing demand can lead to more people being involved in the crypto market which could increase the price.
Increased institutional interest in crypto
In recent years, we’ve seen a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the potential of crypto assets. This increased interest from institutions could bring more stability to the crypto market and lead to more expensive prices.
Government regulations
As the market for crypto continues to mature as it matures, governments all over the world are starting to create more favorable rules for cryptocurrency. This is likely to attract more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more companies are exploring ways they can make use of blockchain technology, which could increase investment and enthusiasm in crypto.
Technology advancements
Crypto and blockchain technology are at the very beginning of development. As progress is made in areas such as security and scalability, potential of crypto assets will grow. This could result in more acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on by the COVID-19 pandemic and other factors many investors are beginning to look for safe haven investments like cryptocurrency and 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 ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people are educated about crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market is maturing, more and more people are beginning to learn about and understand it. As awareness and acceptance grows of crypto, it will lead to more people purchasing and holding crypto, which can raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that allows financial services to be built using 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.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are beginning accepting crypto payments as a form of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investment vehicles, are now beginning to show interest in crypto as an asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Cryptocurrency is used for payment across borders
One of the major benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more businesses and individuals start to utilize crypto for international transactions, this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of crypto ATM’s continue to increase it will be more convenient for people to buy and hold cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that represent ownership of an asset, such as stock or real estate is a fast-growing segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, this could lead to increased demand and higher prices for crypto.
More adoption by merchants
With the increasing number of retailers accept crypto as a means of payment, this will make it more convenient for customers to utilize and store crypto, which could drive up demand and prices.
Will crypto be on the rise in 2023? Only time will tell. But with these factors to consider, it’s possible that the crypto market could see a recovery in 2023. And for those who are in it for the long-term, being patient and disciplined will be key.