It’s been a tough journey for the cryptocurrency market in 2022. By November the market was down by more than 70% from its previous peak at the end of November. Just when the market was getting worse after the FTX crash turned them even worse. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The market for crypto, particularly Bitcoin, has seen its fair share of drops in the past. Every time, it has bounced back with a big rally.
For example, in 2013, Bitcoin reached a peak of $1,160. Then it fell for more than a year, reaching a low of $150. In 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, the price broke that resistance, and reached a record high of $68,000 in November 2021. And just like that, we’ve had another dip. However, history has shown us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed previously, dips are usually followed by a prolonged bull run that eventually breaks through the resistance created by the market’s previous highest price. This pattern 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 recent years. With more and more companies and industries adopting it, its usage and acceptance is growing. From banking to gaming cryptocurrency is being utilized in many ways. And this growing use case can lead to increasing participation in the market which could increase the price.
The rise in interest of institutions in cryptocurrency
In recent times we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks numerous large institutions are now exploring the potential of crypto assets. The increased interest of institutions could provide more stability to the market for crypto and result in higher prices.
Regulations from the Government
As the crypto market grows, governments around the world are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors and increase the acceptance of crypto in general.
A broader range of blockchain applications
The technology that underlies many cryptocurrency, blockchain, has a wide range of possible applications beyond the realm of financial transactions. For example, from supply chain management and voting, many industries are starting to explore how they can utilize blockchain technology. This will increase investment and enthusiasm in crypto.
Blockchain and cryptocurrency technology is at the very beginning of development. As progress is made in areas like security and scalability, potential of crypto assets will continue to grow. This could lead to more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty brought on due to the COVID-19 pandemic as well as other factors, more and more 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 an increase in demand for crypto and higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only ones showing interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the market for crypto. As more and more people become aware of cryptocurrency and investing in it, this could lead to an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the market for crypto is maturing as more and more people are starting to learn about and appreciate the concept. As the awareness and acceptance of cryptocurrency grows, this could lead to more people buying or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is an area that is rapidly expanding in the crypto market that enables finance services built on top of blockchain technology. As DeFi continues to grow and more projects and platforms 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 result in increased usage of crypto in daily transactions and higher prices.
Increased investment from sovereign wealth funds
These funds are state-owned investments, are starting to explore crypto as a potential asset class. As more of these funds allocate a portion or their entire portfolios to cryptocurrency, this could result in a rise in demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is the ability to facilitate swift and affordable cross-border transactions. As more businesses and individuals begin to use crypto for international transactions, it could result in increased the demand for it and a rise in prices.
An increasing number of crypto ATM’s
The number of ATMs for crypto continue to grow it will be easier for individuals to purchase and keep crypto, which will boost demand and increase prices.
Development of security tokens
Security tokens, or digital assets that are used to represent ownership in an asset like stocks or real estate are rapidly expanding sector of the crypto market. Since more and more security tokens will be created and traded, it could lead to increased demand and higher prices for crypto.
A greater adoption rate by merchants
In the event that more retailers start accepting cryptocurrency as a method of payment, this makes it easier for customers to hold and use crypto, which could drive up demand and prices.
So, will crypto increase in 2023? Only time will tell. However, with these aspects to consider, it’s possible that the cryptocurrency market will see a recovery in 2023. And for those who are looking to invest for the long run, being patient and disciplined is essential.