A panic is quite natural in the crypto market amid a bearish trend, however, some industry insiders are of the opinion that such situations will remove bad actors, creating greater opportunities for new participants.
Mihailo Bjelic, the co-founder of Polygon, believes that the recent sell-off earlier this month and a current downturn are exactly what the market needed.
Between November 2019 and November 2021, the total crypto market cap experienced a steep growth that surpassed most other traditional markets.
Bjelic says that a correction is often required in such times and that it is healthy, too.
Currently, the market is going through a major correction. The data from CoinGecko shows that the total market cap has fallen by 60%, from $3 trillion to $1.2 trillion since last November. The traders also predict more pain, especially considering the last market cut prices by 80% overall.
The DeFi Edge, a crypto analyst, tweeted that “bear markets are healthy for the growth of crypto” on May 29.
The reason behind this school of thought is that fewer new market participants enter during a bear market, and they are the potential targets of the scammers. Bitcoin (BTC) transaction volume reached its highest, 335,411, in November, along with its peak in price.
Lower activity signals less opportunity and hence a decrease in profitability; therefore, they tend to vanish.
Jason Ye, partner at ROK Capital, a crypto investment fund, explains that bear markets are a call for building a base for greater success when market sentiments reverse.
Ye believes it’s an ideal time for traders to deploy their cash reserves for having an upside in the next bull cycle. “As always, the winners in the bull market are the people who built in the bear market,” Ye further adds.
Alex Becker, Game Maker at Metaverse game platform Neo Tokyo, too supported Ye’s argument on Twitter. On May 28, he tweeted, saying that “all the money is earned through buying in a bear market and most losses too are suffered from buying during the bull market.”
Becker further says that although buying low and selling high should be the key factor driving crypto market participants; he proposed that people on Twitter happen to be most disagreeable during a bear market, which he thinks is quite “ironic.”
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2022/05/30/heres-why-crypto-bear-markets-are-good-for-growth/