It’s been a rough journey for the cryptocurrency market in 2022. By November, the market had dipped by 70 percent from its previous high in November 2021. And just when things were going downhill after the FTX crash turned things worse. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The cryptocurrency market, specifically Bitcoin, has seen its fair share of dips in the past. Every time, it’s rebounded by a massive rally.
For example, in 2013, Bitcoin reached a peak of $1,160. It then plummeted for a full year before reaching a bottom of $150. However, in 2017 it broke that record and reached a new highest of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, the price broke through the resistance and hit a new peak of $68,000 in the month of November 2021. Then, just like that we’ve witnessed another drop. 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 previously, dips tend to be followed by a prolonged bull run that finally breaks through the resistance created by the previous market’s highest price. This pattern can be seen not only in Bitcoin but also in other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has made significant progress in recent years. With more and more businesses and industries adopting it, its usage and acceptance is increasing. From banking to gaming cryptocurrency is being utilized in many ways. And this growing use case could result in more people being involved in the market, which in turn could increase the price.
Increased institutional interest in crypto
In the last few years we’ve noticed a growing interest from institutional investors in crypto. From banks to hedge funds numerous large institutions are beginning to investigate the possibilities of crypto assets. The increased interest of institutions could provide more stability to the crypto market and could lead to more expensive prices.
Government regulations
As the market for crypto continues to mature as it matures, governments all over the world are starting to create more favorable rules for crypto. This will help draw more investors and boost the acceptance of crypto in general.
A broader range of blockchain applications
The technology that is the basis of many cryptocurrency, blockchain, is a broad range of applications that go beyond just financial transactions. In addition to supply chain management, voting and other systems companies are beginning to look at ways they can utilize blockchain technology. This could stimulate more investment and excitement in crypto.
Technology advancements
Blockchain technology and cryptography are at the very beginning of development. As progress is made in areas like security and scalability, the potential of crypto assets will continue to increase. This could result in more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing economic uncertainty caused by the COVID-19 pandemic as well as other factors many investors are beginning to look for safe haven investments like gold and crypto. Because the global economic climate is uncertain, this could lead to more demand for crypto as well as higher prices.
Retail investors are able to earn interest
Investors from institutions aren’t the only people who are interested in crypto. Retail investors, or individual investors, are also starting to invest in the market for crypto. In the future, as more people become aware of crypto and how to invest in it, this could lead to 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 appreciate it. As the awareness and acceptance grows of crypto, it will lead to more people buying or holding cryptocurrency, and this can drive up prices.
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The Decentralized Finance (DeFi) is an emerging area of the crypto market, which allows finance services developed on top of blockchain technology. As DeFi continues to grow and more platforms and projects become available, this could lead to increased adoption and higher prices for crypto.
The development of crypto payment methods
As the market for crypto is growing increasing numbers of companies are starting to accept crypto as a method of payment. This could result in increased usage of crypto in daily transactions and higher prices.
Increased investment from sovereign wealth funds
Sovereign wealth funds, which are government-owned investments, are beginning to show interest in crypto as an asset class. As more funds devote a percentage of their portfolio to crypto, it could lead to increased demand and increased prices.
Cryptocurrency is used for cross-border payments
One of the main advantages of crypto is the capability to perform swift and affordable cross-border transactions. As more businesses and individuals begin to use cryptocurrency for international transactions this could lead to increased the demand for it and a rise in prices.
The number of ATMs that accept crypto is increasing.
With the amount of ATMs for crypto increase it will be easier for individuals to purchase and store cryptocurrency, which can boost demand and increase prices.
The development of security tokens
Security tokens, or digital assets that are used to represent ownership of an asset, like real estate or stock is a fast-growing sector of the crypto market. Since more and more security tokens will be issued and traded, this could lead to increased demand and higher rates for the crypto.
Merchants are more likely to adopt the concept.
As more and more retailers start accepting crypto as a form of payment, it will make it easier for consumers to utilize and store crypto, which can increase demand and price.
So, will crypto increase in 2023? It’s only time to find out. But with these factors being considered, it’s possible that the crypto market could see a recovery in 2023. For those in it for the long-term patience and discipline will be key.