It’s been a rough journey for the cryptocurrency market in 2022. By November, the market had dipped by 70 percent from its previous high on November 20, 2021. When things were getting worse and down, the FTX crash made them look more dire. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many drops in the past. Every time, it’s bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. But, in 2017, it broke that record and reached a new high of $19,600. Then, in 2018, it was trading at $3,100. In the year 2020 it struck that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. However, history has shown us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen previously, dips are usually followed by a lengthy bull run, which eventually breaks through the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has come a long way in the last few years. With more and more companies and industries taking to it, its usage and acceptance is rising. From finance to gaming the use of crypto is increasing in many ways. And this growing use case can lead to increasing participation in the market, which in turn could increase the price.
Increased institutional interest in crypto
In recent times we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the possibilities of crypto assets. The increased interest of institutions could provide more stability to the crypto market and could lead to more expensive prices.
Government regulations
As the market for crypto continues to mature, governments around the world are beginning to establish more favorable regulations for cryptocurrency. This will help draw more investors as well as increase the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrency, blockchain, offers a variety of possible applications beyond just financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can benefit from blockchain technology. This could drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of cryptocurrency assets will continue to grow. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
Due to the constant economic uncertainty brought on due to the COVID-19 pandemic and other factors, more and more investors are starting to look for safe haven assets such as gold and crypto. As the global economic situation remains uncertain it could result in an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to participate in the crypto market. With increasing numbers of everyday people are educated about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market is maturing as more and more people are starting to learn about and understand the concept. As understanding and acceptance of crypto grows, this could lead to increasing numbers of people purchasing as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market that enables finance services built upon blockchain technology. As DeFi grows and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow as more and more businesses are starting accepting crypto payments as a means of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
These funds are owned by the state as investments, are now beginning to look at crypto as a potential asset class. As more funds allocate a portion of their assets to digital currencies, it could increase demand and higher prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals start to utilize crypto for international transactions, this could lead to increased demand and higher costs.
Increasing numbers of crypto ATM’s
As the number of ATMs for crypto increase, it will become easier for individuals to purchase and keep cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, also known as digital assets that signify ownership in an asset such as real estate or stock are rapidly expanding sector of the crypto market. With the increasing number of security tokens being issued and traded, this could lead to increased demand and higher costs for cryptocurrency.
A greater adoption rate by merchants
In the event that more businesses start accepting crypto as a form of payment, this will make it more convenient for consumers to hold and use cryptocurrency, which will boost demand and increase prices.
Will crypto be on the increase in 2023? Only time will tell. But with these factors being considered, it’s possible that the crypto market will see a recovery in 2023. If you’re committed to the long run patience and discipline is essential.