Fear is currently gripping the entire crypto market, as investors recover from nearly $64 billion in losses from the crash of TerraUSD and its sister token, Luna. In fact, as of the past five weeks, the entire crypto market value has seen nearly $1 trillion in losses, spiking fear on all levels of trading. Add an ongoing war in Ukraine with no ceasefire in sight, a mass shooter epidemic engulfing the United States and you have the perfect recipe for all our investor panic.
The hesitancy to invest is so powerful right now that even typically safe havens like Bitcoin Ethereum have also seen a massive dip in their value. Not only have stablecoins been affected by the current global climate, but so have the major players. As of the time of writing, Bitcoin fell below the $30k support line that so many analysts tout and Ethereum dropped below its $2k support.
These developments may seem like the end of times, like all that good goes wrong is going wrong, and ultimately that those of us with crypto savings may have bet on the wrong asset…
Dear reader, fear not, for this seemingly apocalyptic time is but a time of opportunity hidden with an ugly facade. Jeffrey Ross, Managing Director of Vailshire Capital, reassured investors that if Bitcoin drops to $20k, this could be a “generational opportunity” for investors. Saying,
“I look at things like the 200-week moving average—that’s sitting at like $21,000 right now. Bitcoin in the past, when it’s gotten as bad as it can get, usually goes down and kisses that line. It can dip below, but then there would be tons of people—myself included—that would be backing up the truck to buy as much as possible.”
What Should We Think of The Market?
Markets ebb and flow. That is the nature of the economy on both the macro and micro-level—this belief is keeping institutional investors at bay in the crypto market. There are more investors holding Bitcoin than ever before, with all-time trading lows and a high amount of “HODLers”. These Hodlers or “Hold On For Dear Life” are the very reason that Bitcoin will rebound.
One of those Hodlers is Benjamin Cohen, host of the hit crypto show, “Into the Cryptoverse.” the crypto host believes that a correction is currently occurring in the crypto market. The crypto host says,
“If you look at prior moves and bitcoin bear markets, the pullbacks have been less severe each time. The first pullback was 94%. The second one was I think around 87%. The third one was 84%. So right now—from 69k to 25k—it’s a little over a 60% pullback.”
In short, the bear market we are currently experiencing is completely normal and within the guidelines of a well-performing asset. Crypto heavy hitters, Bitcoin and Ethereum are doing exactly what they should be doing.
Cowen later remarked that if the crypto market does go past the 84% pullback, then that may simply signal an alteration in how the market behaves.
“Now if bitcoin were to go down over 84%, then clearly the structure of the market is completely changing,” he adds.
Should We Still Be Worried About StableCoins?
Terra Luna is in the midst of a comeback, but no one knows if this comeback will stick and the market still seems to be afraid to go anywhere near algorithmic stable coins (and with good reason). But not all is lost in the stable coin community as algorithmic coins leave the favor of the community, others backed by real-world assets are making their way to the top of the crypto food chain.
The following projects are all expected to replace Terra as leaders of the stablecoin community:
EverGrow: A project that launched last year in September, this protocol is aiming to be the monarch of passive income. As of the time of writing, the project has already awarded more than $37 million to its EverGrow Coin investors.
With a modest market cap of only $200 million, this new stablecoin is aiming to take the market by storm. Road-mapping its own NFT marketplace, a content subscription platform, crypto wallets, staking pool, and even a Metaverse integration.
PoolTogether: The newest in crypto savings accounts, PoolTogether allows users to deposit other stablecoins like USDC and DAI onto either Ethereum or Polygon networks. Then, users can expect to gain an average of 9% APY every single day.
A key feature of this new stablecoin alternative is its ability to take your cash out whenever you want. No time commitments or requirements for staking your stablecoin.
Cardano: One of the top altcoins offers a haven for those that want to store their stablecoin and wealth somewhere it won’t vanish (aka, Luna), and Cardano offers exactly that, at a fraction of the gas fees found on Ethereum linked networks.
With an APY of 5%, one might not immediately be drawn to the lower APY—but stability and trust in a worthy protocol are what a percentage drop buys you with the Cardano staking pool.
As well as ease of use, Coinbase this year started offering in-app staking for Cardano’s coin ADA, allowing users to gain rewards of 3.75%—again low, but safe and trustworthy.
How to Move Forward?
Moving forward, we need to remember that markets move up and down. Disasters affect global markets in the short term, but ultimately this weather will pass. Just as the passing of the clouds happens every day after a storm, so too will these in the crypto market and trading community at large.
As the adoption of Blockchain technology continues to rise, so too will the confidence in its efficacy and its real-world uses.
Jeffrey Ross of Vailshare Capital ends the report with this,
“So like the internet, like cell phone adoption, like social media, [bitcoin] basically follows this S-curve of adoption. That’s what I think is going to happen.”