It’s been a difficult ride for the crypto market until 2022. As of November, the market had dipped by more than 70% from its previous peak in November 2021. When things were getting worse and down, the FTX crash made them look more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of dips over the years. Every time, it has bounced back by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year before hitting a low of $150. But, in 2017, it broke that record, and hit a new high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, it broke that resistance and hit a new peak of $68,000 in the month of November 2021. Just like that, we’ve seen another dip. However, the past has proven that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen before, fall-offs tend to be followed by a lengthy bull run that eventually overcomes the resistance set by the market’s previous highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent 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 and, in turn, increase the price.
Increased institutional interest in cryptocurrency
In recent times we’ve witnessed a rising curiosity from institutions investing in crypto. From banks to hedge funds and even large corporations are now exploring the possibilities of crypto assets. The increasing interest from institutions could bring more stability to the market for crypto and could lead to higher prices.
As the crypto market grows as it matures, governments all over the world are beginning to establish more favorable rules for crypto. This is likely to attract more investors and increase the adoption rate of crypto.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, has a wide range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can utilize blockchain technology. This could stimulate more investment and excitement 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, potential of cryptocurrency assets will continue to expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven assets such as gold and crypto. As the global economic situation is uncertain it could result in an increase in demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to get involved in the crypto market. In the future, as more people learn about cryptocurrency and investing in it This could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto is maturing, more and more people are beginning to learn about and understand it. As the awareness and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows finance services built upon blockchain technology. As DeFi grows and more platforms and projects come online, this could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the crypto market continues to grow, more and more companies are starting to accept crypto as a form of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more funds allocate a portion of their portfolio to crypto, this could increase demand and more expensive prices.
Utilization of crypto to make international payments
One of the biggest benefits of crypto is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize cryptocurrency for international transactions it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto continue to increase it will be more convenient for consumers to purchase and keep crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as stocks or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, it could result in a rise in demand and higher costs for cryptocurrency.
More adoption by merchants
As more and more merchants start accepting crypto as a means of payment, it makes it easier for consumers to utilize and store cryptocurrency, which will increase demand and price.
Will crypto be on the increase in 2023? The only way to know is time. However, with these aspects to consider, it’s likely that the crypto market could have a rebound by 2023. And for those who are looking to invest for the long run, being patient and disciplined is crucial.