It’s been a tough journey for the cryptocurrency market in 2022. By November, the market had dipped by more than 70 percent from its previous high at the end of November. When things were looking down and down, the FTX crash made them look more dire. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin has had its fair share of dips in the past. And every time, it’s bounced back with a big increase.
In 2013, for instance, Bitcoin reached a peak of $1,160. Then it fell for over a year, reaching a low of $150. But, in 2017, it broke that record, and hit a new highest of $19,600. In 2018, and it was trading at $3,100. In 2020, it broke through that resistance and reached a new peak of $68,000 in the month of November 2021. Then, just like that we’ve seen another dip. However, the past has proven that following each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Similar to what we’ve witnessed in the past, dips are usually followed by a prolonged bull run that finally surpasses the resistance created by the previous market’s highest price. This is evident not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Crypto and blockchain technology have come a long way in the last few years. With more and more businesses and industries adopting the technology, its use and acceptance is increasing. From finance to gaming, crypto is being used in a variety of ways. And this growing use case could lead to increasing participation in the crypto market, which in turn could drive the prices up.
Increased institutional interest in crypto
In recent times, we’ve seen a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are starting to explore the potential for crypto-based assets. The increased interest of institutions could bring more stability to the market for crypto and result in greater prices.
Government regulations
As the crypto market grows as it matures, governments all over the world are beginning to develop more favorable rules for cryptocurrency. This will help draw more investors and increase the adoption rate of crypto.
A broader range of blockchain applications
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of possible applications that go beyond financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can utilize blockchain technology. This will increase investment and enthusiasm in cryptocurrency.
Advancements in technology
Blockchain and cryptocurrency technology is still in the early stages of development. As advancements continue to be made in areas such as security and scalability, the potential of cryptocurrency assets will continue to increase. This could result in more use and increase in prices.
Global economic uncertainty is growing
With the ongoing economic uncertainty caused by the COVID-19 pandemic, as well as other causes many investors are looking for safe haven investments like bitcoin and even gold. Since the economic outlook for the world is uncertain it could result in increased demand for crypto and increased prices.
Retail investors are able to earn interest
Institutional investors aren’t the only ones showing interest in crypto. Retail investors, also known as individual investors are also beginning to invest in the market for crypto. With increasing numbers of everyday people are educated about cryptocurrency and investing in it, this could lead to increased demand and higher prices.
The growing awareness and acceptance of cryptocurrency
As the market for crypto grows as more and more people are beginning to become aware about it and comprehend it. As the awareness and acceptance grows of crypto it could result in more people buying and holding crypto, which could increase prices.
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Financial decentralization (DeFi) is an emerging area of the crypto market, which allows the provision of financial services created using blockchain technology. As DeFi continues to grow and more projects and platforms come online, this could lead to increased adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the market for crypto grows, more and more companies are beginning accepting crypto payments as a form of payment. This could lead to increased use of crypto in everyday transactions and higher prices.
The increased investment of sovereign wealth funds
The sovereign wealth fund, also known as government-owned instruments for investing, are starting to show interest in cryptocurrency as a possible asset class. As more of these funds allocate a portion of their portfolio to crypto, this could result in a rise in demand and increased prices.
Cryptocurrency is used for payment across borders
One of the main advantages of crypto is its capability to perform quick and inexpensive cross-border payments. As more and more people and businesses begin to use crypto for international transactions, it could result in increased demand and higher costs.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto continue to grow, it will become easier for people to buy and hold cryptocurrency, which can increase demand and price.
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. With the increasing number of security tokens being issued and traded, this can lead to a higher demand, and thus higher costs for cryptocurrency.
More adoption by merchants
In the event that more businesses begin accepting crypto as a means of payment, it makes it easier for consumers to hold and use crypto, which can boost demand and increase prices.
Will crypto be on the increase in 2023? Only time will tell. However, with these aspects in mind, it’s likely that the crypto market will be able to see a rebound in 2023. For those looking to invest for the long haul patience and discipline is essential.