It’s been a difficult experience for the crypto market through 2022. In November the market was down by more than 70 percent from its previous high in November 2021. Just when the market was looking down and down, the FTX crash turned things more dire. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin, has seen its fair share of dips in the past. And every time, it has bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. However, in 2017, it broke that record and reached a new record high of $19,600. Then, in 2018, it was trading at $3,100. And in the year 2020 it struck through that resistance and reached a new peak of $68,000 in the month of November 2021. And just like that, we’ve had another dip. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed before, fall-offs are typically followed by a prolonged bull run that finally overcomes the resistance set by the previous high price. This pattern can be seen in more than Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have come a long way in recent years. With more and more businesses and industries taking to it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in a myriad of ways. This growing demand could result in more people getting involved in the crypto market, which in turn could increase the price.
Increased institutional interest in cryptocurrency
In the last few years we’ve witnessed a rising curiosity from institutions investing in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the possibilities in crypto currencies. The increasing interest from institutions can bring stability to the crypto market and lead to higher prices.
Regulations from the Government
As the market for crypto is maturing, governments around the world are beginning to establish more favorable rules for crypto. This could help attract more investors and boost the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrency, blockchain, has a wide range of applications that go that go beyond financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can make use of blockchain technology, which could increase investment and enthusiasm in cryptocurrency.
Technologies are constantly evolving.
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advancements continue to be made in areas such as scalability and security, the potential of crypto assets will continue to increase. This could result in more use and increase in prices.
Global economic uncertainty is growing
Due to the constant instability in the economy caused due to the COVID-19 pandemic, as well as other causes many investors are beginning to look for safe haven assets like bitcoin and even gold. As the global economic situation remains uncertain it could result in increased demand for crypto and higher prices.
Interest from retail investors
Investors from institutions aren’t the only one who’s showing an interest in cryptocurrency. Retail investors, also known as individual investors are also beginning to get involved in the cryptocurrency market. In the future, as more people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
The growing awareness and acceptance of crypto
As the market for crypto continues to mature increasing numbers of people are beginning to become aware about and understand the concept. As the awareness and acceptance of cryptocurrency grows, it will lead to increasing numbers of people purchasing as well as holding the crypto that could raise prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that enables the provision of financial services created on top of blockchain technology. As DeFi expands and more projects and platforms come online, this will lead to a rise in adoption and more expensive prices for crypto.
The development of crypto payment methods
As the market for crypto grows increasing numbers of companies are starting using crypto to be a method of payment. This could lead to increased use of crypto in regular transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are now beginning to show interest in cryptocurrency as a possible asset class. As more of these funds dedicate a part of their assets to digital currencies, this could result in a rise in demand and higher prices.
Use of crypto for cross-border payments
One of the main advantages 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 demand and higher costs.
Increasing numbers of crypto ATM’s
The number of crypto ATM’s continue to increase, it will become easier for consumers to purchase and store cryptocurrency, which can drive up demand and prices.
Security tokens are developed for development
Security tokens, or digital assets that are used to represent ownership in an asset like stock or real estate, are a rapidly growing area of the crypto market. As more security tokens are issued and traded, this can lead to a higher demand, and thus higher prices for crypto.
A greater adoption rate by merchants
With the increasing number of merchants start accepting crypto as a form of payment, it will make it more convenient for consumers to hold and use crypto, which could drive up demand and prices.
So, will crypto grow in 2023? Only time will tell. With these things in mind, it’s likely that the cryptocurrency market will be able to see a rebound in 2023. For those looking to invest for the long-term, being patient and disciplined is crucial.