How Bitcoin price fluctuations affect crypto gambling

How Bitcoin price fluctuations affect crypto gambling

At this point in time, many Bitcoin enthusiasts believe that the coin has proven itself as a reliable means of storing value. This statement stands as long as we only consider Bitcoin’s stability from a long-term perspective. When gauging its short-term price trends, it becomes clear that Bitcoin is still highly volatile and therefore prone to considerable price swings.

Value drops are incredibly common and often occur in response to negative market moves or gigantic transactions performed by crypto whales. To make matters worse, fear, uncertainty, and doubt are often pushed forth by ill-willed individuals pursuing self-interest. These trends affect not only Bitcoin but most of the popular coins.

Bitcoin has been around for over 10 years, so it only makes sense that a plethora of projects leveraging the benefits of blockchain technology and cryptocurrencies have now appeared. These companies operate in many of the world’s markets, including but not limited to finance, supply chains, healthcare, identity management, gambling, and many others. As expected, cryptocurrency turbulence will inevitably affect these industries, to one degree or another.

As we shall see in this article, digital currency price swings are bound to have a direct impact on the cryptocurrency gambling market.

How the crypto gambling market responds to price drops

By definition, casino players are noticeably more likely to engage in risky behavior with their assets. One would understandably think that price fluctuations don’t play much of a role in the well-being of the crypto casino market. After all, users who wager their funds accept the inherent risk of losing.

However, research has shown that casino players are great at conducting efficient risk management. This is especially the case when gambling via Bitcoin and other volatile cryptocurrencies. Analysis on the matter has unveiled the existence of a trend - anytime the value of popular coins drops, players generally exchange their holdings into stablecoins like Tether, which are pegged to the US dollar. Tether (USDT) is a popular choice that’s supported by most of the market’s crypto casinos. In doing so, the value of one’s portfolio is preserved, and gambling can be resumed.

In times of market drawdown, users may find it more convenient to wager using cryptocurrencies that facilitate cheap and quick transactions. Such an example is Litecoin (LTC), which can be almost instantly exchanged for reliable stablecoins like Tether or to other coins that miraculously maintain their value despite drops in the cryptocurrency market capitalization.

Small-scale downtrends vs. market collapse

Analysis has revealed that many crypto gamblers have become accustomed to volatility waves. Whenever a small-scale downtrend occurs, most users tend to continue their gambling activities as usual. In such moments, players will keep a close watch on how the crypto market evolves. They’re also likely to discuss the recent fluctuations using the live chat functions provided by most casinos.

On the other side of the spectrum, a crypto market collapse will wreak havoc upon the casino industry. Panic ensues, and user behavior drastically changes, as most players go into damage control. Casino customers are likely to have different reactions, but there’s a general rule of thumb - in response to the panic, most users will withdraw everything they hold in a casino wallet, and proceed to deposit the assets into an exchange. Conversion to fiat or a stablecoin may or may not occur, depending on how serious the market collapse is.

It’s important to keep in mind that downtrends encourage colossal transaction volumes as crypto owners worldwide engage in panic selling. This leads to network congestions, thereby making it more expensive to execute transactions. Confirmation wait times are exponentially longer, reducing deposits and the overall gambling volumes of crypto casinos worldwide.

By now, it is known that crypto prices have the tendency to recover. Unfortunately, casinos will find that their recovery entails a lengthy process since it usually takes a while before transaction fees and confirmation times decrease. Players are less likely to deposit funds on their favorite casino as long as they cannot access quick and cheap transactions.

Such responses are generally triggered after price drops between 10% and 20%, as pinpointed by our historical analysis on the recent declines that occurred in March and September 2020. Despite the general market trend, casinos often encounter cold-blooded players who continue to chase the win. This peculiar response is triggered by a nifty logic - since crypto prices are likely to rebound, winning now leads to an even higher gain later on.

Bottom line

Based on everything that has been outlined so far, digital currency volatility directly affects gambling volumes on crypto-based casinos, both from a technical and human point of view. While low-level downtrends don’t have much of an impact, higher price drops either encourage a shift to stablecoins or a rapid cessation of gambling activity, followed by immediate crypto withdrawals.