It’s been a tough journey for the cryptocurrency market in 2022. By November the market had dropped by 70 percent from its previous high at the end of November. When things were getting worse, the FTX crash made them look even worse. So, will the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has experienced its fair share of dips in the past. And every time, it’s bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year, reaching a low of $150. But, in 2017 it broke that record and reached a new high of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, it broke through the resistance and hit a new highest of $68,000 in November 2021. Just like that, we’ve had another dip. However, history has shown 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 in the past, dips tend to be followed by a long bull run, which eventually overcomes the resistance set by the previous high price. This pattern can be seen in not just Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in recent years. With more and better companies and industries taking to the technology, its use and acceptance is growing. From gaming to finance the use of crypto is increasing in a myriad of ways. This growing demand could lead to more people being involved in the market and, in turn, increase the price.
A rise in the interest of institutions for crypto
In the last few years we’ve noticed a growing demand from investors of institutional scale in crypto. From banks to hedge funds, many large institutions are beginning to investigate the possibilities in crypto currencies. This increased interest from institutions could provide more stability to the market for crypto and could lead to higher prices.
As the crypto market continues to mature, governments around the world are starting to create more favorable regulations for crypto. This is likely to attract more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of possible applications beyond just financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can benefit from blockchain technology, which could increase investment and enthusiasm in crypto.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like security and scalability, the potential of crypto assets will continue to increase. This could result in more adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused due to the COVID-19 pandemic as well as other factors increasing numbers of investors are beginning to look for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or even individual investors are also beginning to get involved in the cryptocurrency market. As more and more everyday people learn about cryptocurrency and investing 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, more and more people are beginning to learn about and appreciate the concept. As understanding and acceptance grows of crypto, it will lead to increasing numbers of people purchasing and holding crypto, which can raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that allows financial services to be built using blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and increased prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow, more and more companies are starting using crypto to be a method of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are government-owned instruments for investing, are now beginning to show interest in crypto as an asset class. As more funds dedicate a part of their assets to digital currencies, it could increase demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of cryptocurrency is its ability to make fast and cheap cross-border payments. As more businesses and individuals begin to use cryptocurrency for international transactions, it could result in increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to increase it will be more convenient for people to buy and store cryptocurrency, which can drive up demand and prices.
Security tokens are developed for development
Security tokens, also known as digital assets that represent ownership of an asset, like real estate or stock is a fast-growing area of the crypto market. As more security tokens are created and traded, this can lead to a higher demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, this makes it easier for customers to use and hold crypto, which could increase demand and price.
So, is crypto likely to grow in 2023? It’s only time to find out. With these things to consider, it’s likely that the cryptocurrency market will have a rebound by 2023. For those looking to invest for the long haul Being patient and disciplined is crucial.