Since Bitcoin was introduced, the price and usage of the primary cryptocurrency have been gradually rising. Even the dips and speculative ‘bubbles’ in 2013, 2017, and 2021 failed to dampen the enthusiasm and interest of consumers and investors in the world’s top cryptocurrency. In addition, the perceived tightening regulations did nothing to diminish investors’ and consumers’ interest in digital currencies.
There are plenty of reasons that help sustain the market’s interest in crypto, one of which is its usage as a payment method in online gambling. With its core features like quick and cheap secured transaction fees, Bitcoin use has become a perfect fit for online gambling.
It led to the fast adoption of crypto in online gambling, with some Bitcoin-only casinos now available to players. This helps drives Bitcoin’s popularity higher, pushing demand and even its market price.
But the Bitcoin crash of mid-2022 is ongoing, and the market and the online gambling industry were forced to pause and ponder on a few existential questions. How did the Bitcoin crash affect the gambling industry? What’s next for the online gambling industry?
The Bitcoin Crash of 2022
The history of Bitcoin and crypto is a story of bear markets and crashes. From June 8 to 12, 2011, Bitcoin’s value crashed by 68% and was later considered as the bubble of 2011. After that, prices rebounded, but a bear market followed until 2013.
From August 17 to 19, 2012, Bitcoin’s value fell by 51%. Then on April 10, 2013, its market value fell by 61% after reaching a peak of $266. Fast-forward to 2017, and investors and observers witnessed a bubble where Bitcoin’s price spiked to nearly $20,000 in December 2017 after starting the year below the $1k mark. But its price tumbled to around $3,000 or nearly 75% below its peak after a year.
And by the time the COVID-19 pandemic hit the world, Bitcoin’s price traded near the $10,000 level in mid-February 2020 and briefly dropped below the $4,000 level on March 11.
Bitcoin’s price started to improve in 2021, and after peaking at $68,000 in November 2021, BTC plummets below $20,000 in June 2022. It’s the worst month for the crypto since September 2011, and it’s considered the most painful quarterly loss in 11 years. Along the way, other cryptos suffered with Luna, associated with Terra USD as the most notable casualty, crashing to $0.
Effects of the BTC Crash on Online Gambling
These market corrections came amidst a huge rise in Bitcoin gambling. In the last few years, there has been an increase in the number of online casinos that accept BTC, and there are even a few Bitcoin-only sites. As a result, the operators and players benefit from improved security, fast payouts, and cheaper fees in these dedicated Bitcoin and crypto casinos.
So when the market crashed this 2022, the online gambling industry wasn’t hit badly. While some crypto-related businesses like lending and exchanges have filed for bankruptcy, many online casinos and BTC sites remained steady.
Softswiss, the partner software provider of mBit Casino and Stake, In its State of Crypto Q1 2022 Report, Softswiss explains that while fiat bets account to 64% of the total volume of bets, the share of crypto continues to grow every quarter.
Cloudbet: shares the same sentiment for crypto betting, sees a Bitcoin betting boom despite this market setback, and an increasing number of bettors will benefit from the blockchain model. In a statement ahead of the 2022 Champions League Final, Cloudbet Director Leandro Rossi was bullish and looked forward to the busiest day in crypto betting ever.
TrustDice told us : “I have heard a variety of theories between economic downturns and the gaming industry. None of them are conclusive as to whether or not there is a linear relationship between the two. Players play regardlessly, which means that we provide an experience that gamers constantly need. Perhaps they have reasons to gamble during different times, but overall, as long as a casino is providing a good customer experience, they shouldn’t worry too much. The same goes for bitcoin gambling. It’s true that if a player is a holder, he or she will be less likely to spend the same amount in Bitcoin as its EUR value. But he or she can still play with stable coins like USDT and USDC.”Daniel Lee, TrustDice Co-Founder
Mbit told us : “We’ve seen our crypto players remain resilient in the face of some pretty large price fluctuations - this isn’t the first time, and it won’t be the last - so making sure we put valuable offers in front of people every day has been key to our success”Walter, Affiliate Manager at Mbit
Bitstarz told us: : “The crash and the bull run are a natural cycle with any asset you have. I’m sure people have experienced bear and bull cycles on the stock market too, just that crypto is a bit more volatile in general.
How it affects the player depends on their approach to crypto in the first place. If they’re crypto investors holding a lot, they might hesitate to gamble when the price drops 50%. On the other hand, if you’re solely buying crypto to deposit it to the casino for gambling immediately, the volatility in price doesn’t matter that much.
We also have to remember that we have a stable coin option here as well. If there was a concern about the volatility in crypto price, they could always stick to USDT. They can also utilize the crypto to FIAT conversion option.
This means that if they’re concerned about the volatility, they can essentially leave that out of the equation and still enjoy the many benefits of using crypto. Hassle free transactions, the transparency, etc”Srdjan Kapor, Head of Affiliation & Acquisition of Bitstarz
7bitcasino told us: “the BTC crash affected our budgets as 7bitcasino mainly focuses on BTC players. Players still spend the same amount of BTC or even more but in the equivalent to euro or USD we started to earn less. We think that BTC is going to recover in the future and at the moment we keep calm for the volatility of the market as we have a budget to work and earn but less of course than when the BTC was around 60k”senior affiliate manager - Dan Balvin from 7bitcasino
Bitcoin’s second nature is volatility, and it’s already priced in by players and Bitcoin holders. With that said, while the crash pushed prices down for now, its inherent value and benefits to users remain the same. Moreover, for some players who understand BTC, the ups and downs in market price offer opportunities to buy cheap and profit in the long run.
Why We Think Bitcoin Gambling Is Here to Stay
So what does this recent development means for Bitcoin gambling?
The recent Bitcoin crash simply illustrated what many had known- that Bitcoin and cryptocurrencies are highly volatile. However, while prices may go up and down, its use case and the blockchain technology features that fit gambling remain the same.
In the short term, Bitcoin gambling will continue to become popular thanks to lower costs, fast and anonymous payments, increased security, and the use of provably fair games that run on the blockchain.
On a personal note, we think that Bitcoin’s recent crash affects gambling because Bitcoin and Ethereum went down in value. However, many casinos accept stablecoins like USDT and USDC so the purchasing power is not hurt.
Yes, there are challenges ahead. For example, Bitcoin and established alt-coins are not yet widely accepted, and the general population has concerns about their volatility. But as the technology continues to improve, like what Ethereum is doing with its ‘merge’ project to make the platform efficient and more people get into the project, these issues on Bitcoin and crypto will be addressed.