When will crypto recover?

The past few years have seen dramatic ups and downs in the crypto world: from massive crypto platform hacks to bankruptcies of companies like FTX. The volatility of the crypto market has always been a double-edged sword, bringing both incredible gains and devastating losses. But the current downturn has been especially brutal, leaving many investors wondering why crypto is crashing and whether it will recover. In this article, we’ll explore the factors behind the crash, analyze historical trends, and look to the future to forecast a potential recovery for the crypto market in 2023.

Why is crypto crashing?

To find out the answer to the question “will crypto ever recover?”, it is required to look into the root of the problem and understand why it suffered a protracted ailment, referred to by industry experts as bear market or crypto winter. 

The current crash can be attributed to a number of factors. One of the main drivers is the crackdown on crypto by governments and regulators around the world. China, for instance, has banned all crypto transactions and mining activities, causing a significant drop in demand. The lack of clear regulations in the early days of crypto also led to a lot of fraud and scams, which caused the market to crash. Moreover, concerns over the environmental impact of crypto mining have led to a negative public perception of the industry.

Another factor contributing to the crash is the overall uncertainty in the global economy. The COVID-19 pandemic has taken a toll on the world’s financial markets, and investors are hesitant to take on risky investments like crypto during such an uncertain time. Finally, the market itself may have been overvalued, leading to a correction that was long overdue.

However, despite these challenges, there are grounds that give hope to investors that the crypto comeback is just around the corner. The market has been through similar crashes in the past and has always managed to recover. Additionally, the fundamental technology behind cryptocurrencies, like blockchain, is still in its infancy and has the potential to revolutionize industries beyond finance.

The reasons why crypto will recover

Having looked at the reasons that led to the crypto crash, it’s time to look at the reasons that must necessarily lead to its recovery. Below are the most notable ones.

Historical trends in crypto market recovery

To understand the potential for a crypto recovery in 2023, it’s helpful to look at historical trends and patterns in the market. In the past, the crypto market has gone through several boom-and-bust cycles, with prices rising rapidly before crashing just as quickly. However, each cycle has seen the market bounce back stronger than before, with new highs being reached after each crash.

One example of this is the 2017 crypto bubble, where prices rose rapidly before crashing in early 2018. Many investors lost significant amounts of money during this time, but those who held onto their investments saw significant gains in the years that followed. Bitcoin, for example, reached a new all-time high in 2020, two years after the crash.

The growing adoption of cryptocurrency

One of the main reasons why the crypto comeback is inevitable is the growing adoption of cryptocurrency. Companies like PayPal and Visa have started to accept crypto as payment, and more institutional investors are getting involved in the market. Take the gaming industry, for example, where digital assets are increasingly being introduced to bypass the need for intermediaries and gamers are rewarded in crypto, such as the NFT.

Cryptocurrency is gaining popularity amongst average consumers, who use crypto as a means of payment – to pay for goods and services both in the real world and in the virtual one. While investors, instead of spending, consider cryptocurrencies as a way to accumulate capital and as an investment tool for generating passive income.

The use of digital currency across various industries and different people can help to legitimize the market and lead to increased demand and higher prices in the future.

The contribution of institutional investors to the recovery of the crypto market

Institutional investors play a prominent role in the recovery of the crypto market. Their participation in the market can bring stability and liquidity, and this can help to boost prices. 

Despite market volatility, global institutions show a steady interest in cryptocurrencies. This can be seen in the growing number of institutions, including banks, hedge funds and asset managers, who have begun investing in digital assets or offering services related to them to their clients.

Financial giants such as Goldman Sachs, JPMorgan and Morgan Stanley allow investing in cryptocurrencies through various investment products such as bitcoin futures contracts and exchange-traded funds (ETFs). Notable funds including BlackRock and Fidelity have also launched cryptocurrency investment products and are actively exploring the blockchain space.

Moreover, the central banks of several countries are also exploring the possibility of launching their own digital currencies. This indicates the growing interest and recognition of cryptocurrencies at the institutional level.

The evolution of blockchain technology

Another reason why the crypto comeback is just around the corner is advancements in blockchain technology. Blockchain, the fundamental technology behind cryptocurrencies, has the capacity to transform multiple sectors. 

