Scary image, you wake up, you open your crypto portfolio tracker and your digital assets are down 80% since BTC kissed 68k on November 10th 2021; long term hodlers are used to these market doldrums, months of boring price actions and rampant depression fuelled by lethargic headlines. This phenomenon, also called crypto winter, is what many experienced in 2018 when BTC plunged by more than 80% alongside the death of initial coin offerings and big banks pausing their plans to launch crypto trading desks.
2018 memories similarly to previous crypto crashes have the power to spark fears and soul crushing panics, 2018 is staring at us now after the world largest digital asset nosedive 50% from its November 2021 high. 1 trillion evaporated from the crypto market since it became clear that the Fed will slowly put a brake on the highly accomodative policies that fueled the unstoppable boom in all risk assets including cryptocurrencies. While most crypto die hard adherents and active users pretend that the crypto ecosystem evolved and is now divided in various sub-spheres, DeFi platforms, NFT markets, Meta, GameFi, prices are honest: the pullback has hit all sub divisions, all corners of crypto.
Reflection and predictions with analogy are rarely accurate, using the 2018 argument might not be the best approach, which is why I invite you to reflect with me from a fundamental standpoint. It is quite obvious to most that crypto, as a disruptive technology, has not attained two main massive milestones:
1/ non reflexive business models
2/ user adoption without speculation incentives.
The only products constantly generating income, regardless of market conditions, are platforms, tools, the "shovel and picks" businesses of crypto: FTX, Binance, many DeFi protocols, Opensea and other NFT marketplaces.
Furthermore, potential, potential and potential are all priced in massively and now, simultaneously to the macro economic slump, incentives are lacking for the team building most projects which is slowly putting aside fundamentals to push narratives and artificial metrics paraded by many in hopes of capturing value without the necessary fundamentals, without a functioning product.
On the political dimension, no ones omits the permanent threat of regulators, the Fed considering to launch its owns digital currency while more questions are coming from politicians regarding the role of stablecoins -USDT , USDC: the regulatory environment got a lot cloudier as mentioned by Edward Moya.
While there is no doubt that speculative fatigue has set in and that regulation is imminent, the next bear market might not be a freezing one but a repricing phase needed to bolster the fundamental of the whole space, the long term of crypto is still optimistic despite the looming regulations. Stay positive and keep in mind this: just like no one could picture the need for Amazon in the 90s and only a few could see it dominate the worldwide commerce in 2000, nobody really know what the crypto-space will bring us.
