The crypto winter, commencing in November 2021, cast its shadows across the cryptocurrency landscape. During this period, we witnessed price stagnation and a decline in top assets triggered by global financial instability. As we navigate the current state of affairs, it becomes evident that although crypto winter still persists, the payment sector is driving the industry towards mass adoption.
In my opinion, the emergence of the crypto winter ought to be mainly attributed to surging US inflation, prompting the Federal Reserve to implement aggressive interest rate hikes. Moreover, the collapse of major players like Terra, Luna, FTX, Voyager Digital, Celsius Network, and others added fuel to the flames.
The crypto winter cast a heavy toll on the trading infrastructure, causing a substantial outflow of liquidity from centralised exchanges and resulting in various adverse consequences. Indeed, trust was undermined whilst surviving platforms faced increased scrutiny from regulators.
Despite the echoes of the 2022 crypto winter still reverberating today, historical data reveals a pattern where bullish markets often follow bear cycles in the cryptocurrency industry. This gives us hope for recovery and an increasing interest of businesses in cryptocurrencies.
Although the crypto market cap started shrinking in November 2021 from a record USD 3 trillion to USD 1 trillion, and Bitcoin lost over 60% of its value compared to its all-time high, crypto payments have remained unwavering.
As a crypto payments gateway, CoinsPaid has not witnessed any decline in cryptocurrency payments. On the contrary, our volumes and number of transactions have continued to rise, showcasing the persistent demand for digital assets among businesses and individuals.
In 2022, our transaction volumes doubled compared to 2021, with the number of transactions increasing by 1.9 times. The positive trend carried forward into 2023, with Q1 results revealing a 14% net volume growth and a 9% increase in transactions compared to Q4 2022.
First of all, crypto is becoming a widely-popular means of payment rather than a speculative-only asset. Despite the bear market, mass adoption rates of digital assets are continuing to grow steadily. Over 400 million people worldwide continue to use digital assets, while the number of businesses accepting cryptocurrencies as payments has surpassed 15,000.
Here are just a few famous companies and corporations worldwide that currently accept Bitcoin: Ralph Lauren, Rakuten, Overstock, Hublot, Whole Foods, PayPal, etc. CoinsPaid, among others, has recently partnered with UK-based private jet service Mirai Flights. We can also see that crypto is being used as payment in various industries all over the globe, both online and in-store.
Overall, according to the Deloitte survey, 87% of merchants stated that accepting digital currencies provided a competitive market advantage. The majority of businesses experienced customer base growth and improved brand perception.
When it comes to crypto payments, volatility actually plays no significant role. Payment processors, CoinsPaid included, are able to ‘freeze’ the asset price for the time of the transaction to avoid any slippages. Merchants can also convert digital assets into fiat without having to hold them. Moreover, we are observing that the interest towards Bitcoin as a means of payment is gradually decreasing while the popularity of stablecoins is becoming more evident. As such, since Spring 2021, the share of BTC payments at CoinsPaid decreased from 72% to 45.8%, while the share of USDT transactions rose from 3% to 10%. So, although crypto winter did have an effect on the users’ currency choices, it did not negatively impact the adoption rates of crypto payments.
We should also consider the benefits that drive more individuals and organisations to use cryptocurrencies:
When drawing insights from historical trends, I conclude that the current sentiment leans toward a more bullish outlook. Some even believe that the worst is behind us and that the first signs of market stabilisation may already be emerging.
Still, it’s important to grasp that cyclical nature is a part of any financial market, cryptocurrencies included. Since Bitcoin’s creation in 2008, we have already witnessed several bull runs and bear cycles succeeding one another. What remains generally stable, however, are crypto adoption rates.
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