On Tuesday, bottom buying helped the market stabilize a bit into U.S. trading hours. 

Investors, still smarting from the Terra-LUNA debacle that wiped off billions of dollars in investor wealth, sold off cryptocurrencies earlier in the week amid a market slump over expectations that the Fed will act faster to tame inflation.

Forkast’s Danny Park and Joel Flynn spoke to a cross-section of market participants to gauge the sentiment in the market. 

The interviews have been edited for language and brevity. 

Danny Park: Has a “Crypto Winter” arrived in your opinion?

Toya Zhang, CMO, Bit.com: The crypto winter has come and it will last for a while. Over US$200 billion has been wiped out from the crypto market. Confidence and fortunes need to be rebuilt. Policies have to be formed. These take time. 

The crash has also exposed the weaknesses of some of the existing crypto businesses, for not being able to resist these adverse conditions. It is not the first time, nor will it be the last time of a global-level economic downturn that the crypto market has been hit terribly. After the UST crash, every algorithmic stablecoin will be tested as is the case with USDD.

It is the time for the stakeholders in this industry to strengthen their product offering and business models. Prepare for the spring and pick up and gear up for the next winter. 

Jeff Mei, CMO, ChainUp: I think this is just a start and each crypto winter is different. The one coming our way has the potential to be a turning point for our industry, as now even big players with high valuations such as Coinbase and Celsius are in different kinds of trouble.

Ben Caselin, VP, Global Marketing and Communication, AAX: 

This crash is not a sudden thing, it’s been happening over the past six months, actually. Markets haven’t been doing so well. 

There’s the macroeconomic factors, the rate hikes, the recessionary type of environment that we see now. There’s the risk-off kind of attitude from the bigger investors. There’s general FUD (fear, uncertainty, and doubt) in the market. But this is all just looking at the price. 

Price is just one of the indicators, an important one, but I don’t think we need to look at this from too much of a short-term perspective. There’s a lot of stuff happening. 

So far for USDC, despite all the FUD for many years has actually been quite okay. There’s a need for stablecoins and I wouldn’t write us off right now. It’s just that there’s some fear around algorithmic stablecoins at the moment. 

Well, here’s the thing, right? Yes, it could be winter. But then there’s also climate change. And so seasons are upset. They’re different. They operate differently. Maybe the winter will be over very soon. 

Park/Flynn: Crypto markets are reeling, hitting lows that we’ve not seen in quite some time. What’s your opinion on whether we’re anything close to the bottom?

Benjamin Stani, Business Development & Sales Director At Matrixport: 

It’s very hard to pin down any levels here because we’ve broken through many important resistance levels. And at the moment what’s going on is there’s major liquidity stress. So you don’t know which players are solvent yet. You don’t know how long this drag on liquidity will continue. 

I always say that, but especially around these times and invest in assets, that you have a very strong view that they will have value in the long run and do your dollar-cost averaging into these assets.

Mei: Bitcoin has broken down from the horizontal channel which it had been trading in since the beginning of May and is now trending downwards at levels that were seen during December 2020. Ether’s trend is even weaker, having fallen for 11 consecutive weeks. The levels we are at right now correspond to the highs that were recorded in 2018.

Park/Flynn: What is your view on when crypto markets are likely to recover?

Mei: The cyclicality of cryptocurrencies is strongly correlated with the halving of BTC mining output. The next halving will be in the first half of 2024, and the output will drop from six-fold to three-fold BTC. Judging from past experience, the arrival of the next production cut is the time to start a new round of market.

Stani: You don’t know how long this drag on liquidity will continue. I expect markets to continue to be very volatile in the near term. And for people who have not experienced the crypto bear market in the past, these markets can come very sharp and can last much longer than you would expect, so I would strongly advise anybody investing in crypto to be extremely careful with leverage.