It’s been a rough journey for the cryptocurrency market until 2022. By November, the market had dipped by 70% from its previous peak on November 20, 2021. And just when things were looking down after the FTX crash made them look even worse. So, will 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. Every time, it’s rebounded with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for more than a year before hitting a low of $150. However, in 2017, it broke the record and reached a new high of $19,600. In 2018, the price was at $3,100. And in the year 2020 it struck that resistance and hit 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 at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips are usually followed by a lengthy bull run that eventually breaks through the resistance created by the previous high price. This is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more businesses and industries embracing the technology, its use and acceptance is rising. From banking to gaming the use of crypto is increasing in many ways. And this growing use case could result in increasing participation in the market and, in turn, increase the price.
Increased institutional interest in crypto
In recent times we’ve witnessed a rising interest from institutional investors in cryptocurrency. From banks to hedge funds and even large corporations are starting to explore the potential for crypto-based assets. This increased interest from institutions could provide more stability to the crypto market and could lead to higher prices.
As the market for crypto continues to mature and mature, governments across the globe are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors as well as increase the mainstream adoption of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrency, blockchain, is a broad range of applications that go beyond just financial transactions. For example, from supply chain management and voting, many and more industries are exploring ways they can make use of blockchain technology, which could stimulate more investment and excitement in cryptocurrency.
Advancements in technology
Blockchain technology and cryptography are still in the beginning stages of development. As progress is made in areas such as security and scalability, the potential of crypto assets will expand. This could lead to greater acceptance and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused due to the COVID-19 pandemic and other factors increasing numbers of investors are starting to look for safe haven investments like gold and crypto. As the global economic situation is uncertain, this could lead to increased demand for crypto and higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people learn about crypto and the best ways to invest in it this could result in more demand and higher prices.
Growing awareness and acceptance of crypto
As the market for crypto continues to mature increasing numbers of people are beginning to learn about it and comprehend the concept. As awareness and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this can drive up prices.
The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows finance services developed upon blockchain technology. As DeFi expands and more projects and platforms are launched, it could lead to increased adoption and higher prices for crypto.
Advances in crypto-based payment methods
As the market for crypto is growing as more and more businesses are beginning using crypto to be a form of payment. This could result in increased 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 investment vehicles, are beginning to show interest in crypto as a potential asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could result in a rise in demand and more expensive prices.
Utilization of crypto to make payment across borders
One of the biggest benefits of crypto is the capability to perform fast and cheap cross-border payments. As more individuals and businesses start to utilize crypto for international transactions, this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
With the amount of ATMs that accept crypto continue to increase, it will become easier for people to buy and keep crypto, which will increase demand and price.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset such as real estate or stock, are a rapidly growing area of the crypto market. Since more and more security tokens will be issued and traded, it could lead to increased demand and higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more retailers start accepting crypto as a form of payment, it will make it more convenient for consumers to hold and use cryptocurrency, which will drive up demand and prices.
Will crypto be on the grow in 2023? Only time will tell. But with these factors to consider, it’s likely that the cryptocurrency market will have a rebound by 2023. For those looking to invest for the long haul patience and discipline will be key.