Experts on why bear markets are good for Bitcoin

by · July 5, 2022

Bitcoin and the general cryptocurrency market have experienced one of the most critical moments since 2018, drying up more than $ 1 trillion in market value since early 2022.

The current crisis has triggered a wave of panic in society, with Bitcoin (BTC) miners’ sales activity rising to seven-month highs as profitability in mining has fallen to October 2020 levels.

The Bitcoin Fear & Greed Index has posted the lowest number since the pre-pandemic times in Q3 2019, fell to 7 and indicates “Extreme fear” on Wednesday.

These and other recent events in the industry do not look good – but only at first glance, according to some industry experts and managers.

People in the industry continue to reiterate that bear markets are actually good for Bitcoin and healthy for the crypto industry, as they eliminate speculators and scams while providing space to build real and great products and services.

“The current situation is good for Bitcoin in the long run, and cleanses the market of influence, fraud and dishonest institutions,” Trezor Bitcoin analyst Josef Tětek told Cointelegraph.

According to Tětek, previous bear markets created many key projects, including the Lightning Network, a large Bitcoin-related project that enables cheaper and faster Bitcoin transactions. The first concept of the Lightning Network was formulated during the bear market in 2015.

Crypto winters and bear markets offer more opportunities to build, as speculation leaves the market, Tětek noted and stated:

“Bear markets are good for Bitcoin. Builders face fewer distractions, and the fake” project founders “who were just looking for fast VC financing and naive exit liquidity disappear as fast as they appeared before. Real builders rejoice when all the nonsense is washed out. ”

The crypto market must go through crypto winters to grow and mature, Bitcoin Suisse CEO Dirk Klee told Cointelegraph. According to the manager, the quality, stability and security of crypto services and products become even more important under uncertain market conditions. He said:

“Ultimately, this is what the industry needs to mature further, and we aim to live up to these standards every single day.”

Similar to broader markets, Bitcoin and the entire cryptocurrency ecosystem have historically evolved in cycles, with many cryptocurrencies argued that Bitcoin “has never traded during the previous cycle stop.”

According to Kraken’s CEO Jesse Powell, Bitcoin price cycles are based “as seen around the Bitcoin halving”, a one-in-four-year event that reduces the Bitcoin block reward by half, which has historically increased Bitcoin demand and ultimately led to bull. markets.

Related: ‘Cheaper than it looks:’ Fidelity boss says BTC is undervalued and oversold

Powell is known for accurately predicting the crypto winter of 2022. However, his earlier prediction that Bitcoin would reach $ 100,000 by the end of 2021 failed.