Assessing the Damage

May 19, 2022 • 9 Min Read

The question remains – wen[1] bottom?

Since the November highs, most of the downward pressure on crypto prices has been the product of macroeconomic headwinds. Inflation has yet to conclusively rollover, and the Fed appears intent on stifling demand to bring down the costs of consumer goods. Last week, we had the first instance this year of an idiosyncratic event specific to the crypto markets shaking investors and sending prices lower.

The collapse of UST, combined with the macro backdrop, has had a chilling effect on the overall sentiment among crypto native investors and has sent many towards the exits. For more information on the events that unfolded last week, we direct you to our previous note and a market update video we put together late last week.

Below we will address several data points that will help us determine how close we are to the bottom of this bear market.


The bright side of last week’s carnage is that we finally started to see signs of capitulation. While never enjoyable, capitulatory selling – such as that seen in November 2018, March 2020, and May 2021 – is often the market rinse needed before asset prices can move higher. Capitulation is often the product of long-term holders, “top-buyers”, and crypto “tourists”...

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