It’s been a tough journey for the cryptocurrency market in 2022. In November the market was down by more than 70 percent from the previous high on November 20, 2021. And just when things were looking down and down, the FTX crash made them look worse. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had many drops in the past. Every time, it’s bounced back with a big rise.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year, reaching a low of $150. In 2017, it broke that record, and hit a new high of $19,600. Then, in 2018, the price was at $3,100. And in 2020, the price broke 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 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 finally overcomes the resistance set by the market’s previous highest price. This pattern is evident not only in Bitcoin but also in other cryptocurrency.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in recent years. With more and more companies and industries taking to the technology, its use and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in more people being involved in the market which could increase the price.
A rise in the interest of institutions for cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in cryptocurrency. From banks to hedge funds numerous large institutions are now exploring the possibilities for crypto-based assets. The increasing interest from institutions could provide more stability to the market for crypto and could lead to more expensive prices.
As the market for crypto is maturing as it matures, governments all over the world are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can utilize blockchain technology. This could drive more investment and interest in crypto.
Blockchain technology and cryptography are still in the beginning stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to grow. This could result in more use and increase in prices.
Uncertainty in the global economy
Due to the constant economic uncertainty brought on by the COVID-19 pandemic as well as other factors, more and more investors are starting to look for safe haven investments like cryptocurrency and gold. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and increased prices.
Interest from retail investors
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors, are also starting to get involved in the market for crypto. As more and more people become aware of crypto and the best ways to invest in it this could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows, more and more people are beginning to learn about and appreciate it. As awareness and acceptance of cryptocurrency grows, it will lead to more people buying and holding crypto, which can drive up prices.
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 continues to grow and more projects and platforms become available, this will lead to a rise in adoption and increased prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow increasing numbers of companies are starting to accept crypto as a means of payment. This could lead to an increase in the use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned investments, are now beginning to explore crypto as an asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could result in a rise in demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is the ability to make swift and affordable cross-border transactions. 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.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto increase it will be more convenient for individuals to purchase and hold crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that represent ownership in an asset such as real estate or stock is a fast-growing sector of the crypto market. With the increasing number of security tokens being created and traded, it could lead to increased demand and higher rates for the crypto.
A greater adoption rate by merchants
As more and more businesses start accepting crypto as a means of payment, this makes it easier for consumers to utilize and store crypto, which can boost demand and increase prices.
Will crypto be on the rise in 2023? Only time will tell. However, with these aspects to consider, it’s likely that the cryptocurrency market will see a recovery in 2023. For those looking to invest for the long haul, being patient and disciplined will be key.