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 on November 20, 2021. When things were getting worse after the FTX crash turned them even worse. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced its fair share of dips in the past. Every time, it has bounced back by a massive increase.
For instance, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for more than a year before reaching a bottom of $150. In 2017, it broke that record and reached a new high of $19,600. Fast forward to 2018, it was trading at $3,100. And in the year 2020 it struck 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 in the past, dips are typically followed by a long bull run that finally breaks through the resistance created by the previous market’s 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 come a long way in recent years. With more and more businesses and industries adopting it, its usage and acceptance is growing. From banking to gaming, crypto is being used in many ways. The growing popularity of crypto can lead to increasing participation in the market which could drive the prices up.
Increased institutional interest in cryptocurrency
In recent years we’ve witnessed a rising interest from institutional investors in cryptocurrency. From hedge funds to banks and even large corporations are beginning to investigate the possibilities for crypto-based assets. This increased interest from institutions can bring stability to the market for crypto 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 regulations for crypto. This will help draw more investors as well as increase the acceptance of crypto in general.
More use cases for blockchain
The technology that underlies many cryptocurrencies, blockchain, is a broad range of potential use cases beyond the realm of financial transactions. From supply chain management to voting systems, more industries are beginning to look at ways they can benefit from blockchain technology. This could increase investment and enthusiasm in crypto.
Advancements in technology
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas such as security and scalability, potential of cryptocurrency assets will continue to increase. This could lead to more use and increase in prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused by the COVID-19 pandemic as well as other factors many investors are starting to look for safe haven investments like bitcoin and even gold. Because the global economic climate remains uncertain it could result in increased demand for crypto and more expensive prices.
Retail investors are able to earn interest
Institutional investors aren’t the only one who’s showing an interest in crypto. Retail investors, or even individual investors, are also starting to get involved in the crypto market. As more and more people are educated about cryptocurrency and investing in it This could result in an increase in demand and consequently higher prices.
Growing awareness and acceptance of cryptocurrency
As the crypto market grows, more and more people are beginning to become aware about and understand it. As understanding and acceptance grows of crypto it could result in more people purchasing or holding cryptocurrency, and this can increase prices.
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Decentralized finance (DeFi) is a rapidly growing area of the crypto market that allows financial services to be built upon blockchain technology. As DeFi continues to grow and more platforms and projects become available, 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 is growing increasing numbers of companies are starting using crypto to be a means of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
The increased investment of sovereign wealth funds
Sovereign wealth funds, which are government-owned investment vehicles, are beginning to show interest in crypto as an asset class. As more funds dedicate a part of their assets to digital currencies, it could result in a rise in demand and more expensive prices.
Cryptocurrency is used for international payments
One of the biggest benefits of crypto is its capability to perform quick and inexpensive cross-border payments. As more individuals and businesses begin to use cryptocurrency for international transactions this could lead to increased demand and higher costs.
An increasing number of crypto ATM’s
As the number of ATMs for crypto continue to grow it will be more convenient for consumers to purchase and store cryptocurrency, which can increase demand and price.
The development of security tokens
Security tokens, which are digital assets that signify ownership in an asset like real estate or stock is a fast-growing segment of the cryptocurrency market. As more security tokens are created and traded, it could result in a rise in demand and consequently higher costs for cryptocurrency.
More adoption by merchants
In the event that more merchants start accepting cryptocurrency as a method of payment, this will make it easier for consumers to utilize and store crypto, which could boost demand and increase prices.
So, will crypto rise in 2023? It’s only time to find out. But with these factors being considered, it’s possible that the crypto market will be able to see a rebound in 2023. If you’re in it for the long run, being patient and disciplined is essential.