The Crypto Bubble Is Bad, Right? Well, It Is Complicated

It has been a pretty bad couple of weeks for crypto investors around the world. Not only has the crypto market plummeted for the second time this month as the bubble burst but events like Terra’s downfall have shaken the ecosystem to its core. Fortunately, despite the fear and doubt that these have caused, the current situation has also resulted in new opportunities and positive changes for the space as a whole.

Not only is the crypto market far from the only market currently crashing but the space has also survived similar crashes in the past. Back in 2018, many believed that crypto was done as a result of the ICO boom, worries about a regulatory crackdown, exchange hacks, and many other events. However, despite such predictions, cryptocurrency perdured and grew even stronger as more stable and efficient safeguards were put in place.

It is not a surprise that most experts agree that while the current crypto crash is certainly alarming from a financial perspective, it is temporary. Just like stocks, real estate, and gold have crashes and corrections just to recover from them eventually, crypto is also cyclical. Vitalik Buterin shared his opinion about the current state of the market in a recent interview with Fortune:

“Crypto has had ups before, and it has had downs before, and it will have ups and downs again. The down periods are certainly challenging, though they are also often the periods where the most meaningful projects get nurtured and built”

The outgoing bear market represents an opportunity for crypto projects to gain notoriety based on their technological relevance and innovation. Blockchain networks like Ethereum, Cardano, and Polkadot have already benefited from the lessons taught by recent developments. Charles Hoskinson, Cardano’s founder, offered an update on the impact of Terra’s crash on Cardano’s upcoming Vasil hard fork:

“After the collapse of LUNA, we decided to add an additional test harness to what we’re doing and think really carefully about some things. It’s taking a bit more time but we figured that the abundance of caution is well rewarded these days. We’ll just keep building.”

From an investment perspective, the bubble burst is also more multifaceted than most media and people would make investors think. Bubbles have the potential to drive investment to areas that favor innovation, allowing projects in them to get off the ground. In a similar manner, projects that rely on speculation instead of strong foundations are weeded out more often than not. 

Once you understand the potential positive ramifications of a bubble, it is easy to see why investments opt to get altcoins. The potential profit that can be gained from investing in the right altcoin during a bear market is more than enough to allure investors of all levels. However, this doesn’t mean that investing in any altcoin is the way to go as, in fact, choosing the right altcoin is in fact even more challenging than during a bull run.

Back on June 8th, Grit Daily House saw Linqto’s Chief Strategy Officer Karim Nurani, Journey’s Co-Founder & Chief Metaverse Officer Cathy Hackl, and Contrarian Thinking’s Founder Codie Sanchez, sit with CoinDesk-s Jenn Sanasie to talk about the crypto market bubble. Titled “Where Is the (Market) Bubble?”, the panel was full of important insights ranging from the metaverse’s relation with the bubble to how investors can navigate the current bear market.

If you missed the chance to attend Grit Daily House in person and to hear what these experts have to say about the Yin and Yang that a bubble can be, worry not. Not only will you be able to watch the panel in the video below but you can also find other panels on Grit Daily’s official YouTube Channel.