Is a Crypto Bear Market Coming?
Volatility is something that the crypto space has become known for. It is a regular part of the weather that our industry experiences. This doesn’t necessarily make it easy. Crypto flash crashes and bear markets can be very hard for people who have a lot of money invested and even harder for people who just entered their positions recently. There are concerns that we are headed into a bear market now, and there were similar concerns during the Q2 of 2021 after a significant flash crash in May.
Bull and Bear markets are terms taken from traditional equities that are not necessarily fitting for the modern crypto industry. Technically, an asset is in a bear market when it sees a 20% correction over a period of months, but in crypto, 20% price swings can happen in the matter of hours, and then entirely reverse course by the next day. In the short term, it is entirely unpredictable.
The big fear in the markets currently is the idea that we will see a “crypto winter” similar to 2018 and 2019, where most of the volume in the markets and attention on the industry vanished. Many of us who lived through those days have been left shaken, constantly fearing another prolonged bear market. However, the conditions in the market were much different back then because there was essentially no reason for people to stay in the markets aside from speculating on the price of various different crypto assets.
There were really no ways to earn yield, NFTs were just getting started with a few small projects and there were very few active applications that people could actually use. Now, people can earn yield in DeFi no matter what the market is doing, and the booming NFT market seems to have decoupled from the price action of the broader crypto space. We also have innovations like play to earn gaming, which is allowing new people to enter the markets without a significant financial investment.
Many people have a problem with the phrase “this time is different,” but this time was truly different.
Even the bull market that we saw over the past two years has been nothing like anyone expected or predicted. Plan B’s famous “Stock to Flow” model, which many Bitcoiners depended on to predict the Bitcoin cycle, was invalidated by the market conditions of the past year. The “blow off top” of parabolic movement that typically happens at the end of bull markets never came either, adding to the confusion among traders. The sentiment is much different this time around as well. Today, the biggest fear is that we have a few years of weak price action, but back in 2018, there were very few people who believed that the industry even had a future. Now we have some of the biggest funds in the world diving into crypto, and employees at traditional tech companies are leaving their jobs in large numbers to go work with DAOs or Web3 companies.
If the bull market was novel and unpredictable, then it stands to reason that potential bear markets will also be much different than we expect as well.
Bear markets are not something that should be feared in crypto either. Stenver Jerkku, Chairman of Solid World DAO, pointed out in a recent meeting that “some of the best opportunities are found in bear markets.”
There were massive opportunities for those who stuck around and continued to pay attention to the industry after the crypto prices crashed in 2018. Many of the largest DeFi platforms, like Uniswap and AAVE launched during the market, and the people who got involved back then are very happy with their decision today, even after the corrections that we’ve seen recently.
At Solid World DAO, we will continue to build our project regardless of market conditions because we believe that this technology, and our use-case, has the power to save the world.
To maximize the success of our mission, we will plan to launch our token when there is a strong sentiment in the markets, while building our platform and our community along the way. We are collaborating with many veterans in the industry to plan this out just right.
Solid World DAO wants to make a difference in the world and save the environment, so market conditions are just a small detail in the larger picture. We believe that blockchain technology will be an important tool for funding and coordinating sustainability efforts, and these tools will be available regardless of market conditions.
