It’s been a tough ride for the crypto market through 2022. In November the market was down by more than 70% from its previous peak in November 2021. And just when things were getting worse and down, 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 cryptocurrency market, specifically Bitcoin has experienced many dips in the past. And every time, it has bounced back with a huge increase.
In 2013, for instance, 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 record record high of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, it broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. 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 before, fall-offs are typically followed by a lengthy bull run that finally surpasses the resistance created by the previous market’s highest price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and more companies and industries adopting it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a variety of ways. The growing popularity of crypto could lead to more people being involved in the market which could increase the price.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the potential in crypto currencies. The increasing interest from institutions can bring stability to the market for crypto and lead to greater prices.
Regulations from the Government
As the market for crypto is maturing, governments around the world are beginning to establish more favorable regulations for cryptocurrency. This could help attract more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrencies, blockchain, offers a variety of applications that go that go beyond financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages 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 more use and increase in prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and higher prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to get involved in the market for crypto. In the future, as more everyday people become aware of crypto and how to invest in it this could result in more demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows as more and more people are beginning to become aware about and appreciate it. As the awareness and acceptance of cryptocurrency grows it could result in more people purchasing as well as holding the crypto that can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that enables the provision of financial services built on top of blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could result in increased use and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow as more and more businesses are starting accepting crypto payments as a method of payment. This could lead to increased use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned investments, are beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage of their assets to digital currencies, this could lead to increased demand and more expensive prices.
Use of crypto for cross-border payments
One of the major benefits of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, it could result in increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto increase it will be more convenient for consumers to purchase and hold cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, which are digital assets that represent ownership of an asset, like real estate or stock, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, this can lead to a higher demand and consequently higher rates for the crypto.
A greater adoption rate by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, this will make it more convenient for people to use and hold crypto, which could boost demand and increase prices.
So, is crypto likely to increase in 2023? Only time will tell. But with these factors being considered, it’s likely that the crypto market will see a recovery in 2023. If you’re looking to invest for the long run, being patient and disciplined will be key.