It’s been a tough ride for the crypto market until 2022. By November the market was down by 70 percent from its previous high in November 2021. And just when things were getting worse and down, the FTX crash turned them 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 many drops in the past. Every time, it’s bounced back with a huge rally.
For example, in 2013, Bitcoin reached a peak of $1,160, then fell for a full year, reaching a low of $150. In 2017, it broke the record and reached a new high of $19,600. Fast forward to 2018, the price was at $3,100. In 2020, the price broke through that resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that at the end of every dip the bull runs.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips tend to be followed by a lengthy bull run that finally breaks through the resistance created by the previous high price. This pattern is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have progressed a lot in the last few years. With more and better companies and industries taking to it, its usage and acceptance is rising. From finance to gaming, crypto is being used in a variety of ways. The growing popularity of crypto could lead to increasing participation in the crypto market which could drive the prices up.
Increased institutional interest in crypto
In the last few years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are beginning to investigate the potential in crypto currencies. The increased interest of institutions could provide more stability to the crypto market and result in greater prices.
Regulations from the Government
As the crypto market is maturing and mature, governments across the globe are beginning to establish more favorable regulations for cryptocurrency. This is likely to attract more investors as well as increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind the majority of 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 benefit from blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas like security and scalability, the potential of crypto assets will continue to expand. This could lead to more use and increase in prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on through the COVID-19 pandemic and other factors increasing numbers of investors are looking for safe haven assets such as gold and crypto. Because the global economic climate is uncertain, this could lead to increased demand for crypto and increased prices.
Retail investors are able to earn interest
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, also known as individual investors, are also starting to invest in the cryptocurrency market. As more and more everyday people become aware of cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of crypto
As the market for crypto grows increasing numbers of people are starting to learn about it and comprehend the concept. As understanding and acceptance of crypto grows it could result in increasing numbers of people purchasing and holding crypto, which could raise prices.
The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that enables finance services built on top of blockchain technology. As DeFi grows and more projects and platforms are launched, it will lead to a rise in adoption and increased prices for crypto.
The development of crypto payment methods
As the market for crypto continues to grow, more and more companies are starting to accept crypto as a method of payment. This could result in increased usage of crypto in daily transactions and an increase in the cost of transactions.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investment vehicles, are now beginning to show interest in cryptocurrency as a possible asset class. As more of these funds devote a percentage of their assets to digital currencies, it could result in a rise in demand and increased prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of crypto is its ability to facilitate swift and affordable cross-border transactions. As more individuals and businesses start to utilize crypto for international transactions, this can lead to a rise in the demand for it and a rise in prices.
An increasing number of crypto ATM’s
The number of ATMs for crypto continue to increase it will be easier for people to buy and keep crypto, which could drive up demand and prices.
Security tokens are developed for development
Security tokens, which are digital assets that are used to represent ownership of an asset, such as stocks or real estate, are a rapidly growing area of the crypto market. Since more and more security tokens will be issued and traded, it can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
As more and more businesses begin accepting crypto as a form of payment, it will make it more convenient for people to utilize and store crypto, which could increase demand and price.
So, is crypto likely to grow in 2023? It’s only time to find out. But with these factors being considered, it’s likely that the cryptocurrency market will see a recovery in 2023. And for those who are committed to the long run, being patient and disciplined is essential.