It’s been a rough experience for the crypto market through 2022. In November the market had dropped by more than 70 percent from its previous high on November 20, 2021. And just when things were getting worse, the FTX crash turned them more dire. What is the likelihood that the crypto market be able to recover by 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips over the years. Every time, it has bounced back by a massive rally.
For instance, 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 the record, and hit a new record high of $19,600. In 2018, the price was at $3,100. And in 2020, it broke that resistance and hit a new high of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. But history shows us that after each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are typically followed by a lengthy bull run that finally overcomes the resistance set by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and better companies and industries adopting it, its usage and acceptance is growing. From gaming to finance, crypto is being used in a myriad of ways. This growing demand could lead to more people getting involved in the crypto market, which in turn could boost prices.
Increased institutional interest in cryptocurrency
In recent times we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the potential for crypto-based assets. The increasing interest from institutions could provide more stability to the crypto market and result in more expensive prices.
Government regulations
As the crypto market grows and mature, governments across the globe are starting to create more favorable rules for crypto. This will help draw more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond financial transactions. From supply chain management to voting systems, more companies are starting to explore how they can make use of blockchain technology. This will increase investment and enthusiasm in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to expand. This could lead to greater use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused due to the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven assets such as gold and crypto. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, also known as individual investors are also beginning to get involved in the crypto market. In the future, as more everyday people are educated about crypto and the best ways to invest in it This could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto is maturing, more and more people are starting to learn about and appreciate it. As awareness and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which could increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services developed upon blockchain technology. As DeFi expands and more projects and platforms come online, this will lead to a rise in adoption and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing as more and more businesses are starting using crypto to be a method of payment. This could lead to an increase in the usage of crypto in daily transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are state-owned instruments for investing, are now beginning to look at crypto as an asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, this could result in a rise in demand and more expensive prices.
Use of crypto for payment across borders
One of the biggest benefits of crypto is the capability to perform swift and affordable cross-border transactions. As more individuals and businesses begin to use cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
As the number of ATMs that accept crypto continue to grow, it will become easier for people to buy and hold crypto, which will increase demand and price.
Development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, such as stock or real estate are rapidly expanding sector of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and higher prices for crypto.
Merchants are more likely to adopt the concept.
With the increasing number of businesses begin accepting cryptocurrency as a method of payment, it will make it more convenient for customers to hold and use crypto, which could increase demand and price.
So, is crypto likely to rise in 2023? It’s only time to find out. But with these factors to consider, it’s likely that the crypto market will be able to see a rebound in 2023. For those looking to invest for the long-term Being patient and disciplined will be key.