Crypto market meltdown continues

Crypto Winter is here to stay

Protocol Times

Jun 14, 2022

Coo! It's the Crypto Owl, flying high above the bears, bringing the latest news of the day.

On today’s menu:

🕛 Estimated read time: 3 minutes & 5 seconds*

🛁COLD SHOWER: Crypto Winter 101: Why is everything crashing?

🥪NEWS SANDWICH: Top 6 crypto News from around the globe

🧃” WHITEPAPER” juicebox

CRYPTO WINTER 101: why is everything crashing?

As you may know by now, the markets have been experiencing a pretty steep drop lately. Just yesterday, the total value of cryptocurrencies fell below $1 trillion for the first time since January 2021. And today BTC prices dropped even further below $23k, while ETH has been circling around $1.2k. Ouch, yet again.

And you are absolutely right to ask… Why is this crash happening? Short answer - well, markets are complicated, and there's no single, clear-cut answer to why something goes up or down.

But let's zoom out and take a closer look at a chain of events leading up to it:

Inflation (8.3%+ in the US) —> Fed raises interest rates → Stock prices go down → Investors become fearful → They stop buying risky assets (think: crypto)→ Prices roll down the hill in Olympic skiis → Investors start selling to de-risk —> Prices falling down down down down down…

Even if the sky is falling, on top of it all we had not one, but TWO cherries on top:
1. Luna’s collapse hit investors below the belt over a month ago
2. Celsius “gambling” with ~$20B+ of their customers' assets just a day ago.

So, yeah, things are not that great right now…

And it’s very likely not gonna get any better soon.

But just like with the previous market cycles, there are stages we just must experience to keep the growth going:

Stage 1: “The Unwind”

This is where the excitement (and bags of greed) from the bull market still exists. Market is still full of mini-narratives that pop up for weeks at a time. Assets still have floors and valuations get reasonably cut, but companies don't make the tough decisions to kill products or go ahead with layoffs. Everything seems alright and it doesn't *feel* like a bear market at all. Market sentiment is optimistic. it feels like prices have pulled back to "realistic" valuations. Investors continue allocating and builders keep building… In general, life is good and only the weak hands sell.

Stage 2: “Forced capitulation”

This is where things start to get ugly - narratives die, prices fall 90%... and then another 90%, and layoffs kick in across the board. Diamond hands become forced sellers as they sell not because they want to, but because they have to. I’m sure Celsius doesn't want to sell, but things do not look bright and they might have to. And Celcius will not be the only one, there will be more funds, more companies, and more individuals like it going down the same liquidation road.

Mainstream media and cynics will rise up, laugh and shout "I told you!”. And the lower prices go, the louder the media will become. Fueling the anger and disappointment until all of the excitement and overhyped projects are gone.

And, yes, this is where we are right now - Stage 2. All that is left is to embrace it and weather it out. At the end, as previous cycles have shown, this ugliness is only temporary - it will pass, and as history shows those who survive the turbulent bear ride, will be rewarded!

Ps. Do you know what comes after stage 2? Yes - Stage 3! But more about it next time.

TOP 6 CRYPTO NEWS FROM AROUND THE GLOBE

The Crypto world never sleeps, never gets tired, and never stops surprising us. I picked a few noteworthy headlines just for you :

TREAT OF THE DAY

MORE TREATS

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Disclaimer: This newsletter is strictly educational. None of this information is intended to be financial advice. Always do your own research and act responsibly with your profits

Protocol Times

Crypto market meltdown continues

Crypto Winter is here to stay

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