There will be a crypto winter, but it will be a “warm winter,” predicts one bull. Remember I told you guys about crypto winter? If you haven’t read the article, see it here.
Even if the price of bitcoin has dropped by more than 50% from all-time highs, Race Capital managing partner Edith Yeung insisted that there is “so much more than that.”
She stated last week that bitcoin is a long-term bet and that the “warm winter” will essentially drive out everyone who truly [wants to be] there for short-term benefit.
The phrase “crypto winter” describes a protracted period of low market prices for digital coins.
Since the peak of a significant surge in 2021, cryptocurrencies have lost around $1.9 trillion in value.
The largest digital currency in the world, Bitcoin, is currently 68% below its record high, reached in November at just under $69,000.
Yeung stated that she is still optimistic about digital tokens in the long run since “crypto is actually about Web3”.
The term “Web3” has gained traction in the cryptocurrency community. The next generation of the internet, according to proponents, is “decentralized” and not controlled by a small number of powerful technology companies.
Cryptocurrency and blockchain technology, according to proponents, may play a significant role in that. For instance, a Web3 service might function on a specific blockchain like Ethereum or Solana. To access a certain service or even to own stock in an app or firm, users might need to own the tokens connected to those blockchains.
According to Yeung, a whole generation of internet users truly believe that “the internet should be owned by us” and that “you cannot commercialize my data anymore.”
The ownership of Ethereum or Solana is basically the user owning that piece of the token, which is merely a portion of that internet, which is why there is such a push with cryptocurrency.
Yeung predicted a “warm winter” for the cryptocurrency market, but the problems the sector is currently facing are unprecedented.
The abrupt collapse of an algorithmic stablecoin dubbed TerraUSD, which caused its sister token Luna to lose all of its value, served as the catalyst for the roughly $2 trillion decline in the value of cryptocurrencies. TerraUSD was heavily exposed by a number of cryptocurrency businesses, notably the now-defunct hedge fund Three Arrows Capital.
In the meantime, lending companies like Celsius that made hazardous trading wagers experienced liquidity problems and eventually filed for bankruptcy.
These problems have spread throughout the bitcoin sector.
One of the detractors of the term “warm winter” is James Butterfill, the head of research at CoinShares. He referred to the collapse of Three Arrows and the sharp decline in bitcoin prices as evidence that the crypto winter has been “brutal.”
‘Bitcoin values have declined by 74% peak to trough at one time,’ Butterfill wrote on Monday. ‘This roughly approaches the 83% decline experienced in 2018 and must be regarded in the perspective that the market is substantially bigger and has a much broader investor base currently than it had back then.’
According to Yuya Hasegawa, a crypto market analyst at the Japanese crypto exchange Bitbank, the biggest obstacle facing cryptocurrency at the moment is the uncertainty surrounding the Fed’s monetary policy and if the central bank will decrease the pace of interest rate increases.
Markets are waiting for Federal Reserve Chair Jerome Powell’s address at the Jackson Hole conference on Friday regarding the Fed’s upcoming policy decision. According to Hasegawa, any halt in the rate hikes could be advantageous for the cryptocurrency markets.
My mid-term prognosis is somewhat optimistic because I believe the Fed will eventually have to confront and address certain indications of an economic slowdown, according to Hasegawa.
The economic outlook is still mixed, Butterfill noted, making it difficult to forecast the Fed.
“A shift away from hawkishness might be very positive for Bitcoin prices. A dovish Fed policy might cause it to break out of its $20,000-$25,000 trading range, just as hawkish Fed policy caused this bear market to begin in December/January, he suggested.
Ether vs. Bitcoin
The token that is native to the Ethereum blockchain is ether, the second-largest cryptocurrency in the world after bitcoin. The native coin of Solana, a public blockchain that facilitates decentralized financial applications that seek to replicate established financial systems like banks and exchanges, is called Sol.
Yeung from Race Capital responded that the two cryptocurrencies are “extremely different” when asked if Ethereum has more solid fundamentals than bitcoin.
She emphasized that “Bitcoin is a digital gold,” comparing it to “decentralized cloud services” like Ethereum and Solana, where applications are developed on the blockchain network but are managed by “many, many individuals.”
Blockchains like Ethereum and Solana advertise themselves as platforms for which programmers can build applications. Ethereum and Solana are similar to Bitcoin; however, Bitcoin was designed to be a payment service.
Since both digital coins bottomed out in June as a result of a hotly anticipated Ethereum network upgrade, ether has so far greatly outperformed bitcoin.