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Tuesday, April 23, 2024

The bear market beneficial to the crypto market?

The crypto market is having a complicated start to 2022. Some foresee the possibility of a painful bear market. But for many experts and analysts this correction is necessary and allows us to breathe before, why not, starting again towards new heights .

The markets need to breathe to recover better

The last weeks of the crypto market are complicated. Major caps saw significant declines and the Terra ecosystem’s descent into hell ended up completing a widespread fall in the cryptocurrency market.

In this context, many already fear the arrival of a prolonged bear market . But for many analysts, these bear market phases are a blessing in disguise.

Among those is Polygon co-founder Mihailo Bjelic, who said the recent declines are exactly what the market needed. For him, the cryptocurrency market tended to get a bit irrational. Remember that the latter saw its total capitalization multiply by 12.5 between November 2019 and November 2021, a crazy growth in such a short time. He declares :

“When things like this happen, correction is needed, and ultimately that’s the healthiest thing to do.”

Recall that since its November 2021 ATH, the total market capitalization has fallen by almost 60%. It went from 3 trillion to 1.2 trillion according to the specialized site CoinGecko. Many traders and specialists expect this fall to continue. Indeed, the last cycle had a correction of nearly 80% across the entire market. If this scenario repeats itself, the roller coaster of the crypto ecosystem would still be far from its terminus.

Fewer scams and more time to build better projects

For others, like the DeFi specialist “The DeFi Edge”, a bear market also helps to avoid many scams. Indeed, in a downward market trend, new entrants are much rarer.

Also, scammers are less likely to exploit the credulity, especially of new investors. The profitability of scams and their number is therefore reduced. In view of the resurgence of this type of practice in recent months, a breath of fresh air in the market also appears to be welcome.

For multiple experts in the sector, these breaks also make it possible to build projects in a healthier way . Jason Ye, a partner at crypto investment fund ROK Capital, also points out that bear market periods are essential for successful investing:

“It’s time for traders to allocate cash reserves to take advantage of the next bull market. As always, the winners of a bull market are those who built that success during the bear market.”

He is joined in this sense by many analysts who point out that most gains are made when buying during the bear market . Conversely, most of the losses come from purchases during bull market phases. You have to be able to remain calm in the phases of euphoria and calm during the violent falls experienced by this still young market.

Other specialists also highlight these breathing phases as beneficial for project leaders. Indeed, this gives the opportunity to build your project more serenely by devoting the necessary time to it rather than rushing out to take advantage of the beneficial effects of a bull market. According to some, it also allows to see the real enthusiasts and those who really want to build in this innovative ecosystem. A way of sorting the participants over the successive declines known in recent weeks.

The next few weeks will tell us if we are indeed in a bear market or if this breathing space is only temporary. Still, these phases are necessary in a healthy market and allow many investors to make good moves when the trend reverses.

Of course, if you in turn want to take advantage of the downtrend, it is recommended to buy your cryptos on a secure platform. As such, we can recommend Capital.com for CFDs and Crypto.com for live buying.

Also read Best Way: How to Short Bitcoin in 2022

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