It’s been a rough experience for the crypto market through 2022. By November the market had dropped by 70 percent from its previous high on November 20, 2021. And just when things were going downhill, the FTX crash made them look even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. Each time, it’s bounced back by a massive rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. In 2017, it broke that record, and hit a new high of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke that resistance and reached a new high of $68,000 in November 2021. Just like that, we’ve witnessed another drop. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs tend to be followed by a lengthy bull run, which eventually overcomes the resistance set by the market’s previous highest price. This is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and better companies and industries embracing the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in many ways. The growing popularity of crypto could lead to more people being involved in the crypto market which could boost prices.
The rise in interest of institutions in cryptocurrency
In recent years, we’ve seen a growing curiosity from institutions investing in crypto. From banks to hedge funds, many large institutions are now exploring the potential for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and could lead to higher prices.
As the market for crypto grows and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology. This will drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas like security and scalability, the potential of cryptocurrency assets will continue to expand. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
In the current economic uncertainty brought on through the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or individual investors are also beginning to participate in the market for crypto. In the future, as more everyday people become aware of crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature, more and more people are beginning to learn about it and comprehend it. As awareness and acceptance grows of crypto, this could lead to increasing numbers of people purchasing and holding crypto, which could drive up prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows the provision of financial services created on top of blockchain technology. As DeFi grows and more platforms and projects are launched, it could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow, more and more companies are starting using crypto to be a means of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
The increased investment of 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 funds devote a percentage of their assets to digital currencies, this could increase demand and more expensive 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 individuals and businesses start to utilize cryptocurrency for international transactions this can lead to a rise in the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto increase it will be more convenient for people to buy and hold crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that signify ownership in an asset like real estate or stock, are a rapidly growing area of the crypto market. With the increasing number of security tokens being created and traded, this could lead to increased demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
With the increasing number of retailers accept crypto as a means of payment, this makes it easier for customers to hold and use cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to grow in 2023? Only time will tell. However, with these aspects being considered, it’s likely that the cryptocurrency market will see a recovery in 2023. For those committed to the long run patience and discipline is essential.