Crypto winters are actually good for bitcoin, experts say, because some foundational bitcoin projects, like the Lightning Network, were born during bear markets.
Bitcoin and the overall cryptocurrency market have experienced one of the most critical times since 2018, wiping out over $1 trillion in market value since the start of 2022.
The current crisis has triggered a wave of panic within the community, with bitcoin (BTC) miner sell activity reaching seven-month highs as mining profitability fell to October 2020 levels.
The bitcoin fear and greed index posted the lowest reading since pre-pandemic times in the third quarter of 2019, falling to 7 and indicating “extreme fear” on Wednesday.
These and other recent events in the industry are not good news – but only on the face of it, according to some industry experts and executives.
People in the industry keep repeating that bear markets are actually good for bitcoin and healthy for the crypto industry because they eliminate speculators and scams while providing space to build real, great products and services.
“The current situation is good for bitcoin in the long run, cleaning the market of leverage, scams and dishonest institutions,” Trezor Bitcoin analyst Josef Tětek told Cointelegraph.
According to Tětek, previous bear markets spawned many pivotal projects, including the Lightning Network, a major bitcoin-related project enabling cheaper and faster bitcoin transactions. The initial concept of the Lightning Network was formulated during the bear market of 2015.
Crypto winters and bear markets provide more opportunities for construction as speculation exits the market, Tětek noted, clarifying:
The crypto market needs to go through crypto winters in order to grow and mature, Dirk Klee, CEO of Bitcoin Suisse, told Cointelegraph. According to the leader, the quality, stability and security of crypto services and products become even more important in uncertain market conditions. He stated :
Like broader markets, bitcoin and the entire cryptocurrency ecosystem have historically moved in cycles, with many cryptocurrency watchers claiming that bitcoin has “never traded below from the peak of the previous cycle”.
According to Jesse Powell, CEO of Kraken, bitcoin price cycles are based “sort of on the bitcoin halving,” an event that happens once every four years that halves the block reward of bitcoin, which historically increased the demand for bitcoin and ultimately led to bull markets.
Powell is known for accurately predicting the crypto winter of 2022. His previous prediction that bitcoin would hit $100,000 by the end of 2021, however, fell short.
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“The Current Situation Is Good For Bitcoin In The Long-Term”: These Experts Explain Why Bear Markets Are Favorable For BTC
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