With crypto dipping further every two minutes, many analysts are worried if we are now in a bear market and if a crypto winter is coming much like what we saw in the year 2018.
Is a Bear Market Here?
Winston Ma – managing partner of Cloud Tree Ventures – believes that a bear market has already arrived. In a recent interview, he commented:
As major tokens like bitcoin fell more than 50 percent from their all-time highs, we’re in a bear market, and it should be welcomed because it is a chance to get rid of the bad actors and focus on building products. Not all tokens are created equal.
Right now, according to Ma, two of the big things that seem to be hogging up a lot of space in the crypto industry are stable currencies and regulation. This likely has to do with the recent crash of Terra USD, which is a controversial token given that while allegedly stable, it was an algorithmic coin, and it wasn’t tied to any physical collateral the way other assets – like USDC (USD Coin) and Tether – are.
The Terra USD collapse made it very clear to people that not all stable coins are (always) stable. The regulation of stable coins may be the first to come amid the US government’s current crypto regulatory push.
In addition to the problems surrounding Terra USD, it’s believed regulation is causing a lot of headwinds given that crypto crime allegedly continues to occur at an astronomical level. David Lesperance – managing partner of immigration and tax adviser at Lesperance & Associates – recently noted a case in which an executive of Open Sea – one of the biggest NFT platforms in the world – was indicted by federal officials on charges of wire fraud and money laundering.
Whether crypto consumer protections such as the stable coin crisis or NFT fraud or societal protection such as crypto’s carbon footprint or money laundering, regulators are moving in at lightning speed into the crypto universe.
What’s the Difference Between This Time and the Last?
Frank Corva – senior analyst for crypto and blockchain at Finder – explained about bitcoin:
It’s currently trading at about $31,000, and whenever its price comes down to these lower ranges, crypto traders start sounding the alarm that bitcoin’s price will drop far lower, while mainstream media journalists begin to pronounce bitcoin dead for the nth time… In layperson’s terms, this means that traders tend to express their fear that prices will go lower when prices are near their lows and proclaim that prices are going ‘to the moon’ – or up much higher – when prices are near their all-time highs, so is this time any different? Are market participants just being bearish at support? No one can tell for sure.
He also added that summer is usually a slow period for all trading markets.