It’s been a difficult journey for the cryptocurrency market in 2022. As of November the market had dropped by 70% from its previous peak at the end of November. When things were getting worse after the FTX crash made them look even worse. So, will the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has experienced many dips in the past. Each time, it has bounced back with a huge rise.
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 hit a new record high of $19,600. Then, in 2018, and it was trading at $3,100. And in 2020, it broke 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. But history shows us that after each dip the bull runs.
Every Dip is Followed by a Long Bull Run
Just like we’ve seen in the past, dips are typically followed by a prolonged bull run that finally breaks through the resistance created by the market’s previous highest price. This pattern can be seen not only in Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain technology and cryptography have progressed a lot in recent years. With more and more businesses and industries embracing the technology, its use and acceptance is increasing. From gaming to finance the use of crypto is increasing in a variety of ways. The growing popularity of crypto can lead to increasing participation in the market and, in turn, increase the price.
The rise in interest of institutions in cryptocurrency
In the last few years, we’ve seen a growing interest from institutional investors in crypto. From hedge funds to banks numerous large institutions are now exploring the potential in crypto currencies. The increased interest of institutions can bring stability to the market for crypto and could lead to greater prices.
Regulations from the Government
As the market for crypto is maturing as it matures, governments all over the world are beginning to establish more favorable rules for cryptocurrency. This could help attract more investors as well as increase the adoption rate of crypto.
Blockchain has many more applications.
The technology that underlies the majority of cryptocurrencies, blockchain offers a variety of possible applications beyond just financial transactions. For example, from supply chain management and voting, many industries are exploring ways they can benefit from blockchain technology. This will stimulate more investment and excitement in cryptocurrency.
Technology advancements
Blockchain and cryptocurrency technology is still in the beginning stages of development. As advances continue to be made in areas like security and scalability, potential of crypto assets will continue to expand. This could result in more acceptance and higher prices.
Uncertainty in the global economy
With the ongoing instability in the economy caused due to the COVID-19 pandemic, as well as other causes increasing numbers of investors are beginning to look for safe haven assets such as cryptocurrency and 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 people who are interested in crypto. Retail investors, or individual investors are also beginning to participate in the crypto market. As more and more people are educated about crypto and how to invest in it, this could lead to increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the crypto market grows as more and more people are beginning to learn about and appreciate it. As awareness and acceptance of cryptocurrency grows, this could lead to increasing numbers of people purchasing as well as holding the crypto that can increase prices.
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Decentralized finance (DeFi) is an emerging area of the crypto market that allows finance services developed upon blockchain technology. As DeFi grows and more platforms and projects become available, this could result in increased use and more expensive prices for crypto.
Developments in crypto payment methods
As the market for crypto continues to grow as more and more businesses are beginning accepting crypto payments as a form of payment. This could lead to an increase in the use of crypto in everyday transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
Sovereign wealth funds, which are owned by the state as investment vehicles, are now beginning to explore crypto as an asset class. As more of these funds allocate a portion of their portfolio to crypto, this could lead to increased demand and increased prices.
Use of crypto for payment across borders
One of the biggest benefits of crypto is its capability to perform fast and cheap cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions, it could result in increased the demand for it and a rise in prices.
Increasing numbers of crypto ATM’s
With the amount of ATMs that accept crypto increase it will be easier for people to buy and hold crypto, which will drive up demand and prices.
Development of security tokens
Security tokens, also known as digital assets that are used to represent ownership in an asset like stocks or real estate are rapidly expanding sector of the crypto market. With the increasing number of security tokens being created and traded, this can lead to a higher demand and higher costs for cryptocurrency.
More adoption by merchants
In the event that more retailers begin accepting crypto as a means of payment, it makes it easier for consumers to utilize and store crypto, which could boost demand and increase prices.
So, will crypto increase in 2023? Only time will tell. But with these factors in mind, it’s likely that the crypto market will be able to see a rebound in 2023. And for those who are in it for the long haul, being patient and disciplined is essential.