As cryptocurrency prices keep plummeting, Web3 enthusiasts and entrepreneurs are guessing whether the worst is already behind us or if we should brace ourselves for more pain ahead. Andrei Grachev, managing partner of VC investing and market making heavyweight DWF Labs, shares his take.
Activity bottom might be in, DWF Labs' Grachev says; what about prices?
Cryptocurrency exchanges started asking the teams of projects to perform marketmaking activity for their tokens. In case of refusal, altcoins can be delisted. This statement was shared by DWF Labs' Andrei Grachev in his Twitter thread yesterday.
Market overview. Where we are and why this is a good time for long (IMO). Trading activity has reached its bottom. We can observe that even solid coins are almost not traded on exchanges.
— Andrei Grachev (@ag_dwf) June 14, 2023
Spot volumes 23B/24h - it is minimum since winter 2019. #investments #crypto #web3
As liquidity is shrinking, cryptocurrency prices become even more volatile, so 20-30% price spikes in 24 hours should not be surprising for crypto traders. But they should not be interpreted as signals of "organic" market activity: markets remain fragile.
In recent days, spot trading volume across major trading platforms dropped to $23 billion per day, which is the lowest since the 2019 Crypto Winter.
All sorts of direct token sales are obsolete and irrelevant right now as projects are failing to raise hard caps required for their development progress:
IDO is dead, IEO is dead, direct listings are dead. Waiting for something new + Binance launchpad. It always boosts retail activity. if/when something is successful - a lot of people will try to repeat it.
As such, Grachev is sure that the bottom in terms of trading activity is already in. However, regarding cryptocurrency prices, things may get worse for traders and investors.
Five pillars of crypto nightmare indicated by managing partner
Regulatory risks, financial turbulence, lack of liquidity, market crash, collapsed volumes and assets are elements of what Grachev calls a "nightmare". However, he also recalls that typically "nightmares" have been the best periods to make money by opening long positions.
As market participants are trying to "fix" the market behind the scenes, Grachev is certain that if market activity can increase in coming months, prices may follow.
As covered by U.Today previously, the ongoing bearish recession was triggered by regulatory attacks against leading exchanges Binance and Coinbase.
They were both accused by the U.S. SEC of being illegal securities offerings to American citizens. Also, the SEC documents stated that the watchdog remains certain that all major altcoins are securities.
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