According to cryptocurrency-focused bank Silvergate Capital, the bear market that’s affecting the whole digital asset industry may not be over yet and could cause some more suffering over the next few quarters.
Over the coming quarters of the year, the cryptocurrency industry may still face some challenges for some exchanges and crypto funds, but “at some point, all of that will be done, and then we’ll simply be waiting for what’s the next catalyst,” said Alan Lane, SilverGate CEO, and former TradFi banker.
Given the wider global economic reset, investors shouldn’t, according to Lane, compare the present crypto price decline to earlier ones as digital assets have dropped in line with macro trends like rising rates and inflationary pressures.
Despite the recent failures of some overly leveraged financial organizations connected to cryptocurrencies, Lane is still in favor of adopting Bitcoin for its lending program.
“We continue to be very interested in lending against bitcoin,” said Lane. “We think those are some of the best loans we’ve ever made, and we want to keep expanding that.”
Bitcoin (BTC) dipped to a low of $21,941 on July 23. At the time of publication, Bitcoin was changing hands at $22,267, still down 2.11% in the last 24 hours while still up 5.12% weekly.
Over the past 30 trading days, the price of Bitcoin has started to separate from conventional markets. Its 30-day correlation with the S&P 500 has dropped to 0.78. While its 90-day correlation with the S&P 500 sits at 0.96, indicating that the two have been moving in lockstep.
As miners shut down their equipment on Thursday to reduce the power demands on electricity systems battling with a U.S. heat wave, notably in Texas, the difficulty of mining a bitcoin block decreased by 5%.
Every two weeks, the bitcoin mining difficulty is automatically adjusted to maintain a roughly 10-minute mining period for new blocks. The difficulty rises higher when more computing power is added to the network, and lower as computing power is removed from the network, as has been the case recently.
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