It’s been a tough ride for the crypto market until 2022. In November the market was down by more than 70% from its previous peak on November 20, 2021. And just when things were going downhill and down, the FTX crash turned things even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many drops in the past. Every time, it’s bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. In 2017, it broke the record, and hit a new highest of $19,600. Then, in 2018, it was trading at $3,100. In 2020, the price broke through that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve seen 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 before, fall-offs tend to be followed by a prolonged bull run that eventually breaks through the resistance created by the market’s previous highest price. This is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more businesses and industries taking to the technology, its use and acceptance is increasing. From gaming to finance the use of crypto is increasing in a myriad of ways. This growing demand could result in more people being involved in the crypto market, which in turn could drive the prices up.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising interest from institutional investors in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the potential in crypto currencies. The increased interest of institutions could provide more stability to the crypto market and result in more expensive prices.
Regulations from the Government
As the crypto market continues to mature, governments around the world are starting to create more favorable regulations for cryptocurrency. This will help draw 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 cryptocurrencies, blockchain, has a wide range of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can benefit from blockchain technology. This could stimulate more investment and excitement in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like security and scalability, potential of crypto assets will continue to grow. This could lead to greater adoption and higher 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 assets such as bitcoin and even gold. Since the economic outlook for the world remains uncertain, this could lead to more demand for crypto as well as more expensive prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in crypto. Retail investors, or individual investors are also beginning 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 lead to more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows increasing numbers of people are beginning to learn about it and comprehend the concept. As understanding and acceptance of crypto grows, it will lead to increasing numbers of people purchasing as well as holding the crypto that could raise prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables financial services to be built on top of blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it will lead to a rise in adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing, more and more companies are beginning using crypto to be a method of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as investment vehicles, are starting to look at crypto as a potential asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could result in a rise in demand and higher prices.
Use of crypto for international payments
One of the major benefits of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of crypto for international transactions, it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
The number of crypto ATM’s continue to increase it will be more convenient for people to buy and store cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that represent ownership of an asset, like stock or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be issued and traded, this could result in a rise in demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
As more and more businesses start accepting crypto as a means of payment, this makes it easier for consumers to utilize and store cryptocurrency, which will increase demand and price.
So, is crypto likely to increase in 2023? The only way to know is time. However, with these aspects being considered, it’s possible that the crypto market will be able to see a rebound in 2023. And for those who are committed to the long run, being patient and disciplined will be key.