Investor Insights Report - Are We in a Crab Market?

The Cointelegraph Research Investor Insights Report is a premium report published monthly that highlights the most recent and significant blockchain industry insights. Find exclusive insights about Bitcoin, DeFi, NFT, GameFi, Venture Capital, Security Tokens, Mining, Crypto Stocks, Regulations, and Derivatives from our subject matter experts.

Are We in a Crab Market?

• The slump in traditional finance (TradFi) markets has been a headwind for the crypto markets. The risk-on to risk-off change has had a surprising impact on different sectors of the crypto sphere.

• Downward market pressures were only exacerbated by the collapse of Terra’s stablecoin, which brought down the overall market capitalization considerably.

• Macroeconomic forces have impacted venture capital (VC) firms to take a slight step back and approach projects with more caution and probably less capital allocation to reduce their risk exposure in the case of backing a bad project.

• We have seen neither a complete collapse of the crypto-asset market nor a complete lack of funding for future projects.

This leads to the question: Are we in an actual prolonged bear market or a “crab market?” There is an increased use case for blockchain and decentralized ledger technologies almost daily — that combined with never-before-seen industry and corporate adoption of the technology. Bitcoin’s price, as it has been in the past, is the perfect bellwether to watch the crypto market’s sentiment. Bitcoin has been holding steady and ranging from around $19,000–$20,000. This does show significant support by both retail and sophisticated investors and may produce a prolonged period of sideways action.

This accumulation phase is still subject to shocks from black swan events and macroeconomic conditions. However, busts have a silver lining. Boom periods for any asset class are the times when subjective speculation moves the demand past what the inherent qualities of that asset are. Busts are when the inherent qualities of that asset class shine through. In short, busts show the true strength of an investment. Bad projects scatter to the winds in times like these, and good projects with real use cases will be born during these crab-like markets.