The Bitcoin community has been feeling the effects of fear, uncertainty, and doubt (FUD) these past few weeks, and it’s hard to blame anyone for feeling this way. That said, it might be time to remind people that Bitcoin is nowhere near its end. In fact, it seems its value is precisely where it should be when we take a look at everything that’s been going on.
Why are we having a crypto winter?
Crypto winter is a term used to describe the poor performance of the cryptocurrency market. These times are often accompanied by a fearful market, with crypto traders looking for something to blame.
What many people don’t know is that crypto winter isn’t caused by a single factor; it’s the result of a series of events that have all come together.
The U.S. ends quantitative easing
Quantitative easing is meant to boost market activity by lowering interest rates and is seen as a strategy applicable only when no others are available. However, the US Federal Reserve has just ended QE and raised interest rates. This means that the artificial cash supply from QE will no longer prop up investment assets (stocks, real estate, and cryptocurrencies) and that it will be harder to borrow money from banks.
You’ve probably heard of the recent stories of a few risky cryptocurrencies plummeting earlier this year. With all that going on, it’s no surprise that the market feels more uncertain. That uncertainty and fear could push investors to back off of cryptocurrencies in the meantime.
The market will constantly adjust and apply corrections with all that’s going on. These would always follow after all-time high prices, like the one we saw last year when BTC hit over 60,000 USD. As the market adjusts, some investors will want to store their money elsewhere to avoid certain risks.
Bitcoin halving cycle
Lastly, let’s not forget about the Bitcoin halving. The halving is a way for Bitcoin developers to maximize Bitcoin demand by restricting supply, halving the block rewards that Bitcoin miners receive as well as the rate at which they mine BTC.
The next Bitcoin halving cycle is set to occur sometime in 2024. In the past, the months (or years) leading up to the subsequent halving have seen Bitcoin’s price fluctuate drastically as the market struggles to adapt. This would then be followed by a bull run, with previous post-halving bull runs pushing Bitcoin to reach its all-time highs.
Due to these things happening all at once, crypto winter is only inevitable. In fact, it seems that we’re in a comfortable spot considering everything that’s going on. Let’s remember that Bitcoin is still in its early stages—13 years is just not enough for any currency to mature.
Effects of the crypto winter
Now, let’s take a look at the early impacts of this crypto winter. Some can be seen as beneficial, while others are an unfortunate side effect of all the factors we mentioned earlier.
ETH gas price reduction
One of the impacts seen during this time is that the Ethereum network is no longer congested and that Ethereum gas fees are lower than before. The FOMO and hype surrounding NFTs have died down and there are fewer people ‘gambling’ on ETH-based coins. Great news for the people who use the Ethereum blockchain for its intended purpose.
Only the strongest coins will make it through
As it is, most altcoins are in the red. The environment we’re in now is already seen as the death of “get-rich-quick” coins. While it is unfortunate that this happened, it shows that without utilization or practical benefits to people, most altcoins will fail.
Bitcoin will live on
So what makes Bitcoin different? It’s had enough time to establish itself over the past 13 years and has proven to people that it’s here for everyone’s sake, not the market’s. To that end, Bitcoin is progressing towards its goal of supporting the underbanked and financially empowering the 100%.
We’re seeing proof of this in the stories shared on Bitcoinforthe100.com. Individuals from all over the world are telling their stories of how Bitcoin can be used in daily life.
What this means for the Bitcoin community is that Bitcoin is steadily progressing in its goal of empowering people by giving them direct access to their money—money that they can use for real-world needs. No longer is the currency restricted to niche interests; Bitcoin is here to stay.
Bitcoin is just getting started
So what does this mean for us, the Bitcoin community? Despite Bitcoin’s current value, it remains a highly utilizable currency. We can confidently say that platforms like Paxful continue to show people that Bitcoin’s real-world value is, at the very least, a practical one.
Let’s also remember that this market behaves cyclically, not linear. Take a look at Bitcoin’s previous all-time highs and falls, and you’ll see what we mean—the lows we’re seeing now look a lot like the past all-time highs.
When it was first announced, Bitcoin was said to address problems around the unbanked and those with limited access to their money. It was meant to empower individuals, not markets. With the utilization of BTC, we can confidently say that the currency is well on its way to achieving its goals, all that remains for us to do is to jump in when we’re ready.