It’s been a difficult ride for the crypto market through 2022. In November the market was down by more than 70 percent from the previous high in November 2021. Just when the market was looking down, the FTX crash turned them even more dire. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many drops in the past. And every time, it’s bounced back with a big rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. But, in 2017 it broke that record, and hit a new high of $19,600. Fast forward to 2018, the price was at $3,100. In the year 2020 it struck that resistance and reached a new highest of $68,000 in November 2021. Just like that, we’ve had another dip. But history shows us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are usually followed by a lengthy bull run, which eventually breaks through the resistance created by the market’s previous highest price. This is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in recent years. With more and more businesses and industries taking to it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in a variety of ways. The growing popularity of crypto could lead to more people being involved in the crypto market which could boost prices.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are beginning to investigate the possibilities of crypto assets. The increasing interest from institutions can bring stability to the crypto market and could lead to greater prices.
Regulations of the government
As the market for crypto is maturing and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This could help attract more investors as well as increase the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of possible applications beyond the realm of financial transactions. In addition to supply chain management, voting and other systems companies are exploring ways they can make use of blockchain technology. This could increase investment and enthusiasm in crypto.
Technology advancements
Blockchain and cryptocurrency technology is still in the early stages of development. As progress is made in areas such as scalability and security, the potential of crypto assets will continue to increase. This could lead to greater adoption and higher prices.
Uncertainty in the global economy
Due to the constant instability in the economy caused due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the cryptocurrency market. As more and more everyday people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing as more and more people are beginning to become aware about and appreciate it. As awareness and acceptance of crypto grows it could result in more people buying and holding crypto, which can raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created upon blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it could lead to increased adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing as more and more businesses are beginning to accept crypto as a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are now beginning to look at cryptocurrency as a possible asset class. As more funds devote a percentage or their entire portfolios to cryptocurrency, it could lead to increased demand and increased prices.
Utilization of crypto to make cross-border payments
One of the major benefits of crypto is its capability to perform fast and cheap cross-border payments. As more individuals and businesses are beginning to make use of cryptocurrency for international transactions, it could result in increased demand and higher costs.
Increasing numbers of crypto ATM’s
The number of ATMs that accept crypto continue to grow it will be easier for consumers to purchase and hold crypto, which will increase demand and price.
Development of security tokens
Security tokens, or digital assets that represent ownership of an asset, such as real estate or stock are rapidly expanding segment of the cryptocurrency market. As more security tokens are created and traded, this could result in a rise in demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more retailers accept cryptocurrency as a method of payment, it makes it easier for consumers to use and hold cryptocurrency, which will drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. But with these factors in mind, it’s possible that the cryptocurrency market will be able to see a rebound in 2023. For those in it for the long-term, being patient and disciplined will be key.