Signs Pointing to a Crypto Winter Thaw?

The Bull Case

Bitcoin, Ethereum and the entire crypto space are nine months into the bear market. But some signs point toward a possible recovery.

Crypto Payments

Despite the crypto winter, crypto payments have become a more widely adopted utility in the digital currency ecosystem. 

Dmitry Ivanov, CMO at CoinsPaid, told BSC News how crypto payments grew in the first half of 2022 to offer faster and cheaper local and international transactions:

“For H1, the growth and usage of cryptocurrencies for payments were more evident, with our data showing the number of processed transactions increased by two times and reached almost 9 million. Additionally, the volume of operations increased by 180%. This use case has come to stay, and we can expect this trend to continue in the second half of the year.” 

Rising Prices

Prices are also starting to recover.

• Bitcoin rose ~36% and Ethereum ~112% from their June low.

• After bottoming out in June, Celsius token briefly rebounded to its January levels. It has since retraced but is still up 750% from its June lows. 

• Meme coins are taking off. 

Institutional Support

Big institutions are doubling down on the sector.

• Many top 100 public companies have invested in blockchain in the last few months.

• Coinbase announced a partnership with asset management giant BlackRock.

Tornado Cash and Regulation

It's hard to assess if regulation is bullish or bearish for crypto – it mostly depends on policymakers finding the right balance between freedom and security.

• The U.S. Treasury recently banned crypto privacy mixer Tornado Cash, which could have significant implications for the space. Even Vitalik Buterin has admitted to using the protocol.

• Alexey Pertsev, a developer who contributed code to the decentralized protocol, got arrested. 

• Bitcoin Lightning Network’s regulatory risk is also increasing. 

• Major influencers shared their concerns against overregulation. 

• The increased regulatory scrutiny can also backfire on policymakers.

• Crypto lobbies are starting to fight against overreaching sanctions. 

The Merge

• The Ethereum Merge is less than a month away. 

Emerging Economies

• Emerging economies like Argentina are adopting cryptocurrencies at unprecedented rates. 

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The Broader Picture

Many argue that the current crypto bear market started with the bigger macro picture. 

• The U.S. is arguably in a recession. 

• The U.S. and Europe have been facing the highest inflation since the 80s.

• The war in Ukraine is contributing to the global economic slowdown. 

The question remains: Has the global economy bottomed out, or should we expect a stronger correction? As crypto acts both as an excess liquidity sponge and an alternative to traditional finance, the market can still face more uncertainty. 

• Inflation seems to have been regulating risk asset prices lately, 

• And some argue there is a sustained risk of recession ahead ...

• ... While other respected macro analyzers think we saw the worst in June. 

The best thing for individuals to do is probably to broaden their perspective and realize how crypto can outlive short-term uncertainty.

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