Paul Veradittakit, a partner at crypto fund Pantera Capital, said a crypto bear market has likely begun, but does offer some opportunities.
With valuations down all around, Veradittakit sees this time as a great opportunity to invest, given that high-liquidity cryptos trading at more accessible levels. He added that a prolonged period of market weakness could also weed out the more successful, long-term projects.
Still, the market is also expected to see the entry of fewer new tokens, with most upcoming projects likely opting for equity deals for funding.
Bear market decidedly in play
Crypto markets have seen extreme consolidation this year, with major Bitcoin now trading over 50% below a record high. The token is also about 60% off its highs hit in 2022, and is currently trading around $30,000.
Veradittakit said that investors could consider secondary markets, as well as simple agreement for future tokens models to seek value in such an environment. With crypto markets all severely down, several venture capitalists will be looking at taking some risk off their portfolios.
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Most major altcoins are also down severely, with Ethereum trading just around the $2000 level- a far cry from its record high of $4,800. Total crypto market capitalization has fallen by over $500 billion so far in May.
Crypto weakness to continue for now
The key factors behind the crypto crash this year- rising inflation and interest rates- are still in play, and are expected to keep sentiment dampened for the near future.
Some analysts have predicted that prolonged weakness could last until 2024. Recent data showed that U.S. inflation will likely cool at a much slower pace, while the ongoing war between Russia and Ukraine is also expected to dent global energy and food markets.
Still, historically, bear markets have usually given way to record-high runs. It remains to be seen whether this will be the case. Market weakness also allows several more investors into the market, given that valuations are approachable.
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