It’s been a difficult experience for the crypto market in 2022. By November, the market had dipped by more than 70 percent from the previous high on November 20, 2021. Just when the market was getting worse after the FTX crash made them look more dire. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips over the years. Every time, it’s bounced back by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year before reaching a bottom 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 through that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve had another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs tend to be followed by a prolonged bull run that finally breaks through the resistance created by the previous high price. This pattern can be seen in not just 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 companies and industries embracing 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 more people getting involved in the market which could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In recent times, we’ve seen a growing interest from institutional investors in cryptocurrency. From banks to hedge funds, many large institutions are starting to explore the potential for crypto-based assets. This increased interest from institutions could bring more stability to the crypto market and lead to more expensive prices.
Regulations of the government
As the crypto market grows, governments around the world are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and boost the mainstream adoption of crypto.
A broader range of blockchain applications
The technology that underlies the majority of cryptocurrencies, blockchain offers a variety of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more industries are exploring ways they can make use of blockchain technology. This will drive more investment and interest in crypto.
Technology advancements
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas such as 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
In the current economic uncertainty caused due to the COVID-19 pandemic as well as other factors, more and more investors are beginning to look for safe haven assets like gold and crypto. Since the economic outlook for the world remains uncertain it could result in increased 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 cryptocurrency. Retail investors, or even individual investors, are also starting to participate in the market for crypto. With increasing numbers of people are educated about crypto and how 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 become aware about and appreciate it. As understanding and acceptance of cryptocurrency grows it could result in increasing numbers of people purchasing as well as holding the crypto that can raise prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi expands and more platforms and projects come online, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto continues to grow, more and more companies are beginning using crypto to be a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as government-owned investment vehicles, are now beginning to explore cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could result in a rise in demand and increased prices.
Use of crypto for international payments
One of the biggest benefits of cryptocurrency is its ability to make fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions, this can lead to a rise in demand and higher prices.
The number of ATMs that accept crypto is increasing.
As the number of ATMs for crypto increase, it will become easier for consumers to purchase and keep crypto, which will boost demand and increase prices.
The development of security tokens
Security tokens, which are digital assets that are used to represent ownership in an asset like real estate or stock, are a rapidly growing segment of the cryptocurrency market. With the increasing number of security tokens being issued and traded, it can lead to a higher demand and consequently higher prices for crypto.
More adoption by merchants
In the event that more retailers accept crypto as a form of payment, it will make it more convenient for people to hold and use crypto, which could boost demand and increase prices.
So, is crypto likely to rise in 2023? Only time will tell. But with these factors being considered, it’s likely that the cryptocurrency market will see a recovery in 2023. For those committed to the long haul, being patient and disciplined will be key.