It’s been a rough experience for the crypto market in 2022. In November the market had dropped by 70% from its previous peak at the end of November. Just when the market was looking down after the FTX crash made them look even worse. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had its fair share of dips in the past. Every time, it has bounced back by a massive rally.
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 the record, and hit a new record high of $19,600. Fast forward to 2018, the price was at $3,100. In the year 2020 it struck that resistance and reached a new high of $68,000 in November 2021. And just like that, we’ve witnessed another drop. But history shows us that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are typically followed by a long bull run that eventually surpasses the resistance created by the previous high price. This pattern is evident in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From finance to gaming, crypto is being used in a myriad of ways. The growing popularity of crypto could lead to more people getting involved in the crypto market, which in turn could boost prices.
Increased institutional interest in crypto
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 in crypto currencies. The increased interest of institutions can bring stability to the crypto market and lead to greater prices.
As the crypto market grows as it matures, governments all over the world are beginning to develop more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications beyond just financial transactions. For example, from supply chain management and voting, many companies are beginning to look at ways they can make use of blockchain technology. This could stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain technology and cryptography are at the very beginning of development. As advances continue to be made in areas like security and scalability, the potential of crypto assets will continue to grow. This could lead to greater use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven investments like gold and crypto. Since the economic outlook for the world is uncertain it could result in more demand for crypto as well as higher prices.
Interest from retail investors
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, or individual investors, are also starting to get involved in the crypto market. In the future, as more everyday people learn about crypto and how 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 increasing numbers of people are beginning to become aware about and understand the concept. As understanding and acceptance of crypto grows, this could lead to increasing numbers of people purchasing or holding cryptocurrency, and this could increase prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market that enables finance services built on top of blockchain technology. As DeFi grows and more projects and platforms come online, this will lead to a rise in adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market grows as more and more businesses are beginning using crypto to be a form of payment. This could result in increased usage of crypto in daily transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as instruments for investing, are now beginning to explore cryptocurrency as a possible asset class. As more funds dedicate a part or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of cryptocurrency is its ability to facilitate fast and cheap cross-border payments. As more and more people and businesses are beginning to make use of crypto for international transactions, this could lead to increased demand and higher prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto continue to grow, it will become easier for people to buy and hold cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as real estate or stock are rapidly expanding sector of the crypto market. As more security tokens are created and traded, it could lead to increased demand and higher rates for the crypto.
Merchants are more likely to adopt the concept.
With the increasing number of businesses start accepting crypto as a means of payment, this will make it easier for customers to use and hold crypto, which could boost demand and increase prices.
Will crypto be on the grow in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. And for those who are in it for the long haul Being patient and disciplined is essential.