FTX hole, macro factors, and repeated breaches of user trust have heavily impacted the crypto industry this year. Companies must regain users’ confidence in the security of their organizations in order to gain ground.
A market update for December from Arcana Senior Analyst Vetle Lunde highlight expectations that it will take some time for any potential recovery since the companies faced reputational damage in response to FTX.
Furthermore, Several indicators show that the markets will reach an all-time low in Q1 of 2023. Digital assets have depreciated by 75% from the start of this year’s bear market. Analysts predict that the next dip could fall between 5%-10%.
According to Lunde, there is an unresolved contagion and a decrease in trading volumes, making it hard for investors to invest right now. Furthermore, Lunde added that “Still, the deep drawdown is in favor of maintaining and accelerating a dollar-cost averaging strategy in BTC.”
In addition, other macro-events might provide additional insight. December 12th will be more revealing inflation report and the final FOMC Press Conference of the year.
Lunde urged investors against investing in yield-bearing assets held on centralized platforms. He said the yields don’t outweigh the risks of spreading contagion and potential bankruptcies.
Additionally, Centralized exchanges require users to complete transactions through intermediaries who set the rules and fees for each transaction. Decentralized exchanges allow users to trade without intermediaries by matching buyers and sellers on a peer-to-peer network.
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“Overall, [bitcoin] and crypto seem eerily stable after absorbing the FTX shock, and potential contagion-related knock-on-effects loom. In essence, there are a bunch of arguments in favor of a cautious approach to the market, and 2-10% yields on your precious hard-earned capital are definitely not worth the associated risks,”
Lunde said.
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