Alliance DAO co-founder Qiao Wang warned that the incoming bear market phase will be worse than expected for crypto assets. This comes on the back of the current dip linked to shaky institutional holdings and global macro trends.
‘Dumb Money’ Flooded ETF Market
In a recent post on X, the crypto executive highlighted several negative trends in the market, leaving traders in a dilemma. He noted that the coming bear phase will be worse than most analysts predict because of “dumb money.”
These investors rushed into crypto ETFs as soon as they were approved, fueling a massive price surge. However, very little has been studied about market cycles with these products before investing, a situation Wang says will never end well.
Recent institutional and retail panic has plunged the market to new monthly lows, particularly as Bitcoin fell 25% from its all-time high. At the time of writing, Bitcoin trades at $82,150, crashing 10% in the last 24 hours. Overall, the crypto market cap stands at $2.8 trillion as investors withdraw funds from altcoins.
Still, Wang believes the market needs a 50% drop before another strong rally. Though controversial, several analysts also tipped declining positions before the next bull run.
“The next bear market (don’t know when) will be worse than most ppl here expect. There’s a large cohort of dumb money who know nothing about crypto buying dats and etfs. This never ends well. We may need another 50% drawdown while these ppl puke their position before the market can form a strong foundation and resume the supercycle.”
Aside from the spot ETF craze, corporate treasury firms made up another group of investors that got a percentage of holdings on hype. At the start of the last run, Michael Saylor’s Strategy and other firms inspired many companies to diversify their balance sheets.
Some of these investors just wanted a piece of the action for quick profits without a proper accumulation strategy. Crypto investor Chris Burniske wrote on X that the era of digital asset treasury selling has begun, and a slope was expected.
Since January, large institutions have acquired these assets, but recent hiccups have sparked sales to hedge losses. Wang’s views were also restated by users criticizing some corporate holders as “quick” investors without understanding the market.
However, without this institutional capital, the Bitcoin price would not have tapped $125,000 this year.
Source: https://zycrypto.com/crypto-may-need-50-reset-before-supercycle-can-resume-alliance-dao/
