It’s been a difficult experience for the crypto market through 2022. As of November the market was down by 70% from its previous peak at the end of November. And just when things were going downhill after the FTX crash turned them even more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips over the years. Each time, it has bounced back by a massive rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year before reaching a bottom of $150. But, in 2017, it broke that record and hit a record high of $19,600. In 2018, the price was at $3,100. In the year 2020 it struck that resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, history has shown us that after each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips tend to be followed by a prolonged bull run that finally breaks through the resistance created by the previous market’s highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in recent years. With more and more companies and industries embracing the technology, its use and acceptance is rising. From banking to gaming cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in increasing participation in the market which could drive the prices up.
The rise in interest of institutions in crypto
In recent times we’ve noticed a growing interest from institutional investors in crypto. From hedge funds to banks numerous large institutions are now exploring the potential in crypto currencies. The increasing interest from institutions could provide more stability to the market for crypto and could lead to greater prices.
Government regulations
As the market for crypto grows as it matures, governments all over the world are beginning to establish more favorable rules for cryptocurrency. This could help attract more investors and increase the adoption rate of crypto.
More use cases for blockchain
The technology that underlies the majority of cryptocurrencies, blockchain has a wide range of potential use cases beyond just financial transactions. In addition to supply chain management, voting and other systems companies are starting to explore how they can utilize blockchain technology. This could drive more investment and interest in crypto.
Technologies are constantly evolving.
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas like scalability and security, the potential of crypto assets will increase. This could lead to more acceptance and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused due to the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to get involved in the cryptocurrency market. As more and more people become aware of crypto and the best ways to invest 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 crypto market is maturing increasing numbers of people are starting to learn about and appreciate it. As understanding and acceptance of crypto grows, this could lead to increasing numbers of people purchasing and holding crypto, which could increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows financial services to be developed using blockchain technology. As DeFi expands and more platforms and projects come online, this will lead to a rise in adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market continues to grow as more and more businesses are starting to accept crypto as a means of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned instruments for investing, are beginning to explore crypto as a potential asset class. As more funds devote a percentage of their assets to digital currencies, it could lead to increased demand and higher prices.
Use of crypto for international payments
One of the major benefits of crypto is its ability to make fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of cryptocurrency 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 become easier for people to buy and store cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, which are digital assets that are used to 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, this can lead to a higher demand and higher rates for the crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants begin accepting cryptocurrency as a method of payment, it makes it easier for customers to utilize and store crypto, which can increase demand and price.
So, will crypto grow in 2023? The only way to know is time. But with these factors to consider, it’s possible that the cryptocurrency market will have a rebound by 2023. And for those who are in it for the long haul, being patient and disciplined is crucial.