After breaking all records last November, most cryptocurrencies, including Bitcoin digital gold, have taken a dizzying fall.
After every announcement of new regulations, monetary policy tightening, or interest rate hikes, Bitcoin’s critics rush to announce its death. According to data from 99Bitcoins, the market’s No. 1 cryptocurrency has been declared “dead” at least 458 times since 2010 and 19 times since the start of this year.
However, ReSource co-founder Ashley Taylor Buck believes that Bitcoin is “never as alive” as it is today.
“Bitcoin is the most important use case for this neutral and objective third monetary system. It is also the only large-scale decentralized network that will be able to manage the volume of money necessary for sovereign states and nation states trust each other and transact with each other. Also, this one will never go away because blockchain runs on satellites in space,” Buck told Be[in]Crypto.
From a macro perspective, the two causes of the latest crypto crash are the US Federal Reserve (Fed) raising rates “to alarming levels” and massive over-indebtedness with margin calls and liquidations, explains the ‘ ‘expert.
The wave of Celsius Network liquidations has also had a major impact on the decentralized finance (DeFi) ecosystem. So Ms. Buck believes Celsius’ latest actions will potentially cause a long-term negative impact.
“There is also a lack of solid investments in the crypto sector, as most investments are speculative and based on future potential. Every time such a shock occurs in the system, it reveals the weakness of the pillars of blockchain in the real world,” she said.
Earth and Moon
The collapse of Terra (LUNA) and its stablecoin TerraUSD (UST) would also have received the latest crypto crash. In May, the stablecoin lost its parity with the US dollar and when the LUNA token tried to come to its rescue, it lost almost 100% of its value.
Initially, the Luna Foundation Guard (LFG) sold around $3.5 billion in Bitcoin to save UST and LUNA. Soon after, Terra co-founder Do Kwon came up with another plan, which ultimately failed.
Ms Buck believes that short-term projects will struggle to survive. She also believes that with the macro-systemic issues outside the sector, market recovery will heavily depend on the ability to develop new economic solutions.
“Systemic issues are here to stay. In order to get through this phase, our priority should be the development of new models with long-term viability,” she added.
Is there hope?
The crypto market has lost around two thirds of its market capitalization compared to November 2021. However, the optimism of venture capitalists and the latest fundraisings give a ray of hope to the crypto-sphere. For example, NFT marketplace Magic Eden recently received $130 million in funding. According to data from CoinMarketCap, the industry’s market capitalization is consolidating around the $940 billion mark.
Thus, Ms. Buck believes that the real projects will continue to develop and that the fundamentals are still intact. She also believes retail investors’ perception and confidence have been impacted by market circumstances.
According to her, it will take time for things to return to normal, as it is “difficult to restore trust”. Ms Buck also expects to see more impact-focused projects, particularly in the reimagined finance sector (Reimagined Finance or ReFi).
“We will likely see more liquidations and a collapse of mediocre projects. However, some good projects will also fall apart. In 5 to 10 years, Web 3.0 will become the next layer of the Internet. The current period also offers good opportunities for investors who wish to buy low and this will continue throughout the year”.
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