According to the co-founder of a renowned crypto price-tracking company, the crypto bear market may be just getting started.
Crypto is in the midst of a macro-driven bear market, according to Bobby Ong, who also serves as CoinGecko’s chief operations officer, with Russia’s invasion of Ukraine and supply chain concerns causing ongoing inflation.
He claims that the Federal Reserve in the United States has “no choice” but to raise interest rates in order to combat inflation, and that growth stocks are suffering as a result.
He noted that with the engagement of institutions, crypto has become heavily tied to TradFi [conventional finance] and is being perceived as a tech stock/risk-on asset, therefore it has taken a battering.
In the last six months, the market cap of many publicly traded tech stocks has dropped by 75 percent. Are we getting close to the bottom?
Regrettably, we are only at the beginning of the Fed’s rate tightening cycle. To keep inflation under control, the Fed will have to keep raising interest rates over the next few quarters, and more pain is on the way. We warned our employees that the next 12-18 months would be difficult, he added.
An extended bear market
CoinGecko is expecting a prolonged bear market, according to Ong.
“We’re already in a bear market, and it’s not going to be brief.” We must be prepared for difficult times, be cautious with our spending, concentrate on increasing revenue, and build things that the community wants. It’s time to get our hands dirty and BUIDL [construct] for the next cycle,”he said.
Many of the investors Ong knows are “cash heavy” right now, according to him.
He explained that many of the investors he met are currently cash-strapped. Arthur Hayes expects more volatility and is only buying Bitcoin at $20,000 and Ether at $1,300. It’s time to be very selective with your purchases so that you can emerge stronger on the other side of the cycle.