US companies remain keen on cryptocurrencies amid crypto winter

US companies betting on crypto

Even as the crypto industry flounders, U.S. businesses are betting it could be a future leader.

Online financial advisor Betterment launched themed crypto portfolios for its clients this week, according to The Wall Street Journal. That was followed by Bank of New York Mellon beginning to offer custody services for cryptocurrencies. And, Alphabet’s Google signed a deal to allow crypto payments for its cloud services through Coinbase.

At the same time, data proves that venture capital still likes cryptocurrencies. According to PitchBook data, financing transactions in the crypto industry are actually increasing, with 2,990 transactions so far this year, compared with 2,657 transactions in the same period last year. If you are the one allocating capital, the valuation will also be more reasonable. The total transaction volume in 2022 was only US$37.9 billion, a 52% decrease from US$78.4 billion a year ago. The decline in valuation is not only due to the bear market, but also represents the judgment of investors and entrepreneurs in the primary market that the project has returned to rationality.

Functionality of Cryptocurrency

Ignoring pure speculation, what actual impact can the technical characteristics and trends of cryptocurrency bring to enterprises, and can these impacts make enterprises unwaveringly choose cryptocurrency? Deloitte once released a report that mentioned several advantages of using cryptocurrency for enterprises, including new customer groups, new liquidity and funding pools, the financial advantages of programmable currency, and safer remittances and stronger control over corporate funds.

"Of course, significant volatility risks require careful consideration," Deloitte noted at the end of the report.

The report also mentioned that according to an estimate at the end of 2020, more than 2,300 U.S. businesses accept Bitcoin, not including Bitcoin ATMs. More and more companies around the world use Bitcoin and other digital assets for a large number of investment, operational and trading purposes.

BitPush previously reported that Virtuzone, a UAE enterprise service provider, has integrated Binance Pay into its system to support cryptocurrency payments through Binance Pay. In addition, Virtuzone also stated that it will promote the use of cryptocurrency and blockchain technology in the UAE through cooperation with Binance.

Opposition

However, the Wall Street Journal report also cautiously raised objections: These investments in capital and products are not about the here and now, because cryptocurrencies are now in deep fear. As of press time, the panic index has remained around 26 for nearly a week, which is the "extreme panic" level. Bitcoin has been hovering around $20,000 for the past four months before today's decline after the release of US inflation data. It is trading at around $18,300, the lowest level since December 2020. The value of the entire crypto market has fallen below $900 billion.

Nearly a year of bear market sell-offs has created distrust in cryptocurrencies. About 42% of the 10,500 people surveyed globally by market research firm Toluna said that despite the allure of potential growth, cryptocurrencies are too risky as an investment. Another 32% said they don’t understand it well enough, and 28% said it’s not secure enough. Apparently, a significant number of business owners and users are also in this group.

So what specific impact does this market sentiment have on companies? According to data compiled by CoinShares, the total amount of funds flowing into major crypto fund providers such as Grayscale Investments and CoinShares so far is only a paltry $436 million. This is lower than $9.2 billion last year and $6.7 billion in 2020. This is obviously also a strong counterexample.