It’s been a tough journey for the cryptocurrency market in 2022. As of November, the market had dipped by 70 percent from the previous high in November 2021. When things were going downhill after the FTX crash turned things even more dire. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen many dips over the years. And every time, it has bounced back with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year, reaching a low of $150. But, in 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, it broke through that resistance, and reached a record highest of $68,000 in November 2021. Just like that, we’ve seen another dip. But history shows us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs tend to be followed by a lengthy bull run that finally overcomes the resistance set 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
Crypto and blockchain technology have made significant progress in recent years. With more and more companies and industries taking to it, its usage and acceptance is increasing. From finance to gaming, crypto is being used in a variety of ways. This growing demand can lead to increasing participation in the crypto market and, in turn, drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years 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. This increased interest from institutions could provide more stability to the crypto market and result in higher prices.
Government regulations
As the crypto market continues to mature as it matures, governments all over the world are beginning to establish more favorable rules for cryptocurrency. This will help draw more investors and increase the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more industries are exploring ways they can utilize blockchain technology, which could increase investment and enthusiasm in crypto.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to expand. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused by the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets like bitcoin and even gold. Because the global economic climate remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or even individual investors are also beginning to participate in the cryptocurrency market. In the future, as more people become aware of cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market continues to mature increasing numbers of people are beginning to learn about it and comprehend it. As awareness and acceptance of crypto grows, this could lead to more people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows the provision of financial services developed upon blockchain technology. As DeFi grows and more platforms and projects become available, this will lead to a rise in adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing as more and more businesses are starting to accept crypto as a method of payment. This could result in increased use of crypto in regular transactions and higher prices.
Increased investment from sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to show interest in crypto as a potential asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Utilization of crypto to make international payments
One of the major benefits of cryptocurrency is its ability to make fast and cheap cross-border payments. As more individuals and businesses begin to use crypto for international transactions, it could result in increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
As the number of crypto ATM’s increase it will be more convenient for individuals to purchase and hold cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stock or real estate, are a rapidly growing area of the crypto market. With the increasing number of security tokens being issued and traded, this could result in a rise in demand and consequently higher costs for cryptocurrency.
More adoption by merchants
As more and more businesses accept crypto as a means of payment, it will make it more convenient for customers to use and hold crypto, which could boost demand and increase prices.
So, is crypto likely to increase in 2023? It’s only time to find out. However, with these aspects being considered, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. And for those who are in it for the long run, being patient and disciplined is essential.