It’s been a difficult ride for the crypto market through 2022. As of November the market was down by more than 70% from its previous peak at the end of November. When things were looking down and down, the FTX crash made them look even more dire. What is the likelihood that the cryptocurrency market rebound in 2023?
Crypto Market Dips are Cyclical
The crypto market, especially Bitcoin has had many dips in the past. Each time, it has bounced back with a big rise.
In 2013, for instance, Bitcoin reached a peak of $1,160, then fell for more than a year, reaching a low of $150. But, in 2017 it broke that record and hit a record highest of $19,600. Then, in 2018, and it was trading at $3,100. In 2020, it broke through that resistance and reached a new high of $68,000 in November 2021. Then, just like that we’ve had another dip. But history shows us that following each dip, there’s a bull run.
Every Dip is Followed by a Long Bull Run
As we’ve seen in the past, dips are usually followed by a lengthy bull run that eventually overcomes the resistance set by the previous high price. This pattern is evident in not just Bitcoin but also other cryptocurrencies.
Growing Use of Crypto and Blockchain
Blockchain and cryptocurrency technology has progressed a lot in the last few years. With more and better companies and industries taking to it, its usage and acceptance is growing. From finance to gaming cryptocurrency is being utilized in a variety of ways. And this growing use case can lead to increasing participation in the market and, in turn, boost prices.
Increased institutional interest in crypto
In recent years we’ve noticed a growing demand from investors of institutional scale in crypto. From hedge funds to banks, many large institutions are now exploring the possibilities of crypto assets. The increasing interest from institutions could bring more stability to the crypto market and could lead to higher prices.
Regulations from the Government
As the crypto market continues to mature as it matures, governments all over the world are starting to create more favorable regulations for cryptocurrency. This is likely to attract more investors and boost the acceptance of crypto in general.
Blockchain has many more applications.
The underlying technology behind many cryptocurrencies, blockchain, is a broad range of applications that go beyond the realm of financial transactions. From supply chain management to voting systems, more industries are beginning to look at ways they can make use of blockchain technology. This will drive more investment and interest in crypto.
Crypto and blockchain technology are still in the early stages of development. As progress is made in areas like security and scalability, potential of cryptocurrency assets will continue to grow. This could result in more acceptance and higher prices.
Uncertainty in the global economy
In the current instability in the economy caused due to the COVID-19 pandemic, as well as other causes many investors are starting to look for safe haven assets like gold and crypto. 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
The institutional investors aren’t alone in people who are interested in cryptocurrency. Retail investors, or individual investors are also beginning to invest in the crypto market. As more and more everyday people learn about cryptocurrency and investing in it this could result in increased demand and higher prices.
A growing number of people are becoming aware of and accepting crypto
As the market for crypto grows, more and more people are beginning to learn about and appreciate the concept. As understanding and acceptance grows of crypto, it will lead to more people buying as well as holding the crypto that can raise prices.
Decentralized finance (DeFi) is a rapidly growing area of the crypto market, which allows the provision of financial services built upon blockchain technology. As DeFi continues to grow and more platforms and projects are launched, it will lead to a rise in adoption and more expensive prices for crypto.
Advances in crypto-based payment methods
As the crypto market is growing as more and more businesses are starting to accept crypto as a method of payment. This could lead to an increase in the use of crypto in regular transactions and an increase in the cost of transactions.
More investment from sovereign wealth funds
The sovereign wealth fund, also known as owned by the state as investments, are starting to show interest in cryptocurrency as a possible asset class. As more funds dedicate a part of their assets to digital currencies, it could lead to increased demand and more expensive prices.
Use of crypto for cross-border payments
One of the biggest benefits of cryptocurrency is its capability to perform fast and cheap cross-border payments. As more businesses and individuals start to utilize cryptocurrency for international transactions this can lead to a rise in demand and higher costs.
An increasing number of crypto ATM’s
The number of ATMs that accept crypto increase it will be easier for people to buy and store crypto, which could increase demand and price.
The development of security tokens
Security tokens, which are digital assets that signify ownership in an asset such as stocks or real estate is a fast-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 retailers accept crypto as a means of payment, this will make it more convenient for consumers to utilize and store crypto, which can boost demand and increase prices.
So, will crypto rise in 2023? The only way to know is time. But with these factors in mind, it’s likely that the crypto market could see a recovery in 2023. For those looking to invest for the long run, being patient and disciplined is essential.