The crypto market’s long-term fundamentals look promising, despite the shakeup in October and November that has left asset prices down and investor sentiment to crater, according to Hunter Horsley, CEO of investment firm Bitwise.
Horsley stated that the traditional four-year market cycle is obsolete, replaced by a more mature market structure and altered dynamics due to the pro-crypto regulatory pivot in the US. He elaborated in a recent X post:
“Since the launch of the Bitcoin ETFs and new administration, we've entered a new market structure: new players, new dynamics, new reasons people buy and sell.
Horsley expressed optimism, suggesting that the market has likely been in a bear market for nearly six months and is nearing its end. He believes the current setup for crypto is stronger than ever.
These comments present a contrasting viewpoint to prevailing crypto investor sentiment, which has plunged to its lowest level since February. Asset prices remain significantly below their 2024 highs, contributing to widespread market fear.
Market Sentiment Plunges to "Extreme Fear" Amidst Price Projections
The "Crypto Fear and Greed Index," a key indicator of investor sentiment, currently stands at 16, signaling "extreme fear" among market participants.
Market analyst and CoinBureau founder Nuc Puckrin noted that despite a 25% dip, which is the smallest correction-level drop observed in this cycle compared to previous dips exceeding 30%, investor sentiment has nevertheless cratered.
The price of Bitcoin (BTC) recently fell to a six-month low of $94,590, prompting analysts to project further downside potentially reaching the $86,000 level.
Investor and financial educator Robert Kiyosaki attributed the crypto market downturn to low liquidity levels. He anticipates that crypto and precious metal prices will increase once the government resorts to increased money printing to finance budget deficits.
Liquidity is a significant driver of asset prices. High liquidity, often resulting from low interest rates and an expanding money supply, tends to drive prices upward, while lower liquidity and constrained credit typically lead to lower asset prices or market stagnation.
Although the United States Federal Reserve has begun to lower interest rates, data from the Chicago Mercantile Exchange (CME) indicates that only approximately 44% of traders forecast a rate cut in December.