Industry experts: It is healthy for the market to adjust in the bear market cycle

There is no denying that the crypto market is bearish, but some in the industry believe that these conditions will rid bad actors and create greater opportunities for future players.

Traders tend to lament negative price action and the relative difficulty of executing profitable trades in bearish market conditions. However, several leading analysts agree that now is the time to act, which will bring the biggest gains when the bullish sentiment returns.

Polygon (MATIC) co-founder Mihailo Bjelic told CNBC on May 27 that the current downturn and the massive sell-off earlier this month are exactly what the market needs.

Bjelic believes that the market has become "perhaps a little irrational, or maybe a little reckless," as the total cryptocurrency market capitalization increased 12.5 times between November 2019 and November 2021, an astonishing growth rate that exceeds most other traditional markets.

"When a moment like that comes, it usually takes (a) adjustment and at the end [is] healthy."

The market is currently undergoing a major adjustment. Since November, total market capitalization has fallen 60% from $3 trillion to $1.2 trillion, according to CoinGecko. Cointelegraph reported on May 28 that traders are still anticipating more pain, especially given that the last bear market saw prices drop roughly 80% overall.

Crypto market analyst The DeFi Edge added that the benefits brought by the bear market are consistent with the interests of most market participants. “Bear market is healthy for crypto growth,” the account tweeted to its 164,000 followers on May 29.

This reasoning is based on the observation that fewer new market participants (which scammers see as potential targets) enter during bear markets. Last year, Bitcoin (BTC) transaction volume peaked at 335,411 transactions on Nov. 9, which coincided with the price peak. On May 29, transaction volume dropped 38 percent to just 207,859 transactions, according to Blockchain.com.

Lower activity means fewer opportunities and lower profitability to run many scams, so they tend to disappear.

Bear markets are good for cryptocurrencies.

With dead weight removed, cryptocurrencies can soar to new highs.

— DeFi Edge️ (@thedefedge) May 28, 2022

Lower activity means fewer opportunities and lower profitability to run many scams, so they tend to disappear.

Jason Ye, a partner at crypto investment fund ROK Capital, explained that despite low prices and activity, bear markets are a golden time for traders to lay the foundation for greater success when market sentiment reverses. “In a bear market, it’s time to find the best fundamentals and focus on building products,” he told Cointelegraph on Monday.

"It's time for traders to deploy their cash reserves to gain an edge in the next bull market cycle. As always, the winners in a bull market are those who build in a bear market."

Alex Becker, a game producer at Metaverse gaming platform Neo Tokyo, echoed Ye’s sentiments in a May 28 tweet. He also believes bear market buyers are in the best position to profit in the next bull market. "All the money was bought in a bear market. Most of the losses were bought in a bull market," he said.

Becker added that while buying low and selling high should be a key factor driving crypto market participants, he thinks people on Twitter are the most obnoxious, which he called "ironic."

— Alex Becker (@ZssBecker) May 27, 2022

This place is so out of date.

Most of the losses came from bull market buying.

Which is ironic because all the money is bought in bear markets.

The funniest thing I find about crypto-twitter is that in a bear market everyone becomes unhappy and miserable.