It’s been a difficult journey for the cryptocurrency market until 2022. As of November the market was down by 70 percent from the previous high at the end of November. When things were going downhill and down, the FTX crash turned them even more dire. The question is, can the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced many dips in the past. And every time, it’s bounced back with a huge increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before hitting a low of $150. However, in 2017 it broke that record and reached a new record high of $19,600. In 2018, the price was at $3,100. And in 2020, the price broke that resistance, and reached a record peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, the past has proven 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 tend to be followed by a lengthy bull run that finally overcomes the resistance set by the previous high price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more companies and industries embracing it, its usage and acceptance is increasing. From banking to gaming the use of crypto is increasing in a variety of ways. And this growing use case can lead to more people being involved in the crypto market and, in turn, drive the prices up.
Increased institutional interest in crypto
In recent times, we’ve seen a growing demand from investors of institutional scale in crypto. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increasing interest from institutions could bring more stability to the market for crypto and result in greater prices.
Regulations of the government
As the market for crypto grows 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.
A broader range of blockchain applications
The technology that underlies many 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 exploring ways they can benefit from blockchain technology. This will increase investment and enthusiasm in crypto.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will expand. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
In the current instability in the economy caused due to the COVID-19 pandemic, as well as other causes, more and more investors are looking for safe haven investments like cryptocurrency and gold. Because the global economic climate is uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in people who are interested in crypto. Retail investors, also known as individual investors, are also starting to participate in the market for crypto. In the future, as more people become aware of crypto and the best ways to invest in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto grows increasing numbers of people are beginning to become aware about and understand the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying as well as holding the crypto that can increase prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows the provision of financial services created on top of blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could lead to increased adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows, more and more companies are beginning to accept crypto as a means of payment. This could lead to increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investment vehicles, are now beginning to explore crypto as a potential asset class. As more of these funds devote a percentage of their assets to digital currencies, this could increase demand and increased prices.
Use of crypto for payment across borders
One of the biggest benefits of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses begin to use cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto continue to increase it will be easier for individuals to purchase and keep crypto, which could increase demand and price.
The development of security tokens
Security tokens, which are digital assets that signify ownership in an asset such as stock or real estate, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being created and traded, this could result in a rise in demand and consequently higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of merchants start accepting crypto as a form of payment, this makes it easier for customers to hold and use crypto, which can drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. But with these factors to consider, it’s possible that the cryptocurrency market will have a rebound by 2023. If you’re looking to invest for the long run patience and discipline will be key.