This is how Bitcoin benefits from this crypto bear market
(Kitco News) Bitcoin may emerge from this cryptocurrency winter with a larger market share as investors rotate back to the world’s largest cryptocurrency from other altcoins, according to OSL’s CEO and head of America’s Fernando Martinez.
Bitcoin is already the most recognizable cryptocurrency in space. But after this bear market, it can gain even more dominance.
“We have seen a huge rotation from altcoins to Bitcoin. Right now Bitcoin is trading with more than 40% market dominance. And we expect it to continue to increase as we embrace this bear market,” Martinez told Kitco News in a recent interview .
June was a terrible month for Bitcoin, which plunged 40% and ended below the $ 20,000 level. Since then, Bitcoin has stabilized and risen above $ 23,000. However, the bear market is still in place as investors shift their focus from inflation to fears of a recession and more risk of contagion in the crypto area.
“Many of the active traders in Bitcoin trade with the ranks. On altcoins, they stay away because they are not as predictable as Bitcoin itself,” Martinez described.
In this environment, high inflation figures no longer surprise investors. This is why Bitcoin is well positioned for the cryptocurrency winter – its ability to become a reserve asset and end the correlation with risk assets.
That correlation is already declining, Martinez pointed out. “If you take a look at the correlation between Bitcoin and the NASDAQ 100, it was at an all-time high in February. Right now it’s not so predictable anymore, and it will continue to disconnect. But for the protocols, which are higher beta-type assets “It’s going to be risk-on / risk-off,” he said.
When analyzing trading activity, it is important to separate Bitcoin from the protocols and applications.
“All three of these categories trade extremely differently. And you can not believe that they pose the same risk. For example, the DeFi area saw a complete loss of interest. In November, DeFi used to have $ 150 billion in total value locked in. Right now, the total value locked in is $ 30 billion, “he said.
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However, Bitcoin’s disconnection from risk assets will take time. Martinez noted that OSL’s recent survey showed that institutional customers see a greater chance of Bitcoin disconnection than the retail side.
“Only time will allow Bitcoin to mature. But right now, market sentiment is completely risk-off,” he said.
When it comes to long-term price direction, Martinez is bullish. “In the next five years, we can see Bitcoin as one of the top five currencies in the world,” he said.
Martinez is also very optimistic about Ethereum, noting that it is the strongest protocol. “It survived several cycles. It has received massive adoption. There are some limitations they have to deal with with the merger. But we are extremely positive there,” he said. “Beyond that, the other protocols still have a lot to prove.”
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