The cryptocurrency markets are currently in a bearish state. While the current state has deterred some investors from participating in the market, industry experts believe this phase opened up opportunities for future investors.
Bear markets are good for growth
During an interview with CNBC, the co-founder of Polygon (MATIC), Mihailo Bjelic, said that the current market dip and the massive selloffs witnessed earlier this month were necessary for the market to achieve future growth.
Bjelic noted that the market had become “irrational” and “reckless” after the massive bullish market of 2021. He said that the growth of the crypto market has outperformed the traditional market, having gained by 12.5 times in just two years, and a correction was needed.
In November 2021, the global crypto market reached $3 trillion. The market has since dropped by 60%, and the total market cap is at around $1.3 trillion. Some analysts believe that the bear market is not over, given that the last bear cycle shed 80% from the market.
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According to The DeFi Edge, another crypto market analyst, bear markets were beneficial to the market. The analyst said that “Bear markets are healthy for the growth of crypto.” During bull markets, many new entrants are targeted by scammers.
On November 9, Bitcoin’s transaction volumes were at 335,411 coins, while the price was at an all-time high. However, on May 29, data from Blockchain.com shows that the transaction volumes were 207,859 BTC, representing a 38% decline. With this low transaction volume, the possibility of fraud is reduced because of the low profitability.
Jason Ye of ROK Capital said that bear markets were an opportunity to establish strong fundamentals. “It’s time for traders to deploy their cash reserves in order to get an upside in the next bull cycle. As always, the winners in the bull market are the people who build in the bear market.”
Crypto markets are still bearish
The crypto market has been in a bearish state since early this year. The dips have coincided with a recession in the stock market, where prices have also registered notable lows. Bitcoin’s price has failed to go past $31,000 following the market decline.
The market crash intensified with the collapse of Terra’s algorithmic stablecoin UST. The collapse of the stablecoin spooked investors further, and it caused prices to decline further. While the market has recovered from this collapse, the effects are still being felt, with regulatory scrutiny increasing significantly.
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