It’s been a rough ride for the crypto market until 2022. By November the market was down by 70% from its previous peak in November 2021. When things were going downhill, the FTX crash turned them even more dire. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen many dips over the years. Each time, it has bounced back by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year before hitting a low of $150. In 2017, it broke the record, and hit a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. And in 2020, it broke through that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve seen another dip. However, the past has proven that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are usually followed by a prolonged bull run that eventually overcomes the resistance set by the market’s previous highest price. This is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is growing. From gaming to finance, crypto is being used in a variety of ways. This growing demand could result in more people being involved in the crypto market which could increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From banks to hedge funds numerous large institutions are starting to explore the potential for crypto-based assets. The increasing interest from institutions could bring more stability to the market for crypto and could lead to greater prices.
Regulations of the government
As the crypto market is maturing as it matures, governments all over the world are beginning to develop more favorable regulations for cryptocurrency. This will help draw more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, offers a variety of applications that go that go beyond financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can utilize blockchain technology. This could drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas like security and scalability, the potential of cryptocurrency assets will continue to expand. This could lead to more adoption and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic, as well as other causes, more and more 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
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or individual investors, are also starting to invest 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 lead to more demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market continues to mature, more and more people are beginning to become aware about and appreciate the concept. As awareness and acceptance grows of crypto it could result in more people buying as well as holding the crypto that could drive up prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows the provision of financial services built upon blockchain technology. As DeFi continues to grow and more projects and platforms come online, this will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the crypto market continues to grow increasing numbers of companies are starting to accept crypto as a form of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are beginning to look at crypto as a potential asset class. As more funds allocate a portion of their portfolio to crypto, this could lead to increased demand and increased prices.
Use of crypto for payment across borders
One of the main advantages of cryptocurrency is its capability to perform quick and inexpensive cross-border payments. As more and more people and businesses begin to use cryptocurrency for international transactions, this can lead to a rise in demand and higher prices.
An increasing number of crypto ATM’s
As the number of ATMs that accept crypto continue to grow it will be more convenient for people to buy and hold cryptocurrency, which can boost demand and increase prices.
Security tokens are developed for development
Security tokens, also known as digital assets that are used to represent ownership of an asset, such as stocks or real estate are rapidly expanding 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 higher rates for the crypto.
More adoption by merchants
In the event that more merchants accept crypto as a form of payment, this will make it easier for consumers to hold and use cryptocurrency, which will boost demand and increase prices.
So, is crypto likely to increase in 2023? The only way to know is time. But with these factors in mind, it’s possible that the crypto market could be able to see a rebound in 2023. For those looking to invest for the long-term Being patient and disciplined is essential.