The CEO of the crypto investment fund Three Arrows Capital Su Zhu, provided insights into the reasons that led to the crash of Bitcoin in late May and the direction of the crypto market.
Increased price rates and a series of bearish news may have triggered a sharp sell-off, reducing the value of BTC by more than 50%.
He mentioned China’s possible termination of Bitcoin mining and Tesla CEO Elon Musk’s tweet, who critiqued the headliner cryptocurrency because he considered it to be an ecologically unacceptable property.
“I think there was a lot of news that came out around then that was a bit bearish especially out of China regarding mining, but then also in the US with Elon’s tweets about Tesla and Bitcoin energy usage… Those are not the proximate causes, but they were some of them, and I do think that the market took that as a shelling point to start taking profits. So I think that it was a culmination of that plus the fact that people who had been buying throughout kind of said ‘Okay if I just wait then I could get it at a much lower price, so I’ll just wait.’
So I think it was a culmination of those two factors that put it through, but if you look at the way that the markets have bounced, you can see those buyers are still there. It’s just a matter of what price they’re going to get. During the beginning and the mid part of this run, they kept having to buy at higher and higher prices, and this time they managed to get some at lower prices than before.
Bottom line is there is still a tremendous amount of buying demand.”
In the interview, Zhu claimed that “the bull market is definitely not over.” As investors dig up higher returns and tools, decentralized finance (DeFi) is about to penetrate key financial institutions.
Recent surveys indicates that hedge funds’ plans to invest hundreds of billions of dollars in cryptocurrencies are also a huge bullish catalyst that can greatly strengthen the digital asset market.
“The reality is that once you have this infiltration and people are used to this idea of digital scarcity and this kind of floating around, then you will have a whole new set of natural buyers that come in when there’s dips. These people are trading these assets as just like instruments like copper or another commodity. They will also find reasons to buy it and also find reasons to sell it, and so I think that whole process is something that is very, very bullish long term because it broadens the base of holders massively.”