It’s been a tough experience for the crypto market in 2022. In November the market had dropped by more than 70 percent from the previous high on November 20, 2021. And just when things were going downhill and down, the FTX crash made them look more dire. What is the likelihood that the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips in the past. And every time, it has bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. However, in 2017, it broke that record and hit a record high of $19,600. Fast forward to 2018, and it was trading at $3,100. And in 2020, it broke through the resistance and hit a new high of $68,000 in November 2021. Just like that, we’ve seen 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 in the past, dips are usually followed by a lengthy bull run that eventually breaks through the resistance created by the previous high price. This is evident in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more companies and industries embracing it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a variety of ways. The growing popularity of crypto can lead to increasing participation in the crypto market, which in turn could increase the price.
Increased institutional interest in crypto
In recent times, we’ve seen a growing curiosity from institutions investing in crypto. From banks to hedge funds and even large corporations are beginning to investigate the potential of crypto assets. This increased interest from institutions could bring more stability to the crypto market and lead to greater prices.
Regulations of the government
As the market for crypto grows and mature, governments across the globe are starting to create more favorable rules for crypto. This could help attract more investors and boost the adoption rate of crypto.
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. For example, from supply chain management and voting, many and more industries are exploring ways they can utilize blockchain technology. This could increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to expand. This could result in more adoption and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on by the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in increased demand for crypto and higher prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people are educated about crypto and how to invest in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market is maturing increasing numbers of people are beginning to become aware about and understand it. As the awareness and acceptance of cryptocurrency grows it could result in more people buying as well as holding the crypto that can drive up prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services developed upon blockchain technology. As DeFi grows and more platforms and projects are launched, it could result in increased use and increased prices for crypto.
The development of crypto payment methods
As the crypto market grows as more and more businesses are starting to accept crypto as a method of payment. This could result in increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are starting to look at cryptocurrency as a possible asset class. As more funds devote a percentage of their assets to digital currencies, it could increase demand and increased prices.
Use of crypto for payment across borders
One of the main advantages of crypto is the ability to make quick and inexpensive cross-border payments. As more businesses and individuals begin to use crypto for international transactions, it could result in increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of ATMs for crypto continue to increase it will be more convenient for people to buy and store crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as real estate or stock, are a rapidly growing sector of the crypto market. As more security tokens are created and traded, this could lead to increased demand, and thus higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more businesses start accepting crypto as a form of payment, it makes it easier for people to hold and use cryptocurrency, which will increase demand and price.
So, is crypto likely to rise in 2023? Only time will tell. But with these factors in mind, it’s possible that the crypto market could be able to see a rebound in 2023. And for those who are in it for the long run, being patient and disciplined will be key.