Crypto Crash scatters distrust among crypto investors
On May 12 2022, the crypto market imploded and crashed. The implosion was unexpected and shocked the crypto investors all around the globe. Each and every cryptocurrency in the market lost its value. Billions of dollars just disappeared in thin air from the crypto market. Bitcoin and Ethereum which are regarded as the top two cryptocurrencies around the world, also lost at least 55% of their value. The Terra’s based UST and LUNA were the most affected loosing almost 99% of their value. After the crypto market crash, a movement of distress was noticed among all the crypto investors around the world. But, ARK Invest’s Cathie Wood sparks the ray of optimism in times of a havoc like the crypto crash.
Cathie Wood’s statement about the revival of Crypto Market.
Wood is the founder of ARK Invest, an investment firm that primarily focuses on disruptive technologies and innovation. Cathie Wood points out at the major reasons for the end of bear market and revival of the crypto market:
- She thinks the correlation with stocks is an exception to the rule.
- She foresees an end to the hawkish moves from the Federal Reserve.
Crypto and stock market.
According to Wood, all equities, genetic revolutions, blockchain technology, and crypto assets began to behave similarly. She continued, “From the start of Covid-19, crypto assets began to mirror the Nasdaq, but there was no correlation prior to that.” Crypto was formerly thought to be a non-correlated asset that may help diversify a portfolio. This narrative will fall apart if cryptocurrency begins to follow the stock market.
End of Hawkish moves from Federal.
Another reason Wood believes the bear market will end is that she expects the Federal Reserve will relax some of its tightening policies. Crypto prices have fallen this year as a result of the Federal Reserve’s efforts to keep inflation low without causing a recession. The Federal Reserve raised interest rates by 0.50 percent, the largest increase since 2000. Wood believes the Fed will take no further steps to control inflation, allowing the market to recover from its slump.
It is for sure that, the period of bear market has caused a big dent in investor’s pocket as well as trust. Though the confidence about the revival is low among investors, Cathie Woods statements definitely spark a thought of restoration of the crypto market, ending the bear market. How long will the crypto market be in bear phenomenon and what more destruction it can do to the investors? Only time is the right factor to answer them out.