"Meme-stock speculators" selling out of Bitcoin (CRYPTO: BTC), while driving the valuation lower, is the best thing for the cryptocurrency market in the long run.
That's according to DeVere Group chief Nigel Green, who said it will allow serious investors to buy in without unnecessary inflation of prices.
"This army of get-rich-quick speculators who were all about price frenzies, rather than the actual inherent value of digital, borderless, decentralised money, are now disappearing as crypto prices have lowered."
The Bitcoin price has lost more than 34% so far this year in Australian dollar terms, and an ugly 21% over the past fortnight.
The flagship crypto has more than halved since early November.
Image source: Getty Images
Why this bear market is different from the last one
The last time crypto entered such a bear market was in 2018, marking the start of a long two-year "winter" for digital assets.
But eToro crypto analyst Simon Peters notes the world in 2022 is very different from that time.
"Institutional investors now make up a much bigger proportion of the market, which has already had an observable impact upon not just prices, but the way the market moves," he said.
"In a positive sign for long-term investors in the crypto space, Goldman Sachs Group Inc (NYSE: GS) and Barclays PLC (LON: BARC) have just tied up a deal to invest US$500 million in Elwood Technologies — an institutional crypto investment platform."
Green agrees, saying the exit of speculators and "memers" leaves behind a more serious community of crypto investors.
"This is evidenced by the ever-increasing global level of institutional and sovereign investment into the world's largest cryptocurrency," he said.
"For these investors, who bring with them enormous capital and clout, the robust fundamentals of it being a digital, global, viable, decentralised, tamper-proof, unconfiscatable monetary system remain – and, in fact, are becoming more valuable as time goes on."
Bitcoin still the 'best-performing asset class of the decade'
Despite the large drop in value over the past six months, Green pointed out that Bitcoin is still above its 2020 and 2021 lows.
"Financial markets are going through a period of readjustment as monetary policies are normalised," he said.
"But as the sugar-rush of free money eases, we can see the real value of assets."
Bitcoin remained the "best-performing asset class of the decade", Green added.
And now with the speculators gone, the big investors will be more attracted to crypto, providing stability.
"Without heat and hype affecting prices, we can expect further significant waves of institutional investment into crypto."
