Will A Thinned-Out Market Be The Basis For Crypto's Resurgence?

Ever since Bitcoin and Ethereum peaked in 2021, conditions in the crypto market have taken a turn for the worse:

Cryptocurrencies are reflecting the heightened volatility that comes with war, continued surging inflation, and hawkish U.S. monetary policy.

The current bear market emerged as a consequence and investor sentiment shows little sign of improving anytime soon.

Looking for a silver lining in a cloudy sky, a number of crypto firms have weathered the storm, with mega exchanges Bybit and Bit.com noted for leading the herd of remaining bulls. And one mustn't forget that crisis can mean opportunity.

Opportunistic, overleveraged crypto firms have now been dumped by the wayside, leaving the remaining players with a clearer run at the market. They should now double down on user experience, providing the services and trades that their customers want most.

This way, the market can prove that it's no longer a bandwagon and is instead populated by firms with workable business models and strong financial fundamentals.

Jerome Powell's speech at last week's Jackson Hole Economic Symposium, however, would have been difficult viewing for even the most bullish market participant.

Following such an unwavering position, the crypto market trended further downwards with Bitcoin falling sharply to trade below $19,000 on Wednesday morning, hitting its lowest level since June.

The premier digital token has shed more than 6% so far this week, pushing the sector's overall market value under $1 trillion. This comes as altcoin prices also decrease, with Ether plummeting by almost 8% and DeFi platforms such as Solana losing more than 12% of their value.

In more grim reading, losses arising from cryptocurrency hacks amounted to $1.9 billion in the first half of the year. Solana declared this month that several wallets holding its assets had been breached with at least 7,700 believed to be affected.

This news followed revelations from Nomad – a so-called blockchain bridge – acknowledging that about $190 million had been taken from it after a hacker infiltrated its system.

With hacks up by 60% this year and experts claiming the issue is affecting a number of the less scrupulous exchanges, the waning confidence in the market is unsurprising.

That said, Toya Zhang – the CMO of Bit.com - has welcomed the creative destruction of the past year, with full suite exchanges able to shrug off undercapitalised, low-security competitors:

"We need to keep on offering the best services, provide liquidity, and continue to manage risk. It will take time, but bear markets provide great building opportunities."

Zhang makes clear that Bit.com was built with top security and risk management features, ensuring a secure trading experience and sensible liquidity constraints.

The exchange is a spin off of Matrixport, with Jihan Wu who was the co-founder of Bitmain as CEO, it provides institutional-grade security safeguarded by Cactus Custody (A Qualified Custodian) applying an incremental liquidation mechanism to provide additional user protection during extreme market conditions.

In a similar manner, Bybit ensure security remains a top priority by storing most user funds securely offline in cold wallets, protecting them from unauthorized access. A combination of advanced multi-signature, Trusted Execution Environment (TEE) and Threshold Signature Schemes (TSS) protects wallets, safeguarding the security and integrity of users' funds.

As is clear, with multiple threats continuing to cloud the crypto industry's horizon, exchanges will need to double down on their user offerings and risk management tools to cement themselves in a volatile market.

The winter on global markets isn't going anywhere and for crypto especially, it's evident that only the strong will survive.