Tom Loverro, a long-time crypto investor who formerly served on exchange Coinbase’s board, says it may take years before markets recover from a crypto winter.
Loverro said in a Twitter thread the ongoing crash isn’t a black swan event, but is rather the result of rising interest rates and inflationary pressures. He expects investors to suffer until rates stabilize.
His comments come amid one of the worst downturns in crypto history, which has wiped out over $1 trillion from the market this year. Recent market weakness saw Bitcoin slump to its lowest level since late-2020, along with most major altcoins.
Timeline for a crypto recovery
Loverro, who claims to have experienced crypto market cycles since 2013, says that the space is likely to fall further in 2022. Most of 2023 is also expected to be lukewarm for crypto, before an eventual recovery towards the end of the year.
A crypto bottom, according to the former Coinbase board member, is yet to come. He also expects the price declines to drive a majority of players out of the market.
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The bottom will come not during this current fear & loathing phase but later, after indifference sets in, crypto is no longer making headlines, and the tourists have left . That process will take many months.
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He advised investors to have enough cash to get through the next two to three years, in order to survive the winter. To Loverro, retail investors dictate most of the market’s movement.
How long can the winter last?
Several market commentators have noted that this crypto winter is different from the past ones, particularly due to the macroeconomic factors. 2022 represents the crypto markets first tryst with tight monetary policy.
Crypto rallied over the past two years primarily on the easy money being perpetuated by the Federal Reserve. Its correction now reflects the end of that era.
As such, the market is likely to remain in winter until the Fed reverses its policy and brings rates lower again.
Some observers, particularly Michael Burry of “The Big Shot” fame, say this may happen sooner than expected.
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