The introduction of blockchain increases the speed of exchange, reduces time costs, improves the quality, reliability and availability of services. At the same time, transparency and reliability are increased, and risks are reduced. 

The main scope of blockchain is the crypto industry. But besides this, blockchain projects are used in the banking sector, financial services, payment services, the public sector (public services, real estate registries, notaries, electronic voting, etc.), transport and logistics, IoT, healthcare, intellectual property management, energy, etc. 

As more and more businesses begin to realize the benefits of blockchain, this could lead to more widespread adoption of cryptocurrencies.

Positive regulatory developments for cryptocurrency

The role of government regulations in the crypto market is a highly debated topic in the crypto community. Some believe that increased regulation is necessary to protect investors and prevent money laundering. Others believe that increased regulation will stifle innovation and limit the potential of cryptocurrencies.

In any case, the potential for increased government regulation could also be a catalyst for a crypto market recovery in 2023. Many governments are looking to regulate the crypto market. And, as mentioned earlier, such regulations can greatly affect the volatility of the crypto market. Increased regulation could lead to a more stable market, while decreased regulation could lead to increased volatility.

However, in recent years, we have seen positive regulatory developments that could help to stabilize the market and attract more investors. 

Expert opinions on the future of cryptocurrency

Experts have mixed opinions on when crypto will recover. Some expect the market to bounce back quickly, while others think that it could take years to reach new highs. One factor that many experts agree on is the potential impact of regulation on the market. If governments around the world continue to crack down on crypto, it could slow down the pace of recovery. 

What most experts exactly agree on is that it is not the time to do a farewell funeral for crypto. Among those are analysts Gautam Chkhugani and Manas Agarwal, who are convinced that the crypto, with its “survival instinct”, has enough potential to survive the fiasco of 2022.

Some experts predict that the recovery will happen in 2023. As recently reported by CoinPriceForecast, the crypto market will recover in 2023, with Bitcoin reaching a value of $68,000 by the end of the year. This prediction is based on historical data and the assumption that the current market trend will continue.

Will Crypto Recover in 2023?

The arguments presented above that crypto is going to recover in the near future are quite weighty. But whether 2023 is that “near future” is a question that hardly anyone can answer. Therefore, you should be patient and be prepared for a long-term game. Since it takes time for the market price to rise, investors who have suffered losses from the current drawdown should not expect to get all their money back right away. During a bear market, a significant number of spot traders suffer considerable financial losses, but those who remain patient will eventually recoup some or all of their losses over time.

Conclusion: Why the crypto recovery is inevitable

The crypto market’s future is uncertain, and it is challenging to accurately forecast when the market will experience a recovery. However, there are potential catalysts for a crypto market recovery in 2023, including increased adoption of cryptocurrencies, the development of new technologies, and increased government regulation. While the crypto market will always be volatile, it has shown resilience in the past, and it’s likely that it will continue to do so in the future. Nevertheless, one cannot foresee the emergence of “black swans” that could slow down the recovery process. So, if you’re wondering “when will crypto recover?” the answer is: very soon.

FAQ

Why crypto crashed?

The recent crypto crash has been caused by several factors, including the crackdown on crypto mining in China, increased government regulation, and cyber-attacks.

How will the crypto market recover?

The recovery of the crypto market is influenced by various factors and can unfold in different ways. It is important to note that predicting the exact manner in which the market will recover is challenging. However, historical patterns suggest that market recoveries often occur through a combination of increased investor confidence, positive regulatory developments, technological advancements, and broader adoption of cryptocurrencies. Additionally, improvements in market sentiment, positive news, and the emergence of new investment opportunities can contribute to the recovery. 

Which crypto will recover the fastest?

It is impossible to know for sure which of the more than 17,000 cryptocurrencies will recover or rise the fastest. One way to hedge your bets is to use DCA on a number of different cryptocurrencies. This may require you to reduce the size of your trades, but in doing so, you will minimize your overall risk. Of course, it is not enough to randomly select crypto assets and invest in them. First, you need to conduct due diligence on each crypto asset.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.