Most cryptocurrency platforms display a disclaimer, stating cryptocurrency is highly volatile and can result in significant financial loss. This disclaimer is no joke. Recently, the crypto market experienced a massive nosedive, leaving many wallets and portfolios lighter than ever. Players who enjoy the thrill of crypto casinos aren’t protected from the unusual market movement.
As coins lose value and market confidence wavers, the question is: will players stick around or cash out and dump crypto casinos?
The Recent Market Downturn
On August 5, the crypto market plunged and shed around $367 billion in value. Major cryptocurrencies like Bitcoin and Ethereum were among the most hit as investors sold out risky assets. Bitcoin fell below $50,000 for the first time since February, while Ethereum was trading at $2,432.
A major factor in this sudden crash is the Bank of Japan’s decision to hike interest rates. Usually, traders borrow in low-interest currencies such as the Japanese Yen and invest in higher-yielding assets. This move by the bank has made trades less profitable, leading traders to close their positions. However, this action triggered a massive sell-off in both the crypto and stock markets.
Also, the speculations of a potential global recession and rising geopolitical tensions contributed to the accelerating market’s downward trajectory.
The panic is still there, but the fundamental value of cryptocurrencies remains bullish. In the coming months, the crypto market should recover and maintain steady growth.
The Impact of the Crypto Volatility on Crypto Gambling
Every asset has a certain degree of volatility. However, cryptocurrency is one of the most volatile assets in the market.
Regular crypto casinos use cryptocurrency and are subject to market movements. They have no protection against sudden market downtrend or uptrend movements.
The unpredictability nature of cryptocurrency poses a massive disadvantage to gamblers and crypto casinos.
Imagine a player at a virtual slot machine, the reels spinning in his favor with the promise of a big win. As he or she plays, a notification pops up on the screen indicating that BTC or ETH is down by 15%. What was a sizable win a moment ago just shrinks before his eyes. Surely, that stings! The thrill of the game is suddenly clouded by the reality that, in the world of crypto, nothing is stable. Your winnings can lose value before you cash out, turning an exciting gamble into a nerve-wracking experience.
On the flip side, what was a modest win can grow into a huge amount right before your eyes – you only need a surge in the value of the cryptocurrency. Even with this, some casinos may face temporary liquidity challenges if many players decide to withdraw their earnings at once.
In some other cases, some gamblers take advantage of the volatility property of crypto to increase their potential winnings in the long term. To do this flawlessly, players must have a thorough understanding of the market. They have to filter out the noise and distractions, such as sudden spikes or dips.
All in all, the psychological impact on players in crypto casinos can be profound.
Players’ Psychology During Downturns
The volatility property of cryptocurrency doesn’t favor responsible gambling. Psychologists discovered that crypto casino players tend to engage in compulsive gambling when the market is experiencing a spike or a dip.
As the value of their portfolio declines, heightened anxiety, regret, and uncertainty set in. Nobody ventures into gambling to waste money. So, the thrill of funding their accounts in the future is dampened by the fear of further financial loss. This is common among amateurs. The legends know this is a phase that will surely pass.
During downturns, gamblers become more cautious. They reduce their bets or stay away from riskier games altogether. Some even withdraw their money from the gambling platforms entirely to protect their assets from further decline. Market downturn usually persists due to the knee-jerk reaction of players prioritizing the preservation of value over the pursuit of potential gains. Similar to how most investors decided to dump their assets after the Bank of Japan’s decision.
In extreme cases, the fear of continued losses might trigger an impulsive decision. They may cash out at inopportune moments or chase losses with larger amounts in a desperate move to recover their account.
The psychological pressure fueled by crypto volatility can make the gambling experience more stressful and less enjoyable. This often leads to a decline in player activity and overall spending within crypto casinos.
Adaptation strategies for crypto casinos
Not all cryptocurrencies experience the same volatility levels. There are stablecoins, which are cryptocurrencies whose values are tied to another currency. Some crypto enthusiasts believe that stablecoins are safer options than most popular cryptocurrencies, including Bitcoin and Ethereum. Generally, stablecoins are more useful than volatile cryptocurrencies. With stablecoins in casinos, players can enjoy gambling online with a lesser risk of losing their earnings due to a drop in the crypto market.
However, stablecoins aren’t without their risks. Take the example of UST, a once-popular stablecoin that was pegged to the U.S. dollar. Despite its intended stability, UST crashed dramatically, plummeting to zero within hours.
Online gambling surged in popularity in 2020 thanks to COVID-19 lockdowns. After the pandemic, the sector continues to thrive despite government regulations. With anonymity, lower transaction fees, and fast transactions, the crypto casinos will continue to thrive.
Crypto casinos are developing new games and payment options that will lead to more engagements in the online gambling sector.
The Bottom Line
Online gambling through crypto casinos is still a money-making avenue despite the volatile nature of cryptocurrencies. Players usually react accordingly to market movement as the value of earnings may drop or rise significantly.
While crypto casinos aren’t fully protected from market movements, the belief in future gains often keeps players engaged with the hope that their digital assets will regain value.
