It’s been a difficult ride for the crypto market until 2022. In November, the market had dipped by 70% from its previous peak at the end of November. And just when things were getting worse, the FTX crash turned them worse. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many drops in the past. Each time, it has bounced back with a big rise.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. In 2017 it broke that record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, the price broke through that resistance, and reached a record high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen previously, dips are typically followed by a prolonged bull run that finally surpasses the resistance created by the previous market’s highest price. This pattern can be seen not only in 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 more businesses and industries taking to it, its usage and acceptance is rising. From banking to gaming, crypto is being used in a variety of ways. And this growing use case could result in increasing participation in the market which could boost prices.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve noticed a growing interest from institutional investors in cryptocurrency. From hedge funds to banks, many large institutions are starting to explore the possibilities in crypto currencies. This increased interest from institutions can bring stability to the crypto market and could lead to greater prices.
Government regulations
As the market for crypto is maturing and mature, governments across the globe are beginning to establish more favorable rules for crypto. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of potential use cases that go beyond financial transactions. From supply chain management to voting systems, more companies are beginning to look at ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Advancements in technology
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, potential of cryptocurrency assets will continue to expand. This could lead to greater acceptance and higher prices.
Rising global economic uncertainty
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic, as well as other causes increasing numbers of investors are starting to look for safe haven assets like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only people who are interested in cryptocurrency. Retail investors, also known as individual investors are also beginning to participate in the cryptocurrency market. As more and more everyday people learn about cryptocurrency and investing in it, this could lead to more demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto grows as more and more people are beginning to learn about and understand the concept. As awareness and acceptance of crypto grows, this could lead to increasing numbers of people purchasing or holding cryptocurrency, and this could drive up prices.
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Financial decentralization (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built on top of blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and more expensive prices for crypto.
Developments in crypto payment methods
As the crypto market grows as more and more businesses are beginning to accept crypto as a method of payment. This could result in increased use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are state-owned investments, are now beginning to explore crypto as an asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could lead to increased demand and higher prices.
Utilization of crypto to make international payments
One of the major benefits of crypto is the ability to facilitate swift and affordable cross-border transactions. As more and more people and businesses are beginning to make use of 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 increase it will be more convenient for people to buy and store crypto, which could drive up demand and prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership in an asset such as stocks or real estate, are a rapidly growing segment of the cryptocurrency market. Since more and more security tokens will be issued and traded, this could result in a rise in demand, and thus higher rates for the crypto.
More adoption by merchants
With the increasing number of businesses begin accepting crypto as a form of payment, this will make it easier for customers to use and hold cryptocurrency, which will drive up demand and prices.
Will crypto be on the increase in 2023? Only time will tell. But with these factors in mind, it’s likely that the crypto market could be able to see a rebound in 2023. For those looking to invest for the long run, being patient and disciplined will be key.