Predictions being made by well-known stock market analysts indicate that the melting down of the crypto market is not entirely over. Investors can expect to see a few more incidents like that of Terra and Three Arrows Capital, a hedge fund for crypto. The biggest events are sort of behind us, say analysts. Despite the abovementioned incidents and that of Celsius, it is suggested that investors brace for more.
Every one of these bankruptcies and meltdowns did not happen in a vacuum and they all leave behind a host of problems for involved parties. The upside to these events is that crypto markets being efficient, these events played out as they should. According to Dan Morehead, Pantera Capital’s CEO, his company’s funds focused primarily and heavily on altcoins. They have now diversified to include more investments in BTC to reduce risk. In his opinion, it is typical for bear markets, especially in crypto and the altcoins sector to perform below par compared to BTC. This scenario played out as he expected and when it is time, he would rotate funds back into altcoins.
Drawing a correlation between risk assets like stocks and BTC, Mr. Morehead said that the spikes that occur during bear markets has lasted a lot longer. These correlations spike used to even out faster in previous years, but not so in 2022. This is hardly the first instance when Mr. Morehead predicted a decoupling between BTC and stocks. He and another associate predicted that BTC would definitely decouple from traditional assets, in spite of high interest rates. This prediction was made in February 2022 and didn’t materialize three months later.