Another correction or the start of a new bear market?
The recent 20% drop in the Bitcoin price over the past two weeks has been the most significant since June 2022. This has caused concern among market participants who are worried about a repeat of the 2022 situation, when the cryptocurrency market experienced a major systemic crisis.
However, Bitwise's Chief Investment Officer Matt Hougan believes that the current sell-off reflects more of a cyclical market dynamic and a general outflow of capital from risky assets, rather than a repeat of last year's scenario.
According to Hougan, 'bad news is already priced in', and the market may be close to exhausting the correction. He notes that macroeconomic factors, such as high inflation and the Federal Reserve's tightening of monetary policy, are putting significant pressure on cryptocurrencies, as well as other risky assets.
At the same time, Hougan emphasizes that the current correction has nothing to do with the systemic collapse of the industry in 2022, when major players like Terra/LUNA and FTX collapsed. Now it's more about a general decrease in risk appetite against the backdrop of an unfavorable macroeconomic environment.
Overall, the Bitwise expert is optimistic and expects the cryptocurrency market to soon reach a bottom and begin a recovery. In his opinion, this will mark the end of the current bear cycle, although a full recovery of the industry may take several more months.