As crypto makes its uncertain way through the depths of the bear market, many investors have decided not to trade and have taken their assets off exchanges.
That’s not to say that crypto investors aren’t still hodling. There are probably a few left standing, at least for now, but given the current environment of so many funds and lenders getting into difficulties, investors have taken the decision to get their assets off of the exchanges.
Glassnode is quoted in a Bloomberg article as stating that on-chain activity has lessened to an extent whereby this activity has dropped 13% since the November highs until now, and that these levels haven’t been experienced since the bear market of 2018/19.
According to a Glassnode newsletter from Monday:
“Bitcoin has seen a near complete expulsion of market tourists, leaving the resolve of HODLers as the last line standing,”
It was stated by Mike Novagratz, CEO and founder of Galaxy Digital, in an interview for the Bloomberg Crypto Report on Wednesday, that the reason for the crypto bear market is definitely macro, as the Fed has taken liquidity out of the markets with its hawkish policies over the last few months.
He also attributed the current issues in crypto to the big overleveraged players who have created “a ton of fear in the space”.
“What’s exacerbated this move in crypto is a bunch of leveraged players that had far more leverage than I think people thought, and so you can talk about Celsius or Three Arrows Capital”.
It’s Novogratz’s view that the fear that this has caused has led to a lot of credit being withdrawn. The resulting cascade has brought bitcoin down to the $20,000 level, which he believes is a “good target”.
The Galaxy CEO says that his company is affected by indirect exposure to the big crypto lenders currently facing possible bankruptcy, and he cites the “daisy chain effect” which has been caused by these companies lending and borrowing from each other.
However, he thinks that the leverage has been mostly burnt out.
“My guess is that leverage has been knocked out of the system, but Humpty Dumpty doesn’t get put back together right away. It takes a while, to kind of sort through - there’ll be bankruptcy proceedings in many companies.”
“It’s going to take a little while for crypto to regain a narrative and regain confidence.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.