It’s been a difficult ride for the crypto market in 2022. As of November the market was down by more than 70 percent from the previous high in November 2021. And just when things were going downhill, 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 experienced many drops in the past. And every time, it’s bounced back with a big increase.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. But, in 2017, it broke that record and hit a record record high of $19,600. Then, in 2018, and it was trading at $3,100. In the year 2020 it struck through 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 there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs tend to be followed by a lengthy bull run that eventually overcomes the resistance set by the market’s previous highest price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in recent years. With more and better companies and industries taking to it, its usage and acceptance is increasing. From gaming to finance cryptocurrency is being utilized in many ways. The growing popularity of crypto could lead to more people getting involved in the market which could boost prices.
Increased institutional interest in crypto
In the last few years we’ve witnessed a rising curiosity from institutions investing in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the potential of crypto assets. The increased interest of institutions could bring more stability to the market for crypto and could lead to greater prices.
Regulations from the Government
As the market for crypto continues to mature, governments around the world are starting to create more favorable regulations for crypto. This will help draw more investors as well as 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 possible applications that go beyond financial transactions. For example, from supply chain management and voting, many and more industries are starting to explore how they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Technology advancements
Crypto and blockchain technology are still in the early stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will grow. This could lead to more use and increase in prices.
Global economic uncertainty is growing
With the ongoing instability in the economy caused through the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven assets like cryptocurrency and gold. Since the economic outlook for the world remains uncertain, this could lead to an increase in demand for crypto and higher prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in crypto. Retail investors, or even individual investors are also beginning to get involved in the cryptocurrency market. With increasing numbers of people learn about crypto and the best ways to invest in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the market for crypto is maturing as more and more people are beginning to become aware about it and comprehend the concept. As understanding and acceptance of crypto grows it could result in more people buying or holding cryptocurrency, and this can raise prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built using blockchain technology. As DeFi expands and more projects and platforms come online, this will lead to a rise in adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market grows as more and more businesses are starting using crypto to be a method of payment. This could result in increased use of crypto in regular transactions, and a rise in prices.
The increased investment of sovereign wealth funds
These funds are owned by the state as investment vehicles, are now beginning to explore crypto as a potential asset class. As more of these funds allocate a portion of their portfolio to crypto, it could result in a rise in demand and increased prices.
Cryptocurrency is used for international payments
One of the major benefits of crypto is its ability to make fast and cheap cross-border payments. As more individuals and businesses start to utilize cryptocurrency for international transactions, this can lead to a rise in demand and higher costs.
The number of ATMs that accept crypto is increasing.
As the number of ATMs that accept crypto increase, it will become easier for people to buy and store crypto, which will boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that signify 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 created and traded, this could lead to increased demand, and thus higher rates for the crypto.
Merchants are more likely to adopt the concept.
With the increasing number of merchants accept cryptocurrency as a method of payment, it will make it easier for people to hold and use cryptocurrency, which will drive up demand and prices.
So, is crypto likely to increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market could see a recovery in 2023. If you’re in it for the long-term, being patient and disciplined is essential.