It’s been a rough experience for the crypto market through 2022. In November the market had dropped by more than 70% from its previous peak on November 20, 2021. Just when the market was getting worse and down, the FTX crash made them look 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 seen its fair share of dips in the past. Every time, it has bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for a full year, reaching a low of $150. However, in 2017 it broke that record and hit a record record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, it broke through that resistance and hit a new high of $68,000 in November 2021. And just like that, we’ve witnessed another drop. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips tend to be followed by a long bull run that eventually breaks through the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have made significant progress in recent years. With more and more businesses and industries adopting it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in many ways. The growing popularity of crypto could result in more people getting involved in the market which could boost prices.
The rise in interest of institutions in crypto
In recent years, we’ve seen a growing demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increased interest of institutions can bring stability to the crypto market and lead to higher prices.
As the market for crypto is maturing and mature, governments across the globe are starting to create more favorable regulations for cryptocurrency. This could help attract more investors and increase the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems and more industries are beginning to look at ways they can make use of blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain technology and cryptography are still in the beginning stages of development. As advances continue to be made in areas such as security and scalability, potential of cryptocurrency assets will continue to grow. This could lead to greater use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused due to the COVID-19 pandemic as well as other factors increasing numbers of investors are starting to look for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to increased demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, also known as individual investors, are also starting to get involved in the crypto market. With increasing numbers of everyday people learn about crypto and how to invest in it this could result in more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market continues to mature increasing numbers of people are beginning to learn about and appreciate the concept. As understanding and acceptance of crypto grows it could result in more people purchasing and holding crypto, which can raise prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market that allows financial services to be developed upon blockchain technology. As DeFi grows and more platforms and projects are launched, it could lead to increased adoption and higher prices for crypto.
The development of crypto payment methods
As the crypto market is growing increasing numbers of companies are beginning using crypto to be a means of payment. This could lead to increased usage of crypto in daily transactions, and a rise in prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investment vehicles, are beginning to look at crypto as an asset class. As more funds allocate a portion of their portfolio to crypto, it could result in a rise in demand and more expensive prices.
Use of crypto for cross-border payments
One of the major benefits of crypto is its ability to facilitate quick and inexpensive cross-border payments. As more businesses and individuals begin to use crypto for international transactions, this could lead to increased demand and higher prices.
An increasing number of crypto ATM’s
As the number of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and hold crypto, which could increase demand and price.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership in an asset like real estate or stock is a fast-growing segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, it could lead to increased demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
As more and more businesses start accepting crypto as a form of payment, it makes it easier for customers to utilize and store crypto, which can drive up demand and prices.
Will crypto be on the increase in 2023? The only way to know is time. However, with these aspects to consider, it’s possible that the crypto market will see a recovery in 2023. And for those who are in it for the long-term, being patient and disciplined will be key.