Every crypto-investor, crypto-enthusiast, or just a person who has been interested in the cryptocurrency industry for several months can ask the same question “when will the bear market end?”. Obviously, a 100% answer simply does not exist in nature, but one of the most authoritative crypto funds – Grayscale has published its analysis on the current state of the cryptocurrency market.
We have read, analyzed, and selected the most important parts for you.
As of June 13, 2022, the Realized Price of Bitcoin crossed below the Market Price, signaling that we may officially have entered a bear market. Just 21 days into this zone, we may see another ~250 days of high-value buying opportunities when compared to previous cycles.
Despite tough market conditions, the core DeFi protocols that sparked the industry’s growth continued to operate properly as intended. Unlike their centralized counterparts, Aave, Compound, and MakerDAO’s smart contracts remained resilient to the market, maintaining their loan-to-value and not taking on any bad debt. Additionally, as of July 5, 2022, Uniswap has processed over $42 billion in trading volume over the last 30 days, and metaverse coins, such as AXS, MANA, and GALA, have outperformed Bitcoin and Ethereum in the same period.
June 2022 saw the largest outflow of bitcoins from exchanges, indicating that owners are moving their coins out of exchanges and centralized lending platforms. This signals that investors may be wary of holding funds with centralized lenders, which may have liquidity problems due to riskier strategies used with user funds. Instead, it appears that users are choosing to store their digital assets passively.
Seasoned crypto investors are no strangers to wild price swings and 80% drawdowns – it is to be expected in a nascent asset class. We believe the technology underpinning the entire industry has the potential to revolutionize all aspects of digital life, from fintech to entertainment. In the 40 years since the internet became publicly available, there has never been a way to truly own digital assets without personally operating the physical hardware it lived on until Bitcoin was created.
At the time of this writing, every market cycle that the crypto industry has gone through has left the ecosystem stronger than the previous. In crypto, we have seen that failure has not been fatal to the industry, but, instead, a necessary step in progressing to the future. This market cycle has already provided us with battled-tested DeFi and infrastructure protocols, innovations in scaling solutions, a growing metaverse industry, and more. Despite price declines, liquidations, and volatility, the crypto industry continues to build and innovate, pushing the boundaries of what is possible.
In summary, we can say that the best strategy will be to abandon impulsive actions, carefully monitor the market, analyze various sources and wait.
And remember: after even the darkest night there is always a dawn 🙂