It’s been a rough ride for the crypto market through 2022. By November, the market had dipped by more than 70 percent from the previous high on November 20, 2021. And just when things were getting worse and down, the FTX crash made them look even more dire. The question is, can the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has had its fair share of dips in the past. Each time, it’s bounced back with a big increase.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for over a year before reaching a bottom of $150. But, in 2017, it broke that record and hit a record record high of $19,600. In 2018, it was trading at $3,100. And in the year 2020 it struck that resistance and hit a new highest of $68,000 in November 2021. Then, just like that we’ve had another dip. However, the past has proven that after 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 tend to be followed by a prolonged bull run that eventually breaks through the resistance created 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 and cryptocurrency technology has come a long way in the last few years. With more and more businesses and industries adopting it, its usage and acceptance is growing. From gaming to finance cryptocurrency is being utilized in a myriad of ways. And this growing use case could result in increasing participation in the market and, in turn, drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years we’ve noticed a growing demand from investors of institutional scale in crypto. From banks to hedge funds, many large institutions are now exploring the possibilities in crypto currencies. The increasing interest from institutions could provide more stability to the crypto market and result in more expensive prices.
As the crypto market continues to mature, governments around the world are starting to create more favorable rules for crypto. This could help 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 is a broad range of possible applications beyond just financial transactions. From supply chain management to voting systems, more companies are exploring ways they can utilize blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Crypto and blockchain technology are at the very beginning of development. As advances continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to expand. This could result in more acceptance and higher prices.
Uncertainty in the global economy
Due to the constant economic uncertainty caused due to the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven assets such as bitcoin and even gold. Since the economic outlook for the world remains uncertain it could result in an increase in demand for crypto and more expensive prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in cryptocurrency. Retail investors, or individual investors, are also starting to get involved in the cryptocurrency market. With increasing numbers of people become aware of cryptocurrency and investing in it, this could lead to more demand and higher prices.
The growing awareness and acceptance of crypto
As the crypto market grows, more and more people are starting to learn about it and comprehend the concept. As awareness and acceptance of crypto grows, it will lead to increasing numbers of people purchasing or holding cryptocurrency, and this could drive up prices.
Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that allows financial services to be created upon blockchain technology. As DeFi expands and more platforms and projects are launched, it could result in increased use and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto is growing, more and more companies are starting to accept crypto as a means of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are government-owned instruments for investing, are now beginning to show interest in crypto as an asset class. As more of these funds dedicate a part or their entire portfolios to cryptocurrency, this could increase demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the main advantages of cryptocurrency is its ability to make swift and affordable cross-border transactions. As more businesses and individuals are beginning to make use of crypto for international transactions, this could lead to increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs that accept crypto increase it will be easier for consumers to purchase and hold cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, also known as digital assets that represent ownership of an asset, like stocks or real estate is a fast-growing sector of the crypto market. With the increasing number of security tokens being created and traded, it can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
With the increasing number of retailers accept crypto as a means of payment, this will make it easier for consumers to hold and use crypto, which could drive up demand and prices.
Will crypto be on the increase in 2023? Only time will tell. However, with these aspects being considered, it’s possible that the crypto market will see a recovery in 2023. And for those who are committed to the long haul, being patient and disciplined will be key.