It’s been a difficult experience for the crypto market in 2022. In November the market had dropped by 70% from its previous peak in November 2021. Just when the market was getting worse, the FTX crash turned things worse. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips in the past. Each time, it’s bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom of $150. But, in 2017 it broke that record and reached a new record high of $19,600. Then, in 2018, the price was at $3,100. In the year 2020 it struck through that resistance, and reached a record peak of $68,000 in the month of November 2021. And just like that, we’ve witnessed another drop. But history shows us that after 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 prolonged bull run, which eventually breaks through the resistance created by the market’s previous highest price. This pattern is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and more companies and industries taking to the technology, its use and acceptance is increasing. From gaming to finance, crypto is being used in many ways. This growing demand can lead to increasing participation in the crypto market which could drive the prices up.
A rise in the interest of institutions for crypto
In recent years we’ve noticed a growing curiosity from institutions investing in cryptocurrency. From banks to hedge funds and even large corporations are beginning to investigate the possibilities for crypto-based assets. The increasing interest from institutions can bring stability to the crypto market and lead to more expensive prices.
Regulations from the Government
As the crypto market is maturing as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This could help attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain offers a variety of potential use cases beyond the realm of financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can make use of blockchain technology, which could drive more investment and interest in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas like security and scalability, the potential of crypto assets will continue to increase. This could lead to greater use and increase in prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic and other factors many investors are looking for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to invest in the crypto market. As more and more everyday people are educated about cryptocurrency and investing 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 as more and more people are beginning to become aware about and understand the concept. As awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing as well as holding the crypto that could raise prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services built upon blockchain technology. As DeFi grows and more projects and platforms come online, this could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow, more and more companies are beginning accepting crypto payments as a means of payment. This could result in increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are state-owned instruments for investing, are now beginning to look at crypto as an asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Use of crypto for international payments
One of the major benefits of crypto is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals begin to use crypto for international transactions, this can lead to a rise in the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
The number of ATMs for crypto continue to grow, it will become easier for people to buy and hold crypto, which will increase demand and price.
Security tokens are developed for development
Security tokens, or digital assets that signify ownership in an asset like stock or real estate, are a rapidly growing sector of the crypto market. As more security tokens are created and traded, it could result in a rise in demand and consequently higher costs for cryptocurrency.
A greater adoption rate by merchants
With the increasing number of businesses begin accepting crypto as a form of payment, this makes it easier for consumers to hold and use cryptocurrency, which will drive up demand and prices.
So, will crypto grow in 2023? The only way to know is time. But with these factors in mind, it’s possible that the crypto market will see a recovery in 2023. For those committed to the long haul patience and discipline will be key.