If it wasn’t devastating enough for investors to see cryptocurrencies lose nearly $2 trillion in value since the peak of the 2021 rally, analysts have predicted that the recent drop is not a traditional market downturn. Instead of distinguishing between a market downturn and a long-term downturn, the industry has already shown signs of an even more terrifying “crypto winter.”
For context, unlike BTC’s drop last year from $64,000 to $30,000 that occurred in a matter of weeks, only to be followed by a stunning rebound to a new record of $68,700, the apparent cooling price of 2022 makes the waters even more harsh.
To clarify, consider the context. In 2022, there is wider economic uncertainty due to the invasion of Ukraine, rising inflation, and fears of a recession in the major countries. The contagion also spread across the crypto sector, with the collapse of the Terra blockchain leading to a domino effect that hit a number of lenders and hedge funds. However, this does not mean that the market will never recover. Indeed, analysts raise questions that take into account the opposite result.
Specifically, what does the impact of the crypto winter mean on mainstream adoption of cryptocurrencies — and will it push the industry back or accelerate it toward making digital assets an everyday payment method? The industry is already seeing new ways for consumers to pay with cryptocurrency instead of fiat currency, which suggests that the answer may be the last.
Furthermore, if new solutions are made available, does that mean the end of the crypto winter? And if so, does that mean recovery is underway?
At this point, the only way to make a viable forecast is to research the performance of payment providers, arguably one of the strong indicators of market direction.
crush the numbers
When denominated in dollars, there’s no denying that the 2022 bear market was the worst bitcoin ever. At one point, the value of this major cryptocurrency plummeted by $50,000. But in terms of percentage, it’s a different story.
In fact, a recent report by Glassnode and CoinMarketCap found that this downturn was the smallest bear market in Bitcoin history. So far, the maximum drawdown is 74%. We saw an 84% drop in 2018 and 2015… and a 93% crash in 2011.
It was also interesting to see the response from some of the biggest Bitcoin investors on Wall Street. MicroStrategy owns 130,000 bitcoins — and despite incurring billions of dollars in unrealized losses, Michael Saylor vows to “HODL through adversity.” In fact, after serving as CEO for 33 years, he has now moved on to a new position as CEO so he can focus more of his energy on the company’s crypto reserves — a sign that it plans to continue accumulating sats.
Compare that with Tesla, which sold 75% of its holdings for $936 million to free up cash. Elon Musk stressed that this should not be taken as a judgment on the merits of Bitcoin.
Continuous dependence despite lower prices
With investors widely deploying vastly different strategies to combat the crypto winter, this calls into question the impact of the everyday user.
For now, data from Bitcoin payment processing portal and business wallet, CoinsPaid, indicates that adoption is still heading in the right direction. So far, the payment ecosystem is said to have processed more than €13 billion worth of cryptocurrencies in total and continues to grow by nearly €1 billion per month amid the market downturn.
Nine million transactions worth 5.6 billion euros were also processed in the first half of 2022. During the same period the previous year, this amounted to 3.7 million transactions, with a volume of 2 billion euros.
In response to these rising numbers, CoinsPaid co-founder and leader Max Krupichev told Cointelegraph:
“As the data has shown, the crypto winter has proven to have little impact on mass adoption. For us, this means maintaining plans in the coming years to increase sales volumes, despite the ups and downs of the market. We are confident that this crisis, like others, is an opportunity for continued growth. Hence our goal becomes to showcase the promising future of cryptocurrency within our own initiatives, helping to pave the way forward alongside other industry leaders.”
Looking to the future, CoinsPaid plans to launch crypto-branded debit cards and has taken the first steps to create a non-profit organization that will advocate for the adoption of the CPD token and its additional benefits for use in the CoinsPaid ecosystem. This organization will be based in Switzerland and is set to enter into cooperation agreements with the best blockchain companies.
With 10 million end-user customers, the CoinsPaid payment system is going from strength to strength.