By the end of May, the price of Bitcoin (BTC) had fallen 40%, Ether (ETH) had lost 50% of its value, and the entire crypto market fell below its $1-trillion capitalization for the first time since January 2021. went. As we enter a clear bear market trend, it is necessary to focus on what the blockchain industry has always suggested: construction.
The downturn in the bitcoin, ether and broader crypto markets is related to macroeconomic uncertainty. The uncertainty is driven by rising interest rates as well as quantitative tightening, resulting in a sell-off in asset prices on the stock exchange and crypto market. It is entirely possible that we could see a repeat of events such as the unwinding of the Terra ecosystem, the decline of crypto lending service Celsius, and the $400 million liquidation loss of hedge fund Three Arrows Capital.
Market Crash of 2022 to Crypto Winter of 2018
The 2018 crypto winter was brought about by negative market sentiment and lack of confidence; However, the crypto winter of 2022 is a direct result of macroeconomics. Decentralized finance (DeFi) is down, stocks are down and global markets are down. This bear market is no different to crypto alone, with multiple markets simultaneously leveraging leverage.
Venture capitalists and private investors have invested at least $30 billion in blockchain projects. A third of that amount went to gaming and virtual world projects to lay the foundation for the Web3 metaverse.
As we see an exodus of talent from Web 2 projects, we also expect increased growth of Web 3 brands, as many brands such as Yuga Labs, The Sandbox and RTFKT already have adidas, Nike, HSBC, Warner Bros. and are partnering with retail giants, including others. Blockchain-powered decentralized applications (dApps) and DeFi have the potential to lead the development of Web3 in the future and gain control from a handful of centralized gatekeepers.
This indicates that infection in Web3 is imminent and is dependent on the catalyst for proliferation. A crypto winter can undoubtedly be considered a significant catalyst, as it provides downtime to Web3 projects, in which they can focus on scalability and stability.
related: Hiring Top Crypto Talent Can Be Difficult, But It Doesn’t Have To Be
The crypto winter is not a time to hibernate, but to continue building
During the cryptocurrency winter of 2018, we saw a significant increase in several disruptive projects, such as OpenSea and Uniswap. Despite the declining trend, the projects leading the blockchain space are committed to building and enhancing their products.
It took years for these projects to become successful. In 2021, OpenSea generated $20 billion in non-fungible token (NFT) sales, while there was a significant increase in the adoption of Uniswap, demonstrating the potential of a decentralized financial system. Other examples abound in DApps, DeFi, NFTs and Web3 games.
The key to expanding the Web3 community is usability
During the current crypto winter, there is likely to be more venture capital available to fund new projects, so they can not only survive but thrive during the next big boom. And that is the key to existence – utility. Projects that offer utility succeed, while fundamentally flawed, over-hyped and non-utilitarian projects fail. A crypto winter, therefore, separates the proverbial wheat from the straw.
One of the best ways for crypto projects, whether DeFi, GameFi or NFT-related, is to consider the implications of on-chain housing processes in the transition from Web2 to Web3. Not only this but it is necessary to accelerate business growth through cost-cutting. Payment gateways charging increased fees should be investigated, and it certainly makes sense to consider it a viable approach to the internal practice of making profit.
related: Governments, Enterprises, Gaming: Who Will Drive the Next Crypto Bull Run?
Crypto payment solutions that allow crypto on and off-ramp are helping Web3 firms accelerate their business as the solution enables transactions to happen off-chain, which is dramatic compared to standard payment methods. is substantially cheaper. It also facilitates better conversion and revenue by enabling users of the project to buy and sell crypto at competitive rates within the project’s platform. Crypto platforms looking to streamline their payments infrastructure should consider fully integrated and off-ramp.
API solutions such as on-and-off-ramp platforms are increasingly in demand as they help businesses streamline various currency and cryptocurrency transactions, reducing counterparty risk and cost, thereby empowering businesses and their users. . Such platforms also offer price transparency with leading exchange rates with low conversion spreads, so users know what they are going to pay and what they are paying for.
This coming winter, we should look for the kind of opportunity: projects that are unprecedented and scalable infrastructures that will drive the next evolution of the digital asset ecosystem. As always, the key to knowing when to be greedy when others are fearful, and to be fearful when others are greedy is not as easy as it may seem, but trading platforms built on a solid foundation are reliable in the long run and A built-in resilience that will see them through good and bad times, such as the crypto winter we are going through.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
raymond soo He is the co-founder and CEO of Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions including Citibank, Standard Chartered, eBay, and Airvolex.