Edward Moya, senior market analyst at brokerage firm Oanda, said, “Wall Street is enjoying a positive risk-on mood that is good news for cryptos.” He noted that the crypto market is starting to look “attractive now that the economy is looking a little better as expectations for Fed tightening eased.”
It is worth looking at the driving causes of the crypto winter. Last month, bitcoin and ethereum, the biggest currencies in the crypto space, were down more than 70% from their 2021 peaks. Stablecoins terra and luna crashed, and Three Arrows Capital and crypto lender Celsius filed for bankruptcy.
Many industry insiders also put the blame for the crypto winter on circumstances outside of the crypto ecosystem. Inflation, Russia’s invasion of Ukraine, and the broader market’s plunge into volatility led to many investors selling their crypto assets. Tesla sold almost $1 billion in BTC in the second quarter, which might have played a role in the collapse.
A sustained price recovery for bitcoin and ethereum could signal a crypto spring, but not all analysts believe it will happen soon. “We’re in a full-blown bear market, not a bear cycle. Just because we see some positive price action doesn’t mean we’re out of the clear,” said crypto expert and educator Wendy O.
Crypto is no stranger to bear markets and crashes. The volatile asset has seen a number of them in its storied history, and each time it has come back stronger. This latest crypto winter is likely to claim a number of victims among the various currencies, but the stronger currencies are likely to survive. Venture capitalists and institutional investors had poured money into cryptocurrency, and that interest remains despite the crash.
Crypto winters frequently lead to growth and innovation for the space. There’s no reason not expect spring to roll around, sooner or later.
For more news, information, and strategy, visit the Crypto Channel.
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