It’s been a difficult ride for the crypto market through 2022. By November the market had dropped by more than 70% from its previous peak on November 20, 2021. Just when the market was getting worse after the FTX crash turned them even worse. The question is, can the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of drops in the past. And every time, it’s rebounded with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year, reaching a low of $150. But, in 2017, it broke the record, and hit a new highest of $19,600. Then, in 2018, it was trading at $3,100. And in the year 2020 it struck through the resistance and reached a new high of $68,000 in 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
Just like we’ve seen before, fall-offs tend to be followed by a long bull run that eventually breaks through the resistance created by the market’s previous highest price. This pattern can be seen in not just 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 taking to the technology, its use and acceptance is increasing. From gaming to finance the use of crypto is increasing in a myriad of ways. This growing demand could result in more people getting involved in the market which could increase the price.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising curiosity from institutions investing in crypto. From banks to hedge funds and even large corporations are starting to explore the possibilities for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and lead to more expensive prices.
Government regulations
As the crypto market grows and mature, governments across the globe are beginning to establish more favorable rules for crypto. This could help attract more investors and boost the adoption rate of crypto.
More use cases for blockchain
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can benefit from blockchain technology. This will drive more investment and interest in cryptocurrency.
Advancements in technology
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas such as security and scalability, potential of crypto assets will continue to grow. This could result in more use and increase in prices.
Global economic uncertainty is growing
In the current economic uncertainty brought on by the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets such as bitcoin and even gold. Because the global economic climate remains uncertain, this could lead to more demand for crypto as well as more expensive prices.
Interest from retail investors
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, or even individual investors, are also starting to invest in the crypto market. With increasing numbers of people learn about crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market is maturing increasing numbers of people are starting to learn about and appreciate the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to increasing numbers of people purchasing and holding crypto, which could raise prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services developed using blockchain technology. As DeFi grows and more platforms and projects are launched, it could lead to increased adoption and more expensive prices for crypto.
The development of crypto payment methods
As the crypto market grows as more and more businesses are beginning using crypto to be a means of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are starting to look at cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could increase demand and higher prices.
Utilization of crypto to make cross-border payments
One of the main advantages of crypto is its capability to perform quick and inexpensive cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions this can lead to a rise in demand and higher prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto continue to grow, it will become easier for consumers to purchase and store cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset like stock or real estate are rapidly expanding segment of the cryptocurrency market. As more security tokens are issued and traded, this can lead to a higher demand and higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of retailers accept crypto as a means of payment, this makes it easier for customers to utilize and store crypto, which could boost demand and increase prices.
So, will crypto increase in 2023? Only time will tell. But with these factors to consider, it’s likely that the crypto market could see a recovery in 2023. For those looking to invest for the long run Being patient and disciplined is essential.