Michael Safai, co-founder of Dexterity Capital, shared his thoughts on Bitcoin and altcoin market and said that volatility is good for neutral strategies. Here are Safai’s comments…
Safai: Individual investors have withdrawn
Talking about the latest crash in the cryptocurrency market, Safai said that volatility is mostly good for market neutral strategies, while it goes pretty well for arbitrage strategies. But for individual investors, it’s a different story, he said. Safai said, “Many investors were burned. Our data suggest that there was probably less individual activity than before the collapse. “What that means is that most of the volume you see, or even more of the volume you see, is now the volume of institutional traders like us.”
Cryptocurrency, as we’ve also reported on Cryptokoin.com, was initially fueled by the rising Fed interest rates and then only a month ago to a market cap of $33 billion. accelerated by the collapse of the Terra ecosystem that had
Safai, Bitcoin and this altcoin project may begin orientation
The environment is so uncertain right now, it’s hard to say what the catalyst might be to re-engage individual investors, Safai said. Safai said that if the central bank decides to tolerate inflation for a long time, the narrative of cryptocurrency as a hedge against inflation could “revive” individual investors. According to Safai, one of his biggest fears after the events of last week is losing trust in the ecosystem and “Ethereum killers” like Solana (SOL) and Avalanche (AVAX). Expects to see a shift towards known amounts that are Ethereum (ETH) and Bitcoin (BTC).
Many developers have switched to other Blockchains known as “Ethereum killers” because Ethereum had difficulty scaling, resulting in high gas fees and slow transaction speeds. “Now you have to weigh that against the risk of what we saw on Terra last week,” Safai said. said. However, Safai said that individual investors are at a difficult point for now. Institutional players are also at risk for the stablecoin USDT to diverge from the stable with limited US dollar. He says even a small divergence can have big consequences.
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