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Does it make sense to look back at previous crypto market crashes?
Why comparing the current market fall to the notorious 2018 crash makes no sense.
With Bitcoin's price having fallen by half from its November peak, investor sentiment has become increasingly pessimistic, and the focus has switched away from making ATH predictions and towards arguments over the currency's possibility for recovery.
The present crypto fall is part of the same broader backdrop as the equities market slump, with tech stocks recently dropping to new 14-week lows.
However, while most agree that investor concern was fuelled by the potential of increased interest rates and political tension, with the Ukraine-Russia conflict heating up, can looking at the macros justify the worry of the 2018 bear market repeating itself?
How awful is it?
The danger of 2018 repeating itself has crept back into the bull-bear market argument.
"Macro-induced downturns have more structural similarities to March 2020 than 2018 (which was a crypto slowdown in a risk-on climate)," Zhu Su, co-founder of the crypto hedge fund Three Arrows Capital (3AC), said on Twitter.
To bolster his case, Su "reminded" of three rate hikes in 2017–the year that saw the largest crypto rally in history.
The year 2018 will be remembered with dread, as the price of Bitcoin plunged about 65 percent from January 6 to February 6.
By September of that year, the MVIS CryptoCompare Digital Assets 10 Index had lost 80% of its value, making the cryptocurrency market meltdown worse in percentage terms than the Dot-com bubble's 78 percent collapse in 2002.
What happens next?
Following the 2018 fall, it took over three years for the price of Bitcoin to return to the all-time high hit in late 2017.
However, the crypto market has grown into an entirely different beast–in both scale and complexity.
Just looking at industries like DeFi and NFTs demonstrates how the current market is unrelated to 2018 conditions.
Jim Cramer, who runs the CNBC Investing Club, claimed he expected "a surge of money moving from crypto into equities," as he pointed to his list of recommendations–only to be reminded by Su that regular investors are already given a better incentive.
"There is zero possibility Millenials will buy Brazilian commodity extractors, Russian banks, or Chinese life insurance companies," Su stated, adding that "no one is going to buy value stocks or utilities when these currently yield considerably higher in DeFi."
Meanwhile, the plethora of institutions that have entered the field in recent years will undoubtedly play a part in the market response.
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By Crypto PiratesWhy comparing the current market fall to the notorious 2018 crash makes no sense.
With Bitcoin's price having fallen by half from its November peak, investor sentiment has become increasingly pessimistic, and the focus has switched away from making ATH predictions and towards arguments over the currency's possibility for recovery.
The present crypto fall is part of the same broader backdrop as the equities market slump, with tech stocks recently dropping to new 14-week lows.
However, while most agree that investor concern was fuelled by the potential of increased interest rates and political tension, with the Ukraine-Russia conflict heating up, can looking at the macros justify the worry of the 2018 bear market repeating itself?
How awful is it?
The danger of 2018 repeating itself has crept back into the bull-bear market argument.
"Macro-induced downturns have more structural similarities to March 2020 than 2018 (which was a crypto slowdown in a risk-on climate)," Zhu Su, co-founder of the crypto hedge fund Three Arrows Capital (3AC), said on Twitter.
To bolster his case, Su "reminded" of three rate hikes in 2017–the year that saw the largest crypto rally in history.
The year 2018 will be remembered with dread, as the price of Bitcoin plunged about 65 percent from January 6 to February 6.
By September of that year, the MVIS CryptoCompare Digital Assets 10 Index had lost 80% of its value, making the cryptocurrency market meltdown worse in percentage terms than the Dot-com bubble's 78 percent collapse in 2002.
What happens next?
Following the 2018 fall, it took over three years for the price of Bitcoin to return to the all-time high hit in late 2017.
However, the crypto market has grown into an entirely different beast–in both scale and complexity.
Just looking at industries like DeFi and NFTs demonstrates how the current market is unrelated to 2018 conditions.
Jim Cramer, who runs the CNBC Investing Club, claimed he expected "a surge of money moving from crypto into equities," as he pointed to his list of recommendations–only to be reminded by Su that regular investors are already given a better incentive.
"There is zero possibility Millenials will buy Brazilian commodity extractors, Russian banks, or Chinese life insurance companies," Su stated, adding that "no one is going to buy value stocks or utilities when these currently yield considerably higher in DeFi."
Meanwhile, the plethora of institutions that have entered the field in recent years will undoubtedly play a part in the market response.
Support us!