The crypto bear market continues to wipe billions of dollars’ worth of market value from projects, with Monday’s dramatic crash the latest installment of the downturn.
Amid all these, the sector has seen Terra (LUNA) virtually “die”, while this week has the community watching events around major crypto lender Celsius Network.
Markets are in ‘extreme fear’
Timo Lehes, the co-founder of Swarm Markets, says the price crash comes amid extreme fear in the markets.
He told Invezz in an emailed comment that this is what is driving the downturn – which despite not being “rational nor easy to watch” – is understandable.
Simply, it was inevitable for crypto to come back with a “hard landing” after the stratospheric upside over the past year and half. Bitcoin, which rose to highs of $69,000 in November 2021, is down to lows of $22,000. Lehes terms this as a classic example of every coin having two sides.
On the other hand the industry is still plugging away developing new ideas, technologies and solutions to problems. The fall of assets is not that far removed from listed businesses that have to operate in a negative market environment. Funding is more difficult to place and business leaders have to work harder to justify price levels.”
Lehes: Only viable projects to survive
According to Lehes, the crypto crash is what it will take to sieve the market and expose the “really viable businesses and projects.”
It happened to tech during the dotcom era; it will happen in crypto. He sees a huge shakeup happening already.
We’re seeing a big shake out underway. What will be left is the really viable businesses and projects.”
He notes that not all is gloomy as crypto has the opportunity to learn from past events similar to the current scenario. One of the biggest lessons is what happened in 2008 during the Great Financial Crisis.
As they say, history doesn’t repeat itself, but it often rhymes.”
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