Posted on: June 20, 2022, 02:12h.
Last updated on: June 20, 2022, 02:12h.
It’s been a history-making few weeks for cryptocurrencies. Bitcoin continues to tumble to new lows, leading to a market meltdown of smaller cryptocurrencies. The down market has led consumers and analysts to question the future of all new currencies. That’s particularly true of its uses in online casinos and sports betting.
Last week, bitcoin fell by 7.8%. On Saturday, it dropped as low as $17,592.78. This is its lowest price since December 2020.
In the overall market, cryptocurrency has lost nearly 60% of its value this year. This month alone, it lost 37% of its value. And while it managed to reclaim 7% by the start of this week, financial analysts across the globe have coined the phrase “crypto meltdown” to categorize the destructive loss.
Bitcoin’s plummet has also led smaller cryptocurrencies to take action. US crypto lender Celsius recently froze withdrawals and transfers between user accounts and suspended customer withdrawals.
Talks of higher Federal Reserve interest rate hikes for the US as inflation in the world’s biggest economy soars have also heaped pressure on risky assets from cryptocurrencies to stocks.
But what exactly do these changes mean for the market and the future of crypto and casinos?
Casinos Embrace Crypto
Almost as soon as cryptocurrencies proliferated, the igaming industry saw the opportunity to get involved. Crypto casinos have sprung up all over the globe, with big names including the likes of Bitcasino, FortuneJack, and 1xbit.
In early 2014, Zynga began testing bitcoin for in-game purchases for several of its games. At the same time, the D Las Vegas Casino Hotel and the Golden Gate Hotel & Casino announced they’d also accept bitcoin.
Platform provider Softswiss recalls establishing between three and four bitcoin casinos per month in the early years, between 2013 – 2014. While many did not survive the various downturns since then, a lot has. These ‘crypto winters,’ like any economic downturn, tend to sort the wheat from the chaff, leaving the most resilient businesses to establish a firmer footing in the market when it picks back up.
The Future of Crypto Casinos
Before this year’s epic crypto crash, we witnessed a mass crossover between crypto and sports betting in the US. The Super Bowl was dubbed the “Crypto Bowl” after major crypto brands, including Coinbase, Crypto.com, and FTX, scrambled to market their wares in the primetime ad slots. The slots were considered worth between $7 million and $14 million.
More recently, even after the dramatic drop in the crypto market cap, DraftKings CEO Jason Robins has articulated an interest in building crypto into the operators’ offering. However, he’s offered no specific time frame for its implementation.
Certainly people want it,” he told Decrypt’s gm podcast last month. “Certainly, within the marketplace, we should be able to do that. So we’re working towards it.”
The daily fantasy sports and sports betting giant had already moved into the non-fungible token (NFT) space in July 2021, launching a marketplace that is the exclusive platform for buying, selling, and trading NFTs from NFL legend Tom Brady’s Autograph collection.
2022’s Crypto Currency Fall
Since May, the crypto world has been rocked by its biggest slump to date.
Bitcoin fell to a low of $20,950.82 on June 14, following the unanticipated demise of Terra USD – a so-called stablecoin, a crypto-backed by fiat money and whose price hardly changes – and its sister crypto, LUNA, in May.
Terra was part of several attempts in recent years to quell the notorious volatility of cryptocurrencies by pegging their values to fiat currencies, hence them being dubbed ‘stable’ coins. The idea is that they would track the value of fiat and be insulated from the volatility that otherwise characterizes crypto.
The consequent uncertainty following those failures has plunged the sector into a ‘crypto winter,’ believed to be a temporary downturn by many crypto enthusiasts. They trust it can be weathered if they just hold tight and wait for an inevitable gradual thawing and recovery.
While a crypto winter is not great news for crypto start-ups or businesses with insufficient liquidity to weather it, most established crypto casinos will likely sail through, only to benefit even more when the market begins to rise again. But the downturn will undoubtedly slow how fast others will adopt crypto into their operations.
However, how exactly the downturn in the crypto market will affect further casino and sportsbook adoption remains to be seen.