- As the crypto market matures and blends itself into the global financial system, “market efficiency” plays a key role in understanding the price swings.
- Coinbase owes two-thirds of the global crypto market decline to the current macro conditions.
There’s been a massive bloodbath on Satoshi Street this year in 2022, especially over the last two months. The broader cryptocurrency market has lost 66 percent of its valuations in just eight months since the November 2021 peak of $2.9 trillion.
As cryptos have been on the path of massive wealth erosion, Coinbase takes a look at the market efficiency in its newly published research report. Coinbase says that 70 percent of corrections in the crypto space are nothing unusual. The research report states that since 2010, there have been nine such instances where the crypto market plunged over 20 percent in a single quarter.
Interestingly, every time in such bear market conditions, the market takes two kinds of responses.
- Crypto Is Dead: Market players start seeing crypto as a big Ponzi scheme destined to fail. There’s massive anxiety and despair among investors leading to severe FUD. Responders in this category see the price drops as the bubble burst and advice everyone to exit before their investments turn to zero.
- The HODL response: Respondents in this category believe that investors should continue to HODL for a longer period…
