Trying to figure out if crypto winter is over

Market-defying but more real-world use cases will continue to be key. By Hazel Hernandez

At the end of 2022, the cryptocurrency market crashed after a violent period of consecutive peaks. The value of Bitcoin dropped by 63%, the overall cryptocurrency market lost $1.63 trillion in value, and thousands of small altcoins were largely wiped out.

To make matters worse, once famous crypto giants including Blockfi, Celsius, FTX and Voyager collapsed after filing for bankruptcy.

The so-called crypto winter left crypto investors and traders begging for a light at the end of the tunnel.

For many, the light finally came in 2023. Although they have not come close to the peaks of 2021, coins such as Bitcoin and Ethereum have started to bounce back in the first months of 2023.

Bitcoin, for example, jumped as much as 43% in January and achieved its highest level of performance in one month since 2021. Ether increased to represent almost 20.5% of the total crypto market capitalization.

Last month, Bitcoin passed $28,000 – a nine-month high – after rising from a low of $20,000. It has held steady at around $26,000 for the past few days. The latest rebuttal has people asking: is crypto winter finally over?

Despite recent increases in valuation, many remain skeptical.

Some attribute the rally that opened 2023 to the general trend of markets performing well in January, as it is the start of a new year.

Others argue that the pump is an expected result after a rise in prices, as those who took short positions in crypto were forced to exit their positions.

It is also undeniable that all coins are still far from their record high values. Bitcoin, for example, was trading above $40,000 as recently as last April, after reaching an all-time high of just over $65,000 in November 2021.

With this in mind, it would seem painfully premature to declare a full comeback just yet.

Skeptics pointed out that higher US interest rates and a stronger US dollar could put a damper on Bitcoin’s growth. Cryptocurrencies generally do poorly with higher interest rates, as investors may prefer to seek out lower-risk assets that offer safer returns. If Bitcoin doesn’t perform well, the same pretty much applies to the rest of the crypto market as well.

There were even certain weeks when Ethereum was completely in the red.

The truth is that cryptocurrencies are likely to remain as volatile as they have always been. While not impossible, it will likely take a very long time for Bitcoin and Ethereum to return to record highs. They will probably even go through a series of ups and downs before they get to that point.

Instead, many key industry leaders are concentrating on making it easier to provide a use case for crypto. According to Mastercard’s Chief Product Officer Craig Vosburg, the company continues to work with partners to make buying, selling and holding cryptocurrencies more accessible through financial institution partners. The logic here is that when people really start using crypto in everyday life, without any fuss, the more valuable it will become.

The principle of providing use cases is clearly understood by startups such as blockchain solutions provider Pundi X. Pundi X works with institutions such as local governments, universities and even small businesses to help facilitate crypto transactions. Its XPOS vending machines, for example, enable local vendors to accept crypto from international visitors.

The future of crypto can be unpredictable. But it can be shaped – simply by making it easier for more people to use.