It’s been a difficult ride for the crypto market until 2022. As of November, the market had dipped by more than 70% from its previous peak at the end of November. When things were looking down, the FTX crash turned them even worse. The question is, can the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin has experienced its fair share of dips in the past. And every time, it’s rebounded by a massive rally.
For instance, in 2013, Bitcoin reached a peak of $1,160. Then it fell for over a year before hitting a low of $150. But, in 2017, it broke that record and reached a new high of $19,600. In 2018, it was trading at $3,100. In 2020, the price broke through the resistance and reached a new peak of $68,000 in the month of November 2021. Just like that, we’ve seen another dip. But history shows us that at the end of every dip there’s a bull-run.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen before, fall-offs are typically followed by a long bull run, which eventually overcomes the resistance set by the market’s previous highest price. This pattern is evident in more than Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have made significant progress in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is rising. From banking to gaming, crypto is being used in a myriad of ways. This growing demand can lead to increasing participation in the crypto market, which in turn could drive the prices up.
Increased institutional interest in cryptocurrency
In the last few years we’ve witnessed a rising demand from investors of institutional scale in crypto. From banks to hedge funds and even large corporations are starting to explore the potential in crypto currencies. The increased interest of institutions could bring more stability to the market for crypto and result in more expensive prices.
Regulations of the government
As the crypto market is maturing and mature, governments across the globe are beginning to develop more favorable regulations for crypto. This is likely to attract more investors and increase the acceptance of crypto in general.
More use cases for blockchain
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of possible applications beyond just financial transactions. In addition to supply chain management, voting and other systems industries are exploring ways they can benefit from blockchain technology. This will drive more investment and interest in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is at the very beginning of development. As advancements continue to be made in areas such as security and scalability, the potential of crypto assets will continue to increase. This could lead to more acceptance and higher prices.
Rising global economic uncertainty
In the current economic uncertainty caused through the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven assets such as gold and crypto. Since the economic outlook for the world is uncertain, this could lead to an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, also known as individual investors are also beginning to participate in the crypto market. In the future, as more everyday people become aware of crypto and the best ways to invest in it, this could lead to an increase in demand and consequently higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market is maturing increasing numbers of people are beginning to learn about and appreciate the concept. As awareness and acceptance grows of crypto it could result in more people purchasing as well as holding the crypto that could increase prices.
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The Decentralized Finance (DeFi) is an area that is rapidly expanding in the crypto market that allows the provision of financial services created on top of blockchain technology. As DeFi expands and more platforms and projects are launched, it could lead to increased adoption 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 form of payment. This could lead to increased use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
These funds are owned by the state as instruments for investing, are beginning to show interest in crypto as a potential asset class. As more of these funds devote a percentage of their assets to digital currencies, this could increase demand and higher prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is its capability to perform fast and cheap cross-border payments. As more individuals and businesses 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 crypto ATM’s increase, it will become easier for individuals to purchase and keep crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset such as stocks or real estate, are a rapidly growing segment of the cryptocurrency market. As more security tokens are created and traded, it can lead to a higher demand and consequently higher prices for crypto.
Merchants are more likely to adopt the concept.
In the event that more merchants begin accepting cryptocurrency as a method of payment, it makes it easier for customers to utilize and store 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 possible that the crypto market could have a rebound by 2023. For those in it for the long haul, being patient and disciplined will be key.