By the end of May, Bitcoin (BTC) had fallen by 40%, Ether (ETH) had lost 50% of its value and the entire cryptocurrency market fell below $ 1 trillion for the first time since January 2021. As we enter clear bear market trends , it is necessary to focus on what the blockchain industry has always suggested: build.
The contraction of Bitcoin, Ether and the broader cryptocurrency market is linked to macroeconomic uncertainty. The uncertainty is driven by rising interest rates along with a quantitative increase, which leads to the sale of asset prices on the stock exchange and the cryptocurrency market. It is quite possible that we may see a recurrence of events such as the relaxation of the Terra ecosystem, the cessation of Celsius’ mortgage lending services and the loss of USD 400 million in the winding-up proceedings of the hedge fund Three Arrows Capital.
Market collapse 2022 to cryptocurrency winter 2018
The 2018 cryptocurrency winter came about due to negative market sentiment and loss of confidence; However, the cryptic winter of 2022 is a direct result of macroeconomics. Deficit finance is falling, equities are falling and international markets are falling. This bear market is not isolated to cryptocurrencies alone, as the abolition of leverage takes place simultaneously in several markets.
Venture capitalists and private investors pumped no less than $ 30 billion into blockchain projects. One third of that amount went to a game and virtual world project to lay the foundation for Web3 metaverse.
As we witness the flight of talent from Web2 projects, we also anticipate increased growth of Web3 brands, as several brands such as Yuga Labs, The Sandbox and RTFKT are already partnering with retail giants, including Adidas, Nike, HSBC , Warner Bros. and more. Blockchain-powered distributed applications (DApp) and DeFi have the potential to lead Web3 development in the future and gain control from a handful of centralized gateways.
This indicates that the transition to Web3 is imminent and subject to incentives to increase. Cryptocurrency can undoubtedly be considered an important stimulus, as it provides downtime for Web3 projects, as they can focus on flexibility and sustainability.
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Crypto winter is not a time to go to sleep, but continue to build
During the 2018 codec winter, we saw a remarkable increase in several disruptive projects, such as OpenSea and Uniswap. Despite the declining trend, the projects leading the blockchain space were committed to building and improving their products.
These projects took many years to yield. In 2021, OpenSea returned $ 20 billion in sales of inflexible tokens (NFT), while Uniswap footprint increased significantly, demonstrating the potential of a diversified financial system. Other examples in DApps, DeFi, NFT and Web3 games are plenty.
The key to expanding the Web3 community is utility
In the current crypto winter, it is likely that more venture capital will be available to finance new projects, so that they could not only survive but prosper with the next big increase. And that’s the key to survival – utility. Projects that offer utility are successful, but those that are fundamentally flawed, overrated, and useless end up failing. Crystalline winter therefore separates the proverbial wheat from the hemisphere.
One of the best ways for cryptocurrencies, whether DeFi, GameFi or NFT-related, to switch from Web2 to Web3 is to consider the significance of chain housing processes. Not only that, but it is also necessary to accelerate the growth of companies by reducing costs. Payment portals that charge inflatable fees should be the first to be examined, and it is certainly sensible to consider a realistic approach to the internal practice of making a profit.
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Encrypted payment solutions that allow encryption and checkout processes help Web3 companies speed up their business as the solution enables off-chain transactions, making the fees involved significantly cheaper than standard payment methods. It also facilitates improved business and revenue by enabling project users to buy and sell cryptocurrencies at competitive rates within the project platform. Crypto platforms that seek to streamline their payment structure should consider fully integrated on- and off-road.
Demand for API solutions on and off the platform is steadily increasing because they help companies settle different currency and cryptocurrency transactions, reduce counterparty risk and cost, and thus strengthen companies and their users. Such platforms also offer price transparency with a leading exchange rate with a low transaction load, so users know what they are going to pay and what they are paying for.
In the wake of this winter, this is the kind of opportunity we should be looking for: projects that are revolutionary and scalable infrastructure that will drive the next development of the digital asset system. As always, the key to knowing when to be greedy when others are scared and scared when others are greedy is not as simple as it might sound, but trading platforms based on a solid foundation are reliable in the long run and have built-in … in resilience that will see them through good and bad times, like the cryptic winter we are going through.
This article does not include investment advice or advice. Every investment and trading business involves risk and readers should do their own research when making a decision.
The views, thoughts and opinions expressed herein are those of the authors only and do not necessarily reflect or represent the views and opinions of the Cointelegraph.
Raymond Hsu is the co – founder and CEO of Cabital, the cryptocurrency’s easy-to-manage platform. Prior to founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions, including Citibank, Standard Chartered, eBay and Airwallex.
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