Seamus Rocca, the CEO of Xapo Bank, warns of a possible onset of a new bear trend in the Bitcoin market. He believes that the four-year cycle of the first cryptocurrency remains relevant, and the next crash could occur even without loud external shocks or global crises.
This is reported by Business • Media
Investor Psychology and Risk Factors
Seamus Rocca emphasizes that the dynamics of Bitcoin’s price largely depend on human psychology. He believes that a potential market decline could be triggered by organic reasons: a decrease in information flow, a lack of new growth drivers, or a reevaluation of portfolios by investors. Accordingly, a sharp decline in activity could lead to a gradual depletion of interest in Bitcoin and, consequently, a decrease in its value.
“We all want to believe that Bitcoin is a hedge against inflation, and I believe it will become one. But right now, I don’t see that. For me, it is still a risky asset. At least, the correlation between Bitcoin, the S&P, and stocks is still evident,” said Rocca.
The head of Xapo Bank notes that a lack of news or significant events could trigger the so-called “infection effect,” where the crypto market gradually loses investor interest and “burns out.”
Have Bitcoin’s Cyclical Declines Ended?
This viewpoint contradicts the position of some analysts who believe that with the involvement of institutional investors, the cryptocurrency market has matured, and regular deep corrections are a thing of the past. However, Rocca does not share this confidence, emphasizing that the influence of human psychology remains unchanged, and markets continue to be prone to cycles.
This is also confirmed by other experts. Analyst and educator Matthew Kratter, as well as the author of the book “The Bitcoin BusiDo,” Aleksandar Svetski, are convinced that the cyclicality of the market is related not to the asset itself but to human behavior. Svetski emphasizes:
“Human psychology will never change. Cycles are not related to Bitcoin, but to people. The same boom and bust will happen again,” wrote Svetski.
Some market participants, including the venture firm Breed, warn that excessive debt burden on Bitcoin companies could become an additional trigger for a new bear trend. At the same time, the firm notes that risks decrease if the financing of BTC purchases is primarily done through equity rather than loans.
Rocca emphasizes that Bitcoin’s history demonstrates the consistency of the four-year cycle, which includes periods of reaching historical highs and sharp corrections. The growing participation of institutional players, he says, does not change the fundamental nature of the market but merely adds a new dimension to the familiar model.
By the way, on July 11, Bitcoin set a new historical high, reaching $118,400.