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Matt Hougan: The Crypto Market Downturn Is Not Just a Brief Correction
According to Hougan, the current situation resembles the crypto winters of 2018 and 2022, when the overall decline continued despite positive news — growing cryptocurrency adoption and improving attitudes from the authorities of major countries.
“What is happening now is a classic bear market. Excessive use of leverage combined with the habit of early investors taking profits is, for now, only reinforcing the negative trend,” the executive explained.
The downward trend began in early January, but many investors did not pay sufficient attention to it, lamented the Chief Investment Officer of Bitwise.
“The inflow of funds from institutional investors masked the true weakness of the market. Without support from exchange-traded funds and purchases of U.S. Treasury bonds, Bitcoin’s decline could have reached 60%,” Hougan said.
In his opinion, it is difficult to predict the exact timing of the crypto market’s recovery, but it is likely that it is slowly moving toward a gradual rebound rather than a deeper fall. Catalysts for growth could include U.S. economic expansion and the potential recognition of Bitcoin by individual states, Hougan added.
Earlier, analysts at hedge fund Pantera Capital stated that the crypto market has entered a “cooling phase,” where the use of leverage is decreasing and major cryptocurrencies have undergone a deep correction.
See also: "Bernstein analysts named the timeframe for Bitcoin reaching a bottom"
