Hopes that the future of crypto will soon thaw seem more distant, the chief executive said Financial Newsas many prepare for a bear market until 2023.
Jean-Marie Mognetti, CEO of CoinShares, said he expects the industry to “suffer for at least 18 months.”
However, he added that minor repairs may begin in August next year. “Crypto is not for the faint of heart,” he said.
Crypto prices have been on the decline since the collapse of stablecoin terraUSD and related cryptocurrency luna caused a wider market crash earlier this year.
They took a further hit after data showed US inflation picked up faster than expected in September, dashing hopes that the Federal Reserve will slow the pace of its planned rate hikes.
Bitcoin fell more than 4% on October 13 to below $18,400, nearly a yearly decline and represents a 61% year-over-year decline. The world’s largest cryptocurrency by market cap has hovered between $19,000 and $20,000 since early September.
Analysts say the value of the crypto – which has become more closely related to the broader stock market this year – is unlikely to break its current range until the Fed starts cutting rates.
‘Testing’ period for crypto companies
The sector has seen several companies file for bankruptcy or insolvency in recent months, partly as a result of falling valuations, including lender Celsius, brokerage Voyager Digital and hedge fund Three Arrows Capital.
Some worry the waves aren’t over yet. This month, South Korean crypto investment firm Blockwater defaulted on a $3.4 million loan to lender TrueFi.
Marcus Sotiriou, an analyst at GlobalBlock, said it was “another example of the chaos caused by a centralized entity taking too much influence and risk”.
Wrong boss FN he saw some more big loans maturing in the last quarter, which can be “make-or-break” moments for sizeable market players.
Serhii Zhdanov, CEO of the crypto exchange Exmo, said there are “no signs of a turning point in the near future. Growth seems impossible for the crypto market in the last quarter.
He added: “In general, this crypto season is a testing period. Uncertainty tests the stability of all market players and identifies weaknesses in the sector.
Amid the turmoil, traditional financial players have moved into digital asset markets.
The most famous is BlackRock, which announced a partnership with Coinbase in early 2022 and launched a private bitcoin trust for institutional investors.
Adrien Treccani, CEO of Metaco, a crypto custodian that has partnerships with Citigroup, Société Générale and BNP Paribas, said that bear markets are “irrelevant” for institutions.
“They may be happy, because they see this as one more opportunity to reach out and see themselves as the saviors of the market.”
To contact the author of this story with feedback or news, email Alex Daniel