It’s been a tough experience for the crypto market in 2022. By November, the market had dipped by more than 70% from its previous peak at the end of November. And just when things were getting worse, the FTX crash made them look even worse. So, will the crypto market recover in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. Each time, it’s rebounded with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. In 2017 it broke that record and reached a new highest of $19,600. Fast forward to 2018, the price was at $3,100. And in the year 2020 it struck that resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve seen another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a long bull run, which eventually overcomes the resistance set by the market’s previous 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 come a long way in recent years. With more and better companies and industries taking to it, its usage and acceptance is rising. From finance to gaming, crypto is being used in many ways. The growing popularity of crypto could result in more people being involved in the crypto market which could drive the prices up.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are now exploring the potential for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and lead to more expensive 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 is likely to attract more investors and boost 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 the realm of financial transactions. From supply chain management to voting systems, more industries are beginning to look at ways they can utilize blockchain technology, which could drive more investment and interest in cryptocurrency.
Technologies are constantly evolving.
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, potential of crypto assets will increase. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
In the current economic uncertainty brought on by 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. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors, are also starting to participate in the cryptocurrency market. With increasing numbers of everyday people learn about crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market continues to mature as more and more people are beginning to learn about and understand it. As awareness and acceptance of crypto grows it could result in more people purchasing and holding crypto, which could drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market that allows finance services built upon blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing increasing numbers of companies are beginning using crypto to be a form of payment. This could result in increased use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
These funds are state-owned investment vehicles, are now beginning to look at cryptocurrency as a possible asset class. As more funds allocate a portion or their entire portfolios to cryptocurrency, it could result in a rise in demand and more expensive prices.
Use of crypto for international payments
One of the biggest benefits of crypto is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize crypto for international transactions, this could lead to increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
The number of ATMs for crypto continue to grow, it will become easier for individuals to purchase and store crypto, which will increase demand and price.
Development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as stock or real estate are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, this could result in a rise in demand, and thus higher rates for the crypto.
More adoption by merchants
With the increasing number of merchants accept cryptocurrency as a method of payment, it will make it more convenient for people to use and hold crypto, which can boost demand and increase prices.
So, is crypto likely to grow in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market could see a recovery in 2023. And for those who are looking to invest for the long-term Being patient and disciplined is crucial.