The market for cryptocurrencies has been volatile this year and has led to even deeper losses for investors.
According to three industry experts, the reason for keeping their nerve is because of thecryptocurrencies.
It's due to the shake out of businesses and coins that don't have real use cases and the bad actors.
A lot of firms are built on hype. Charlie Silver told Insider that it will be good for the industry to have them gone.
There was a boom in the price of bitcoin. The record of $69,000 was set in November. With Russia's war in Ukraine and rising interest rates, investors are shunning riskier assets like tech stocks andcryptocurrencies.
Two recent events cast doubts on the market's long-term resilience. Terra lost its peg to the dollar. There was a wave of liquidations that rattled the broader market and raised questions about the role of stable coins, which are backed by real assets.
The second brutal sell-off that stripped billions of value from the digital-asset market, which fell below $1 trillion for the first time in 16 months, was caused by the freeze on all transactions on Celsius' platform.
Bear markets are healthy because they reset valuations to reality. Ponzi schemes that pay investors only with new investor money are some of thecryptocurrencies that are true. The project will fall apart when the new money dries up.
Lucy Gazmararian, founder and managing partner of token Bay Capital, said that the scope for regulators to protect investors and reduce risk from cryptocurrencies leads to better products and services.
In a bear market, irrational exuberance and reckless behavior is no longer rewarded, and entrepreneurs can focus on the longer term and build sustainable businesses which are more robust and better able to scale once the markets turn again and as user adoption continues to grow."
There's no lender of last resort, like a central bank, to step in if there's a problem with a lender.
Businesses that aren't prudently managed have a higher chance of going bankrupt.
The entire financial system was frozen until the central banks came to the rescue.
The market turmoil has taken a toll on the lender Blockfi and the fund Three Arrows. According to the Financial Times, 3AC failed to meet margin calls from a number of banks.
BlockFi received a $250 million rescue from FTX boss Sam Bankman-Fried after 20% of its workforce was cut.
"Despite this short-term debacle, I think the crypto industry will become more efficient in the long term as irresponsible companies are removed from the space so we don't have these systemic issues like we are seeing currently," said Marcus Sotiriou of Global Block.
All Rights Reserved © 2024
