Bitcoin and the general cryptocurrency market have been experiencing one of the essential moments since 2018, wiping greater than $1 trillion in market worth since early 2022.
The present disaster has triggered a wave of panic locally, with Bitcoin (BTC) miners’ promoting exercise surging to seven-month highs as mining profitability has dropped to October 2020 ranges.
The Bitcoin Fear & Greed Index has posted the bottom quantity because the pre-pandemic instances of Q3 2019, dropping to 7 and indicating “Extreme Fear” on Wednesday.
These and different current occasions within the trade don’t look good — however solely at first look, in keeping with some trade consultants and executives.
People within the trade proceed to reiterate that bear markets are really good for Bitcoin and wholesome for the crypto trade, as they take away speculators and scams whereas offering area to construct actual and nice services and products.
“The current situation is good for Bitcoin in the long term, cleansing the market from leverage, scams and dishonest institutions,” Trezor Bitcoin analyst Josef Tětek instructed Cointelegraph.
According to Tětek, earlier bear markets spawned many pivotal initiatives, together with the Lightning Network, a serious Bitcoin-related undertaking enabling cheaper, sooner Bitcoin transactions. The preliminary idea of the Lightning Network was formulated throughout the bear market of 2015.
Crypto winters and bear markets present extra alternatives to construct, as hypothesis leaves the market, Tětek famous, stating:
“Bear markets are good for Bitcoin. Builders face fewer distractions, and the fake ‘project founders’ that were only looking for a quick VC funding and naive retail exit liquidity disappear as quickly as they previously appeared. Real builders rejoice when all the bullshit gets washed out.”
The crypto market must undergo crypto winters so as to develop and mature, Bitcoin Suisse CEO Dirk Klee instructed Cointelegraph. According to the manager, the standard, stability and safety of crypto companies and merchandise grow to be much more essential throughout unsure market circumstances. He stated:
“Ultimately, that is what the industry needs in order to mature further, and we aim to live up to those standards every single day.”
In an identical method to broader markets, Bitcoin and the complete cryptocurrency ecosystem have traditionally developed in cycles, with many crypto observers arguing that Bitcoin has “never traded below previous cycle peak.”
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According to Kraken CEO Jesse Powell, Bitcoin worth cycles are based mostly “sort of around the Bitcoin halving,” a one-in-four-years occasion that reduces the Bitcoin block reward by half, which has traditionally elevated Bitcoin’s demand and finally led to bull markets.
Related: ‘Cheaper than it looks:’ Fidelity exec says BTC undervalued and oversold
Powell is understood for precisely predicting the crypto winter of 2022. His earlier prediction that Bitcoin would hit $100,000 by the tip of 2021 failed, nevertheless.