It’s been a tough journey for the cryptocurrency market in 2022. As of November the market had dropped by more than 70% from its previous peak at the end of November. When things were getting worse, the FTX crash turned things even more dire. The question is, can the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had many dips over the years. Every time, it has bounced back with a big increase.
For instance, in 2013, Bitcoin reached a peak of $1,160, then fell for more than a year before reaching a bottom of $150. In 2017, it broke that record and reached a new record high of $19,600. Fast forward to 2018, it was trading at $3,100. In 2020, it broke that resistance and reached a new highest of $68,000 in November 2021. Just like that, we’ve seen another dip. However, history has shown us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips tend to be followed by a prolonged bull run, which eventually overcomes the resistance set by the market’s previous highest price. This is evident not only in 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 taking to it, its usage and acceptance is rising. From gaming to finance cryptocurrency is being utilized in a myriad of ways. The growing popularity of crypto could result in more people being involved in the crypto market, which in turn could drive the prices up.
A rise in the interest of institutions for cryptocurrency
In the last few years we’ve noticed a growing demand from investors of institutional scale in cryptocurrency. From hedge funds to banks numerous large institutions are starting to explore the potential for crypto-based assets. This increased interest from institutions could provide more stability to the market for crypto and lead to higher prices.
Regulations from the Government
As the market for crypto grows and mature, governments across the globe are starting to create more favorable rules for crypto. This is likely to attract more investors and increase the mainstream adoption of crypto.
More use cases for blockchain
The technology that underlies many cryptocurrency, blockchain, has a wide range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more industries are starting to explore how they can make use of blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like scalability and security, the potential of crypto assets will continue to increase. This could lead to more use and increase in prices.
Rising global economic uncertainty
In the current instability in the economy caused due to the COVID-19 pandemic as well as other factors increasing numbers of investors are looking for safe haven assets such as cryptocurrency and gold. Since the economic outlook for the world remains uncertain and 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 invest in the cryptocurrency market. As more and more everyday people are educated about cryptocurrency and investing in it this could result in increased demand and higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows, more and more people are beginning to learn about and understand the concept. As understanding and acceptance of cryptocurrency grows it could result in more people buying as well as holding the crypto that could drive up prices.
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The Decentralized Finance (DeFi) is a rapidly growing area of the crypto market, which allows finance services developed upon blockchain technology. As DeFi grows and more projects and platforms become available, this could result in increased use and higher prices for crypto.
Developments in crypto payment methods
As the market for crypto is growing, more and more companies are starting accepting crypto payments as a means of payment. This could result in increased use of crypto in regular transactions and higher prices.
More investment from sovereign wealth funds
These funds are government-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds devote a percentage or their entire portfolios to cryptocurrency, this could lead to increased demand and more expensive prices.
Cryptocurrency is used for payment across borders
One of the biggest benefits of crypto is the ability to make fast and cheap cross-border payments. As more businesses and individuals are beginning to make use of cryptocurrency for international transactions it could result in increased demand and higher prices.
Increasing numbers of crypto ATM’s
As the number of ATMs that accept crypto continue to increase, it will become easier for individuals to purchase and hold cryptocurrency, which can drive up demand and prices.
The development of security tokens
Security tokens, or digital assets that signify ownership in an asset such as stock or real estate, are a rapidly growing sector of the crypto market. Since more and more security tokens will be issued and traded, it could lead to increased demand, and thus higher rates for the crypto.
A greater adoption rate by merchants
As more and more retailers begin accepting crypto as a form of payment, it makes it easier for consumers to use and hold crypto, which can boost demand and increase prices.
Will crypto be on the grow in 2023? The only way to know is time. However, with these aspects in mind, it’s possible that the crypto market could see a recovery in 2023. And for those who are looking to invest for the long haul patience and discipline is crucial.