It’s been a difficult experience for the crypto market through 2022. By November the market had dropped by more than 70 percent from its previous high at the end of November. When things were going downhill after the FTX crash turned them even 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 seen its fair share of dips over the years. Each time, it’s bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. In 2017 it broke that record, and hit a new record high of $19,600. Fast forward to 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, history has shown us 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 lengthy bull run that eventually overcomes the resistance set by the previous high price. This pattern 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 the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in many ways. And this growing use case can lead to more people getting involved in the market which could increase the price.
A rise in the interest of institutions for cryptocurrency
In recent years we’ve noticed a growing interest from institutional investors in crypto. From hedge funds to banks and even large corporations are now exploring the possibilities of crypto assets. This increased interest from institutions can bring stability to the crypto market and result in greater prices.
Regulations of the government
As the market for crypto grows and mature, governments across the globe are starting to create more favorable rules for crypto. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The technology that is the basis of the majority of cryptocurrencies, blockchain has a wide range of applications that go that go beyond 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 drive more investment and interest in crypto.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to expand. This could lead to greater acceptance 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 factors many investors are looking for safe haven investments like gold and crypto. As the global economic situation is uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, or even individual investors are also beginning to invest in the market for crypto. With increasing numbers of people are educated about cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the crypto market continues to mature increasing numbers of people are beginning to learn about it and comprehend the concept. As awareness and acceptance grows of crypto, this could lead to increasing numbers of people purchasing and holding crypto, which can increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that allows finance services built on top of blockchain technology. As DeFi grows and more projects and platforms become available, this could lead to increased adoption and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing increasing numbers of companies are beginning to accept crypto as a method of payment. This could result in increased use of crypto in everyday transactions, and a rise in prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are beginning to look at crypto as an asset class. As more of these funds dedicate a part of their portfolio to crypto, this could result in a rise in demand and more expensive prices.
Use of crypto for cross-border payments
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more and more people and businesses start to utilize cryptocurrency for international transactions this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
As the number of ATMs for crypto increase it will be more convenient for people to buy and store cryptocurrency, which can drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership of 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 result in a rise in demand and higher rates for the crypto.
A greater adoption rate by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, it will make it easier for consumers to hold and use crypto, which can boost demand and increase prices.
So, is crypto likely to grow in 2023? It’s only time to find out. But with these factors in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those looking to invest for the long haul patience and discipline is crucial.