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What happens to crypto payments amid the crypto winter 2022?
The two words on every crypto investor's mind are undoubtedly «crypto winter». Cryptocurrencies have experienced a brutal crash this year, losing $2 trillion in value since the massive rally peaked in 2021.
Bitcoin is down 70% from its November all-time high of nearly $69,000.
These developments have warned many experts of an extended bear market known as the «crypto winter». The last such unpleasant event occurred between 2017 and 2018.
What is «crypto winter»?
«Crypto winter» usually means that prices fell heavily and remained low for weeks or months. The signs are everywhere: the failure of the TerraUSD crypto project this spring caused an ice explosion in the market, then the cryptocurrency lending platform Celsius Network suspended withdrawals, which triggered a sell-off that sent Bitcoin to a 17-month low. The platform ICOholder notes the impact of all these events on the digital currency market.
But something about the new crash sets it apart from previous downturns in crypto. During the last cycle, several events caused problems throughout the industry due to their interconnected nature and business strategies.
Situations in 2018 and 2022
In 2018, bitcoin and other tokens fell sharply after a dizzying rise in 2017.
During that period, there were many so-called initial coin offerings in the market, where people invested in crypto-currency ventures that popped up everywhere. Still, the vast majority of these projects failed as a result.
«The crash of 2017 was largely due to the bursting of the hype bubble», Clara Medali, head of research at Kaiko, tells CNBC.
However, the current decline began earlier this year due to macroeconomic factors, including runaway inflation, which led the US Federal Reserve and central banks of other countries to raise interest rates. These factors were absent in the last cycle.
Bitcoin and the cryptocurrency market broadly trade in closely with other risky assets, particularly equities. Bitcoin posted its worst quarter in a decade in the year's second quarter. During the same period, the high-tech Nasdaq's decline exceeded 22%.
Such a sharp turn in the market caught many in the industry, from hedge funds to lenders.
How are things really with crypto payments?
Despite all the experts' expectations, cryptocurrency payments have held steady in the first six months of this year, according to research shared with City AM a few days ago.
Compliance platform Deal stated that crypto payments remain stable at 5% of all monthly global payments withdrawn from the platform.
For comparison, in the second half of last year, 2% of all payments were made in cryptocurrencies, which confirms the growing demand for cryptocurrencies.
Cryptocurrency payments are most in demand in countries with currency volatility. Therefore, Latin America, Europe, the Middle East, and Africa are more inclined to accept payments in cryptocurrencies.
In these regions, they account for 67% and 24% of all withdrawals of crypto payments worldwide. Bitcoin is the most common coin type at 47%, followed by USDC at 29%.
Author Bio
Brian Vital is a freelance writer specializing on business and finances, technology and personal development. He is working for the company ICOholder. He possesses an analytical mind and creativity at the same time and represents as true and passionate explorer in his field. Brian is one of the best specialists, who knows that creativity and constant self-development are key components of a good writer.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.