The crypto markets are undeniably bearish, but some industry insiders believe that these conditions will shake off the bad actors and create more opportunities for future participants.
Traders lament the negative price action and the relative difficulty of executing profitable trades in bearish market conditions. However, many leading analysts and builders agree that this is the time to take actions that will yield the biggest gains when bullish sentiments return.
Mihailo Bejelic, co-founder of Polygon (MATIC), told CNBC on May 27 that the current downturn earlier this month and the recent major selloff were what the market needed.
Bjelic believes that the market became “perhaps a little irrational, or perhaps a little reckless”, with the total crypto market cap increasing by 12.5x between November 2019 and November 2021, a tremendous growth rate that has seen most other traditional The markets overtook.
“When the time comes, [a] correction is normally needed, and at the end of the day [is] Healthy.”
The market is currently going through a phase of major correction. Since last November, the overall market cap has fallen 60% from $3 trillion to $1.2 trillion, according to CoinGecko. Cointelegraph reported on May 28 that traders still expect more pain, especially given the past bear market that saw the price drop by about 80% overall.
Crypto market analyst The DeFi Edge added context to the idea that bear markets offer leverage that remains in line with the interests of most market actors. The account tweeted to its 164,000 followers on May 29 that “bear markets are healthy for crypto growth.”
This line of reasoning is based on the observation that fewer new market participants, which scammers see as potential targets, enter during a bear period. During the past year, bitcoin (BTC) transaction volume peaked at 335,411 on 9 November, which coincided with the price peak. According to Blockchain.com the transaction volume dropped by 38% on May 29 to just 207,859.
Less activity means fewer opportunities and less profitability to run multiple scams, so they tend to disappear.
Bear markets are healthy for crypto growth.
The deadweight is removed and the crypto can climb to new highs. pic.twitter.com/5wKEzHxy6B
— Defi Edge ️ (@thedefiedge) 28 May 2022
Jason Ye, partner at crypto investment fund ROK Capital, pointed out that although prices and activity are low, bear markets represent prime time for traders and builders to lay the groundwork for greater success when market sentiment reverses. He told Cointelegraph on Monday that “in a bear market, it is time to find the best fundamentals and focus on building products.”
“It is time for traders to deploy their cash reserves to accelerate the next bull cycle. As always, the winners in a bull market are the people who have built up in a bear market.”
Game maker Alex Baker at the Metaverse game platform Neo Tokyo echoed Yeh’s notion in a Tweet on 28 May. He also believes that bear market buyers are best positioned to make profits during the next bull run. He said that “all money is made by buying in a bear market. The biggest loss comes from buying in a bull market.”
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Baker said that although buying low and selling high should be the major factors driving crypto market participants, he suggested that people on Twitter disagree the most during a bear market, which he called “ironic”.
The funniest thing I felt about crypto Twitter is that everyone gets toxic and bitter in a bear market.
Which is ironic because all the money is made by buying in a bear market.
The biggest loss comes from buying in a bull market.
Shows how far back this place is.
— Alex Baker (@ZssBecker) 27 May 2022
