It’s been a rough journey for the cryptocurrency market in 2022. As of November the market was down by more than 70 percent from its previous high at the end of November. And just when things were looking down, the FTX crash turned things more dire. The question is, can the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of drops in the past. Every time, it’s rebounded by a massive rally.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for over a year before reaching a bottom of $150. But, in 2017, it broke that record, and hit a new record high of $19,600. Then, in 2018, the price was at $3,100. In 2020, the price broke that resistance and hit a new highest of $68,000 in November 2021. And just like that, we’ve witnessed another drop. But history shows us that following each dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are typically followed by a lengthy bull run that eventually overcomes the resistance set by the previous market’s highest price. This pattern can be seen in not just Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in the last few years. With more and more businesses and industries taking to it, its usage and acceptance is growing. From finance to gaming, crypto is being used in a variety of ways. And this growing use case can lead to more people being involved in the market which could boost prices.
Increased institutional interest in cryptocurrency
In recent years we’ve noticed a growing interest from institutional investors in cryptocurrency. From banks to hedge funds, many large institutions are now exploring the possibilities of crypto assets. The increased interest of institutions could bring more stability to the crypto market and result in higher prices.
Regulations of the government
As the crypto market continues to mature as it matures, governments all over the world are beginning to develop more favorable rules for crypto. This will help draw more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The underlying technology behind the majority of cryptocurrencies, blockchain is a broad range of potential use cases that go beyond financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can benefit from blockchain technology. This will stimulate more investment and excitement in crypto.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas such as security and scalability, potential of cryptocurrency assets will continue to expand. This could result in more adoption and higher prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty brought on through the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven assets such as bitcoin and even gold. As the global economic situation is uncertain it could result in more demand for crypto as well as increased prices.
Interest from retail investors
The institutional investors aren’t alone in ones showing interest in cryptocurrency. Retail investors, or even individual investors are also beginning to invest in the crypto market. As more and more people are educated about cryptocurrency and investing in it this could result in increased demand and higher prices.
Growing awareness and acceptance of crypto
As the crypto market grows as more and more people are beginning to become aware about and understand it. As awareness and acceptance of crypto grows it could result in more people buying as well as holding the crypto that could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market that enables financial services to be developed on top of blockchain technology. As DeFi grows and more projects and platforms come online, this could result in increased use and increased prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows increasing numbers of companies are starting accepting crypto payments as a form of payment. This could result in increased use of crypto in everyday transactions and higher prices.
More investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are starting to explore crypto as an asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, it could lead to increased demand and higher prices.
Use of crypto for payment across borders
One of the biggest benefits of crypto is the capability to perform quick and inexpensive cross-border payments. As more and more people and businesses start to utilize cryptocurrency for international transactions, it could result in increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
As the number of crypto ATM’s continue to increase, it will become easier for people to buy and hold crypto, which could increase demand and price.
The development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, such as real estate or stock is a fast-growing area of the crypto market. As more security tokens are issued and traded, this could lead to increased demand and consequently higher rates for the crypto.
Merchants are more likely to adopt the concept.
In the event that more merchants begin accepting crypto as a means of payment, this will make it more convenient for people to utilize and store crypto, which can drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects in mind, it’s possible that the cryptocurrency market will see a recovery in 2023. If you’re looking to invest for the long run, being patient and disciplined will be key.