If you’re a long-term believer in cryptocurrency, down markets like the current crypto winter can be less stressful, in some ways, than bull market runs, said Stephen Pair, CEO of crypto payments technology firm BitPay.
“It’s kind of simple if you’re a long-term believer in bitcoin,” he told PYMNTS’ Karen Webster. “Then you don’t want to sell, to tap into that wealth, except when it’s hitting all-time highs. If it’s down, you just wait.”
Assuming you can wait, of course, which is why Pair said he advises people not to invest more than they can wait three to five years to sell.
That way, you won’t have to sell your crypto for less than you bought it for, he said.
What Pair said he is seeing is that unwillingness to part with bitcoin showing up at checkout and the point of sale.
“We’re seeing reduced activity and buying,” he said. “A lot of the volume has shifted over to stablecoins as opposed to using bitcoin or Ethereum or the more volatile cryptos to make purchases. We still see it though; bitcoin’s still 40% to 50% of our volume.”
But, he added, stablecoins now account for 20% to 25% of BitPay’s volume — which is about double the number he gave Webster in January, before it was clear to crypto investors that bitcoin’s decline from its November all-time high was just the beginning of a much longer slide.
That certainly supports his theory that the longer-term holders bought stablecoins when bitcoin and ether were at the top to take some profit, which they use for expenses and other purchases when the price of their volatile crypto holdings drop, and they don’t want to be forced to sell some low.
It’s enough growth that BitPay just added a euro-denominated stablecoin to make the tactic easier for European consumers and merchants.
Looking to the Merge
Pair — whose company has been providing the back end and services that merchants need to accept crypto payments for 11 years — said he’s about 75% positive that this is the bottom of the crypto winter cycle.
However, bitcoin’s history hasn’t seen that bounce come very quickly, Pair acknowledged.
“People overinvest, and then they put too much money into it, and then they have to sell it because they need to eat, or they have expenses that they have to cover,” he said. “But the worst possible reason you could sell is because you’ve gotten emotionally attached to it and you think it’s going lower and you panic sell.”
The cryptocurrency that’s been stronger recently is ether, which has been boosted by the upcoming “merge” — a massive change in which the Ethereum blockchain is switching from a bitcoin-style “proof-of-work” consensus mechanism, which drains as much power as whole countries, to the far more environmentally friendly “proof of stake.”
“Right now, you’re seeing ether outperform bitcoin in terms of its price,” Pair said, adding that he believes optimism around merge is supporting ether.
“I think if it goes smoothly, and all the indications are that it should, then the prices will hold,” he said. “If there’s some chaos, there may be some volatility in the price.”
Pair is something of an Ethereum skeptic. While the market capitalization of bitcoin is still double that of ether, Ethereum is still far and away the most popular blockchain in terms of the number of projects built on it — including most decentralized finance (DeFi) and non-fungible token (NFT) projects.
“I’m not saying Ethereum is not valuable and doesn’t have utility,” Pair said. “But putting everything on one blockchain is not going to be appropriate.”
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