It’s been a difficult ride for the crypto market until 2022. As of November the market had dropped by more than 70% from its previous peak in November 2021. Just when the market was looking down, the FTX crash turned things even more dire. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips over the years. Each time, it has bounced back by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. However, in 2017, it broke the record and hit a record highest of $19,600. In 2018, the price was at $3,100. In 2020, it broke through the resistance and reached a new highest of $68,000 in November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are typically followed by a prolonged bull run that eventually overcomes the resistance set by the previous market’s highest price. This is evident in more than Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more companies and industries adopting the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a variety of ways. And this growing use case could result in increasing participation in the crypto market, which in turn could drive the prices up.
The rise in interest of institutions in crypto
In recent times we’ve noticed a growing curiosity from institutions investing in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the potential of crypto assets. The increasing interest from institutions can bring stability to the market for crypto and lead to higher prices.
As the crypto market continues to mature and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors and boost the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrencies, blockchain, is a broad range of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many companies are exploring ways they can make use of blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas such as security and scalability, potential of crypto assets will expand. This could lead to more adoption and higher prices.
Global economic uncertainty is growing
In the current instability in the economy caused by the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world remains uncertain it could result in increased demand for crypto and higher prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors are also beginning to get involved in the crypto market. As more and more everyday people become aware of cryptocurrency and investing in it, this could lead to more demand and higher prices.
A growing number of people are becoming aware of and accepting cryptocurrency
As the crypto market continues to mature, more and more people are beginning to become aware about it and comprehend it. As understanding and acceptance of cryptocurrency grows, this could lead to more people purchasing as well as holding the crypto that could increase prices.
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created using blockchain technology. As DeFi grows and more platforms and projects are launched, it could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing, more and more companies are beginning using crypto to be a method of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as instruments for investing, are now beginning to look at crypto as an asset class. As more of these funds devote a percentage of their assets to digital currencies, it could lead to increased demand and higher prices.
Utilization of crypto to make cross-border payments
One of the main advantages of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more individuals and businesses start to utilize 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 grow, it will become easier for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
Development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset like stocks or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, this can lead to a higher demand, and thus higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more businesses start accepting crypto as a means of payment, it will make it more convenient for people to utilize and store crypto, which can increase demand and price.
So, will crypto increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market will see a recovery in 2023. And for those who are committed to the long haul patience and discipline is crucial.