The crypto bleed-out continues.<\/p>\n\n\n\n
Over the past week, the bitcoin price lost about one-third of its value, hitting a low of just over $20,000, but then recovering to $22,664 at the time of writing. Altcoins are bleeding too. Ethereum\u2019s price\u00a0ETH<\/a>fell 31%, CardanoADA<\/a>\u00a0is off by 16%, SolanaSOL<\/a>\u00a0dipped just under 10%, and XRPXRP<\/a>, BNBBNB<\/a>, dogecoin, Terra\u2019s luna are down 15%, 24%, 30%, 23%.<\/p>\n\n\n\n Is the bottom near?<\/p>\n\n\n\n While it’s hard to see in murky waters, “Shark Tank” star Kevin O\u2019Leary, who made a killing at the height of the dot-com bubble, says he doesn\u2019t believe we\u2019ve hit bottom just yet. \u201cYou don\u2019t get a bottom until you have an event,\u201d\u00a0O\u2019Leary told CoinDesk this week<\/a>.<\/p>\n\n\n\n What kind of event are we talking about, Kevin? Before we let him answer that question, let\u2019s take a good hard look at what\u2019s got the crypto markets down in the dumps.<\/p>\n\n\n\n [Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]<\/em><\/p>\n\n\n\n Zooming out<\/strong><\/p>\n\n\n\n Even though we\u2019ve seen a number of such \u201cevents\u201d, including Terra\u2019s collapse and the\u00a0implosion of the biggest crypto lender Celsius<\/a>, they were more an effect, rather than the cause of the broader risk-off sentiment in risk assets.<\/p>\n\n\n\n As I recently wrote<\/a>:<\/p>\n\n\n\n \u201cWho\u2019s to blame for this rout? Many analysts pin it on stablecoins. However, it\u2019s likely the other way around. The crypto market had been chugging downhill since May 4, which perfectly coincides with the Fed\u2019s half-point rate hike<\/a>. After that, stocks crashed and the tech-heavy Nasdaq lost 13% of its value. That makes sense. Cryptos are highly correlated to risk assets, especially tech stocks. And since they have a higher beta<\/a>, they work as a de facto amplifier of stock moves\u201d<\/p>\n\n\n\n Some analysts compare this sell-off to the tragic bursting of the first major crypto bubble back in 2018. After going parabolic and blasting past $19,000, bitcoin lost 80% of its value within a year.<\/p>\n\n\n\n But unlike today\u2019s sentiment-driven implosion, that crash was largely a result of a chain of panic events:<\/p>\n\n\n\n Many early crypto investors thought it was the end of the world. We all know what happened in the years to follow. Even at today\u2019s price, bitcoin is up more than 3X in under three years.<\/p>\n\n\n\n Looking ahead<\/strong><\/p>\n\n\n\n Nobody can tell where crypto will be next month or by the end of the year. But, one thing is certain: if recent market action teaches us anything, crypto markets won\u2019t reverse course until investors regain their risk appetite across the board.<\/p>\n\n\n\n For that to happen, we\u2019ll have to get some clarity to several macro headwinds, including the worst inflation in 40 years, the Fed\u2019s tightening, and the eventual fallout of the Ukraine-Russia war.<\/p>\n\n\n\n The good news is this crypto rout is cleansing the market of overhyped assets. And multi-billion dollar wipeouts are urging lawmakers to\u00a0create a clear regulatory framework for digital assets\u2014which can boost their institutional adoption in the long run.<\/a><\/p>\n\n\n\n The bad news, O\u2019Leary thinks the great cleansing is not over because we haven\u2019t really seen a cascade of panic events that he thinks define the bottom. He believes more crypto assets are heading for zero value.<\/p>\n\n\n\n \u201cPanic events define bottoms,\u201d says O\u2019Leary. \u201cIn the crypto world, we need someone to go to zero\u201d before the crypto can come back leaner and meaner.<\/p>\n\n\n\n Stay ahead of the crypto trends with <\/strong>Meanwhile in Markets\u2026<\/strong><\/a><\/p>\n\n\n\n