Signs Pointing to a Crypto Winter Thaw?

While many signs point to very bullish months coming up, the macro environment still has the global economy on ice.

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.

Yesterday’s megabears already closing trades after a -3.1% move tells you everything you need to know

— Jack Niewold 🫡 (@JackNiewold) August 15, 2022

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.”

Source

Rising Prices

Prices are also starting to recover.

#Bitcoin not giving up and pushing again after the bounce on the local trend support. Important range right here on the $24k. This range has been resistance for about one month. pic.twitter.com/ADFMVo7XvY

— Crypto Rand (@crypto_rand) August 11, 2022

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.

Some crypto traders may be worrying about the end of this bull run as dog coins take off. Dog coins ramping up marked the end of the two 2021 bull runs. However dig in and you’ll notice this dog run just started and is news driven. The $DOGE run in particular looks sound to me.

— Alex Krüger (@krugermacro) August 16, 2022

Institutional Support

Big institutions are doubling down on the sector.

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

The world’s largest asset manager @BlackRock has partnered with top-tier cryptocurrency exchange @coinbase to make crypto accessible directly to institutional investors.

What does this mean, and why has social media gone berserk about it? Let’s take a closer look 🧵

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— BSC News (@BSCNews) August 7, 2022

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.

I’ll out myself as someone who has used TC to donate to this exact cause.

— vitalik.eth (@VitalikButerin) August 9, 2022

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

Bitcoin Lightning Network’s regulatory risk is also increasing.

1/ In light of the recent Tornado Cash situation, I feel like regulatory risk (esp. AML) for the #Bitcoin lightning network is generally under-discussed.

I will have a closer look in the next weeks, but here are a few initial thoughts 👇

— Patrick Hansen (@paddi_hansen) August 16, 2022

Major influencers shared their concerns against overregulation.

Sanctioning a technology (as opposed to an individual or entity) seems like a bad precedent to me, and it should probably be challenged. Could have many downstream unintended consequences.#TornadoCash

Hopefully obvious point: we will always follow the law.

— Brian Armstrong – barmstrong.eth (@brian_armstrong) August 14, 2022

The increased regulatory scrutiny can also backfire on policymakers.

Prediction: developers will be more anonymous; code will be more open-source.

— CZ 🔶 Binance (@cz_binance) August 15, 2022

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 recession disinformation campaign is pointless.

1. Assumes people are either dumb or never believed definition in the first place

2. Won’t change what actually happens to the economy or people

3. Will be dumb point of debate if/when GOP also tries to play “hide the cheese” https://t.co/dNw3joiIo1

— Chamath Palihapitiya (@chamath) July 27, 2022

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

The Inflation Reduction Act is now law.

Giving Medicare the power to negotiate lower prescription drug prices. Ensuring wealthy corporations pay their fair share in taxes.

And taking the biggest step forward on climate in our history.

— President Biden (@POTUS) August 16, 2022

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

⚡️ Annual inflation in Ukraine reaches 22.2% in July.

According to a report by the State Statistics Service of Ukraine, consumer prices in Ukraine accelerated to 22.2% in July compared to last year.

— The Kyiv Independent (@KyivIndependent) August 10, 2022

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 …

Source: Michael Burry, the fund manager who predicted the housing bubble.

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

Well, this appears to be one of the most hated rallies I’ve seen in quite few years in equities. Probably has quite a bit more to go (path of most pain) and a very decent chance the low was in June…. 1/.

— Raoul Pal (@RaoulGMI) August 11, 2022

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

I do think there’s a terminological difference worth highlighting.

When you see ♾/21M, that’s not a thesis about Bitcoin as a short-term hedge against inflation. It’s a thesis about Bitcoin as a long-term hedge against monetary debasement.

The ♾ is MMT, the 21M is BTC.

— Balaji Srinivasan (@balajis) August 10, 2022

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