The crisis has triggered a wave of panic in the community, with the Bitcoin miners’ selling activity surging to seven-month highs as the BTC mining profitability has dropped to October 2020 levels.
Bitcoin’s Fear and Greed Index fell posted the lowest records since pre-pandemic times in Q3 2019, dropping to seven and indicating “Extreme Fear” on June 15.
These and other recent events in the industry do not look good, but only at first glance, according to some industry experts and executives.
People in the industry continue to reiterate that bear markets are actually good for Bitcoin and healthy for the crypto industry as they remove speculators and scams, while providing space to build real and great products and services.
“The current situation is good for Bitcoin in the long term, cleansing the market from leverage, scams and dishonest institutions,” Trezor Bitcoin analyst Josef Tětek told Cointelegraph.
According to Tětek, previous bear markets have spawned many pivotal projects, including the Lightning Network, a major Bitcoin-related project enabling cheaper and faster Bitcoin transactions. The initial concept of the Lightning Network was formulated during the bear market of 2015.
Crypto winters or bear markets provide more opportunities to build as speculation leaves the market, Tětek noted, stating:
“Bear markets are good for Bitcoin. Builders face less distractions and the fake “project founders” that were only looking for a quick VC funding and a naive retail exit liquidity disappear as quickly as they previously appeared. Real builders rejoice when all the bullshit gets washed out.”
The crypto market needs to go through crypto winters in order to grow and mature, Bitcoin Suisse CEO Dirk Klee told Cointelegraph. According to the executive, quality, stability and security of crypto services and products become even more important during uncertain market conditions. He said:
“Ultimately, that is what the industry needs in order to mature further, and we aim to live up to those standards every single day.”
In a similar way to broader markets, Bitcoin and the entire cryptocurrency ecosystem have been historically evolving in cycles. Many crypto observers argued that Bitcoin has “never traded below previous cycle peak.”
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According to Kraken CEO Jesse Powell, Bitcoin price cycles are based “sort of around the Bitcoin halving,” the one-in-four-years event that reduces the Bitcoin block reward in half, which historically increased Bitcoin’s demand and eventually led to bull markets.
Powell is known for accurately predicting the crypto winter of 2022. His previous prediction that Bitcoin would hit $100,000 by the end of 2021 failed though.