It’s been a tough journey for the cryptocurrency market through 2022. By November, the market had dipped by more than 70 percent from its previous high at the end of November. 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 market for crypto, particularly Bitcoin has experienced its fair share of dips over the years. And every time, it’s rebounded by a massive increase.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year before hitting a low of $150. However, in 2017 it broke that record and hit a record high of $19,600. Then, in 2018, it was trading at $3,100. And in the year 2020 it struck through the resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve seen another dip. But history shows 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 prolonged bull run, which eventually overcomes the resistance set by the previous market’s highest price. This is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and better companies and industries adopting the technology, its use and acceptance is rising. From banking to gaming cryptocurrency is being utilized in many ways. The growing popularity of crypto can lead to increasing participation in the market and, in turn, increase the price.
Increased institutional interest in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are now exploring the potential in crypto currencies. The increasing interest from institutions can bring stability to the crypto market and could lead to greater prices.
Regulations from the Government
As the market for crypto is maturing, governments around the world are starting to create more favorable rules for cryptocurrency. This could help attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, offers a variety of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many and more industries are beginning to look at ways they can utilize blockchain technology, which could stimulate more investment and excitement in crypto.
Advancements in technology
Crypto and blockchain technology are at the very beginning of development. As advancements continue to be made in areas like security and scalability, potential of crypto assets will continue to increase. This could result in more acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on by the COVID-19 pandemic, as well as other causes many investors are starting to look for safe haven investments like cryptocurrency and gold. As the global economic situation remains uncertain, this could lead to more demand for crypto as well as more expensive 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 beginning to get involved in the crypto market. In the future, as more everyday people become aware of crypto and the best ways to invest in it this could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto grows increasing numbers of people are beginning to learn about and appreciate it. As the awareness and acceptance grows of crypto, this could lead to more people buying and holding crypto, which can drive up prices.
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Financial decentralization (DeFi) is an area that is rapidly expanding in the crypto market, which allows the provision of financial services developed upon blockchain technology. As DeFi continues to grow and more platforms and projects come online, this could result in increased use and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing increasing numbers of companies are starting accepting crypto payments as a form of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
Increased investment from sovereign wealth funds
The sovereign wealth fund, also known as state-owned instruments for investing, are starting to show interest in crypto as a potential asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could increase demand and higher prices.
Cryptocurrency is used for international payments
One of the biggest benefits of cryptocurrency is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses begin to use cryptocurrency for international transactions it could result in increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto continue to increase it will be more convenient for individuals to purchase and store cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that represent ownership of an asset, such as real estate or stock, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, it can lead to a higher demand and higher prices for 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 more convenient for consumers to hold and use cryptocurrency, which will boost demand and increase prices.
Will crypto be on the grow in 2023? Only time will tell. But with these factors being considered, it’s possible that the crypto market could see a recovery in 2023. For those looking to invest for the long run Being patient and disciplined will be key.