Cumberland believes that adoption in cryptocurrencies will lead to a market rebound in 2023, but only after a “period of volatility” as the “market reorganizes itself”. Jonah Van Bourg, the firm’s chief commercial officer, said he expects an eventual uptrend next year as major tech companies continue to use blockchain technology, along with China and Russia’s liberalizations that will increase Bitcoin’s “geopolitical significance”. Van Bourg continued his speech on the subject as follows:
“After a very busy month, price action is consolidating. Given the nature of crypto and the tectonic changes occurring underneath, we do not expect this trend to continue. Looking ahead to 2023, market recovery will be related to resource adoption.”
“The collapse of FTX and Terra stifled the credit markets from breathing and accelerated the recalibration with more ‘measured’ valuations. Firms in the industry have curtailed their plans or ceased operations,” he said, adding that “the future of the industry is as uncertain as ever.” He said that the relative price stability seen in recent weeks will not last long:
“After these billions of dollars worth of liquidations and trillions of dollars in market cap losses, the next period of price action depends almost entirely on whether there will be additional sales.”
Cumberland concluded his analysis of the cryptocurrency market as follows:
“While there are indeed a number of portfolios under the control of bankruptcy managers, and the assets in these portfolios will certainly need to be liquidated over the coming months and years, it is becoming increasingly clear that in most scenarios the market is actually facing a deficit, not a surplus of crypto.
FTX, Alameda, and several bankrupt lenders wouldn’t have applied for Chapter 11 protection if they hadn’t sold all of their liquid assets in a last-ditch effort to extend their maturity. In other words, you don’t go bankrupt if you have tradable coins left to sell. Maybe what we’ve seen over the past few months is a wholesale liquidation of these coins.”