It’s been a difficult ride for the crypto market through 2022. As of November the market was down by more than 70 percent from the previous high on November 20, 2021. When things were looking down after the FTX crash made them look even worse. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of dips in the past. And every time, it’s bounced back with a huge increase.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. However, in 2017, it broke the record and hit a record highest of $19,600. Fast forward to 2018, and it was trading at $3,100. In 2020, the price broke through that resistance, and reached a record highest of $68,000 in November 2021. 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
As we’ve seen before, fall-offs are typically followed by a lengthy bull run that eventually overcomes the resistance set by the previous market’s highest price. This is evident in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent years. With more and better companies and industries adopting it, its usage and acceptance is rising. From gaming to finance the use of crypto is increasing in a myriad of ways. The growing popularity of crypto could lead to increasing participation in the crypto market which could boost prices.
Increased institutional interest in cryptocurrency
In recent times, we’ve seen a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks, many large institutions are now exploring the potential for crypto-based assets. The increasing interest from institutions could bring more stability to the crypto market and result in more expensive prices.
Regulations of the government
As the crypto market is maturing as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This will help draw more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, has a wide range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can utilize blockchain technology, which could drive more investment and interest in crypto.
Blockchain and cryptocurrency technology is still in the early stages of development. As advances continue to be made in areas such as security and scalability, the potential of crypto assets will expand. This could result in more acceptance and higher prices.
Rising global economic uncertainty
Due to the constant instability in the economy caused due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets such as gold and crypto. As the global economic situation is uncertain and uncertain, this could lead to increased demand for crypto and higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or individual investors are also beginning to invest in the crypto market. In the future, as more people are educated about cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the crypto market is maturing as more and more people are starting to learn about it and comprehend the concept. As the awareness and acceptance of crypto grows, this could lead to more people buying or holding cryptocurrency, and this could increase prices.
The Decentralized Finance (DeFi) is an emerging area of the crypto market, which allows the provision of financial services built using blockchain technology. As DeFi expands and more platforms and projects come online, this will lead to a rise in adoption and increased prices for crypto.
Developments in crypto payment methods
As the crypto market is growing increasing numbers of companies are starting to accept crypto as a means of payment. This could result in increased use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
These funds are government-owned instruments for investing, are now beginning to explore crypto as a potential asset class. As more funds devote a percentage of their assets to digital currencies, it could result in a rise in demand and more expensive prices.
Cryptocurrency is used for cross-border payments
One of the major benefits of crypto is the ability to facilitate 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 the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto increase it will be easier for people to buy and keep crypto, which could boost demand and increase prices.
Development of security tokens
Security tokens, which are digital assets that signify ownership in an asset such as real estate or stock are rapidly expanding area of the crypto market. Since more and more security tokens will be created and traded, this could result in a rise in demand, and thus higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of merchants start accepting crypto as a means of payment, it will make it easier for consumers to hold and use cryptocurrency, which will increase demand and price.
So, is crypto likely to grow in 2023? It’s only time to find out. With these things to consider, it’s possible that the crypto market could see a recovery in 2023. If you’re looking to invest for the long run, being patient and disciplined will be key.