Trying to figure out if the crypto winter is ending

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Market stabilization, but more real-world use cases will continue to be key

At the end of 2022, the cryptocurrency market collapsed after a heady period of successive highs. Bitcoin’s value plummeted 63%, the overall cryptocurrency market lost $1.63 trillion, and thousands of smaller altcoins all but disappeared.

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

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

For many, the light has finally come in 2023. Although far from reaching the highs of 2021, coins like Bitcoin and Ethereum have started to rebound in the first months of 2023.

Bitcoin, for example, jumped 43% in January and hit its highest one-month performance since 2021. Ether surged to account for nearly 20.5% of the total crypto market value.

Last month, Bitcoin surpassed $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 recent bounce has got people wondering: is the crypto winter finally over?

Despite recent increases in valuations, many remain skeptical.

Some attribute the rebound that opened 2023 to the general tendency of markets to perform well in January, as it is the start of a new year.

Others argue that the pump is an expected outcome following a price increase, as those who took short positions in the crypto were forced out of their positions.

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

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

Skeptics pointed out that higher US interest rates and a stronger US dollar could dampen Bitcoin’s growth. Cryptocurrencies generally do not fare well with higher interest rates, as investors may prefer to seek out lower-risk assets that offer safer returns. If Bitcoin is not performing well, so is the rest of the crypto market.

There were even some weeks where Ethereum was completely in the red.

The truth is, cryptocurrencies will likely remain as volatile as they always have been. While not impossible, it will likely take a long time for Bitcoin and Ethereum to return to their all-time highs. They will probably even go through a number of ups and downs before they get there.

Instead, what many key industry leaders are focused on is making it easier to provide a use case for crypto. According to Craig Vosburg, chief product officer of Mastercard, the company continues to work with partners to make buying, selling and holding cryptocurrencies more widely available through partner financial institutions. The logic here is that once people really start using crypto in their day-to-day lives, without 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 transactions cryptographic. Its XPOS point-of-sale machines, for example, allow 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 to use for more people.

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