It’s been a tough experience for the crypto market through 2022. In November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were getting worse after the FTX crash turned them even worse. 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 experienced many dips in the past. Each time, it’s rebounded with a huge rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. However, in 2017 it broke that record, and hit a new high of $19,600. In 2018, it was trading at $3,100. In 2020, it broke through the resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve had another dip. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are usually followed by a long bull run that eventually surpasses the resistance created by the market’s previous highest price. This pattern can be seen in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more companies and industries embracing it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a variety of ways. This growing demand could lead to increasing participation in the crypto market, which in turn could increase the price.
Increased institutional interest in cryptocurrency
In recent times we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From hedge funds to banks, many large institutions are now exploring the potential in crypto currencies. The increasing interest from institutions can bring stability to the crypto market and result in greater prices.
Government regulations
As the market for crypto continues to mature and mature, governments across the globe are starting to create more favorable rules for cryptocurrency. This will help draw more investors and increase the mainstream adoption of crypto.
Blockchain has many more applications.
The technology that underlies many cryptocurrencies, blockchain, has a wide range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems and more industries are exploring ways they can utilize blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will continue to increase. This could lead to more adoption and higher prices.
Rising global economic uncertainty
Due to the constant economic uncertainty caused through the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to get involved in the crypto market. As more and more everyday people learn about cryptocurrency and investing in it this could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto grows increasing numbers of people are beginning to become aware about it and comprehend it. As the awareness and acceptance of crypto grows, it will lead to more people purchasing or holding cryptocurrency, and this can raise prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows financial services to be built on top of blockchain technology. As DeFi grows and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto grows increasing numbers of companies are starting to accept crypto as a form of payment. This could lead to an increase in the use of crypto in regular transactions, and a rise in prices.
Increased investment from sovereign wealth funds
These funds are government-owned investment vehicles, are now beginning to look at crypto as a potential asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is its capability to perform quick and inexpensive cross-border payments. As more individuals and businesses start to utilize cryptocurrency 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.
With the amount of ATMs that accept crypto increase it will be easier for consumers to purchase and keep crypto, which will increase demand and price.
Development of security tokens
Security tokens, which are digital assets that are used to represent ownership of an asset, such as stock or real estate are rapidly expanding area of the crypto market. As more security tokens are created and traded, this could lead to increased demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more merchants accept crypto as a means of payment, this will make it more convenient for people to hold and use crypto, which can drive up demand and prices.
Will crypto be on the rise in 2023? Only time will tell. With these things to consider, it’s likely that the crypto market will be able to see a rebound in 2023. For those in it for the long run patience and discipline will be key.