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Crypto Panic? No. "The Bear Market is Good, It's a Cycle and It Will Pass"

Cryptocurrency May 27, 2022 06:52
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© Reuters.

By Laura Sanchez

Investing.com - We are in a bear market, and that's a good thing. That's what almost all cryptocurrency industry experts say.

In recent weeks, the sector has lost billions of dollars following the massive sell-off of shares and the collapse of Terra/Luna and TerraUSD. But, in general, analysts do not link the crisis of 2018 to the moment the crypto sector is experiencing right now.

"Bitcoin (BTC) a few years ago, was around 8,000. Now it's at 30,000. Yes, there has been a collapse and a trillion dollars has gone up in smoke. But when you step back a little bit, take perspective and look at the long-term trends, you see that cryptocurrencies are here to stay," Brad Garlinghouse, CEO of Ripple, told CNBC.

"In March 2020, global markets collapsed amid massive disruption to supply chains and intensive blockades around the world. The price of BTC collapsed by almost 50% in one day, while the S&P 500 lost 23% in two weeks. The fear of another winter was real," recalls The Defiant.

By October 2020, the price of BTC had risen 120% from the COVID low, surpassing 12,000 for the first time since early 2018.

"There are notable differences when comparing the series of factors that triggered a cryptowinter in 2018 and what we are seeing now. First, the blockchain industry has grown from a small group of isolated networks to a series of interconnected ecosystems that attract millions of daily users," notes The Defiant.

Moreover, experts point out that in recent years, the profile of investors has shifted from mostly retail investors to large institutions and corporations with greater economic power.

In addition, the correlation between the stock market and the crypto sector is becoming increasingly close.

Finally, experts recall that; like almost all sectors, the crypto industry is made up of cycles. "It is unsustainable for any industry to maintain constant growth. Cycles of consolidation and capitulation are healthy for creating financial stability within the markets".

Follow developments in the main cryptocurrencies here: https://ca.investing.com/crypto/currencies

Crypto Panic? No. "The Bear Market is Good, It's a Cycle and It Will Pass"
 

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