It’s been a rough ride for the crypto market through 2022. By November the market had dropped by more than 70% from its previous peak at the end of November. And just when things were getting worse and down, the FTX crash made them look even worse. The question is, can the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many drops in the past. And every time, it’s rebounded with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year, reaching a low of $150. However, in 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, the price was at $3,100. In the year 2020 it struck through that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are typically followed by a lengthy bull run that eventually surpasses the resistance created by the market’s previous highest price. This pattern can be seen in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and more businesses and industries embracing it, its usage and acceptance is rising. From gaming to finance, crypto is being used in a myriad of ways. And this growing use case can lead to more people getting involved in the crypto market which could boost prices.
A rise in the interest of institutions for cryptocurrency
In recent years we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the potential for crypto-based assets. The increased interest of institutions could bring more stability to the crypto market and lead to greater prices.
Government regulations
As the crypto market continues to mature as it matures, governments all over the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors and boost the mainstream adoption of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can utilize blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as security and scalability, potential of cryptocurrency assets will continue to expand. This could lead to more acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty caused due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven assets such as cryptocurrency and gold. As the global economic situation is uncertain it could result in more demand for crypto as well as increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in crypto. Retail investors, also known as individual investors, are also starting to participate in the crypto market. As more and more everyday people are educated about cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows as more and more people are starting to learn about and understand it. As understanding and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing and holding crypto, which can increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services created using blockchain technology. As DeFi continues to grow and more projects and platforms are launched, it will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow as more and more businesses are beginning to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are beginning to show interest in crypto as an asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could result in a rise in demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the biggest benefits of crypto is its capability to perform swift and affordable cross-border transactions. As more and more people 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.
Increasing numbers of crypto ATM’s
With the amount of ATMs for crypto increase it will be more convenient for individuals to purchase and store crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like stocks or real estate is a fast-growing area of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more retailers accept cryptocurrency as a method of payment, this will make it more convenient for customers to utilize and store crypto, which can drive up demand and prices.
So, is crypto likely to grow in 2023? It’s only time to find out. However, with these aspects being considered, it’s likely that the crypto market could see a recovery in 2023. And for those who are looking to invest for the long run Being patient and disciplined is essential.