Solana co-founder tells how long this phase of cryptocurrency decline will last
It has been several months since the collapse of Terra, which led to a severe correction in the entire cryptocurrency market. The prices of the vast majority of digital assets are still either falling or moving horizontally without any noticeable activity from traders. All this is exacerbated by the dire macroeconomic situation due to rising inflation and geopolitical conflict. How long will the collapse phase last, and when will the rebound come? Here is the answer from the founder of one of the most popular blockchain projects.
It should be noted that there are more than enough predictions about the duration of the current bearish trend in the cryptocurrency market. For example, in July Grayscale Investment said that the collapse phase could last another 250 days, indicating a transition to growth by the spring of 2023.
At the same time, Bloomberg analyst Mike McGlone believes that Bitcoin has room for further growth before the end of this year, as the cryptocurrency has shown enviable stability amid the collapse of other markets.
Bitcoin and other cryptocurrencies falling
In other words, there are plenty of options. Now a representative of Solana Labs shares his viewpoint on what is happening.
When will Bitcoin start rising?
Solana co-founder Anatoly Yakovenko gave his prediction on the matter during a recent podcast “gm” from journalists of news outlet Decrypt. In his opinion, the bearish trend in the crypto industry could last for at least another year.
According to Yakovenko, one of the main problems for investors is the US Federal Reserve’s continued increase in the benchmark lending rate, which has been raised by 75 basis points three times in the last three years, something that has not happened for decades before. This makes credit and money itself more expensive and reduces investor appetite for risk. Here is a quote from the developer.
Considering the macroeconomic data, the Fed’s stiff rate increase is likely to continue for another 12 to 18 months. But it will come to an end. And just like in the last bear market, many development teams who built and focused on matching the product to the market and really trying to create something unique – many of them succeeded, I think, in a very serious way.
Anatoly Yakovenko, co-founder of Solana
Solana was no exception to the list of seriously collapsed cryptocurrencies either. Since reaching an all-time high, the altcoin’s price has fallen more than 81 percent. Meanwhile, the cryptocurrency SOL has become one of the most profitable investments in 2021, with a price increase of 11 thousand percent during this period.
Solana exchange rate since the beginning of 2021
But the Solana ecosystem also continues to grow, especially in terms of unique tokens – blockchain is gradually gaining popularity as a base layer for NFT. For example, in the last 24 hours, the network has ranked second in terms of trading volume with NFT tokens after Etherium.
Top blockchains by NFT token trading volume
We’ll probably find out more interesting details about the project at the Solana Breakpoint conference in November. Here’s how Yakovenko himself comments.
We call the conference “Breakpoint” because it’s a kind of break. It’s important to take a break and then look back at what we’ve achieved, what problems we had last year, and really energise everyone to continue creating new projects.
During last year’s Solana Breakpoint, the altcoin price skyrocketed upwards. Admittedly, Yakovenko doesn’t know if investors will be as optimistic this time around – and given the current bearish trend, that makes perfect sense.
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Unfortunately, more than one more cryptocurrency company could go bankrupt in the year and a half that Yakovenk mentioned. Compute North, a provider for miners, previously faced such a fate, owing more than $500 million to its creditors. Of that amount, $81.3 million belongs to mining company Marathon Digital.
Most of the $50 million invested is distributed in deposits between energy companies King Mountain and Wolf Hollow, with whom Compute North is partnering. The remainder is in Compute North securities.
The provider is now going through bankruptcy proceedings under Part 11 of the US Bankruptcy Code, according to Cointelegraph. That is, the company has the option to continue operating, in parallel with its debts to creditors being restructured and paid off.
Many mining firms are in such dire straits today
Marathon Digital representatives said that some of the company’s BTC mining capacity is maintained by Compute North in Texas, Nebraska and South Dakota. That said, for now, all of the mining centres continue to operate as usual, so we are unlikely to see a major collapse in the Bitcoin hash rate graph, which in addition set a record this week at 316 hashes per second.
Bitcoin network hashrate chart
We believe that the main point of Anatoly Yakovenko's comments is the rejoinder about growth coming sooner or later. Perhaps before the market reverses, we still have some unexpected events like the March 2020 collapse, but one way or another, the bearish trend will be replaced by a bull run. That means investors should focus on the long term, develop an appropriate strategy and stick to it.
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