Chainlink’s Sergey Nazarov: Why this crypto bear market differs
Chainlink co-founder Sergey Nazarov said the latest cryptocurrency market decline differs from previous bear cycles, noting the absence of major failures similar to FTX and continued expansion in tokenized real-world assets (RWAs).
In comments posted on X on Tuesday, Nazarov said market cycles are expected, but the key takeaway is what each cycle reveals about the industry’s maturity. The total crypto market capitalization has fallen 44% from its October all-time high of $4.4 trillion, with nearly $2 trillion exiting the market over the past four months. Nazarov pointed to two main distinctions in the current drawdown.
First, unlike prior periods such as the 2022 collapse of FTX and several crypto lenders, this downturn has not produced large institutional failures. He said there have been no significant risk management breakdowns resulting in major institutional collapses or broad systemic risk, suggesting the sector is managing volatility more effectively.
RWA expansion seen as catalyst for institutions and infrastructure
Second, Nazarov said growth in RWA tokenization and on-chain perpetual contracts for traditional commodities has continued regardless of cryptocurrency prices, indicating these developments have utility beyond market speculation.
According to RWA.xyz, the on-chain value of tokenized RWAs has increased 300% over the past 12 months. He said this trend shows that bringing real-world assets on-chain is not tightly linked to cryptocurrency price movements and can grow independently of how Bitcoin or other crypto assets are priced.
Despite the RWA momentum, Chainlink’s native token LINK has not reflected the surge. LINK has fallen 67% since its October peak and is down 83% from its 2021 all-time high, trading below $9 at the time of writing.
Nazarov added that on-chain perpetuals and tokenization provide distinctive features such as 24/7 markets, on-chain collateral, and real-time data. He expects institutional participation to be driven by this underlying utility, while demand for infrastructure should rise as more complex RWAs require advanced on-chain systems. If these trends persist, he said on-chain RWAs could eventually surpass cryptocurrencies in total value within the industry, fundamentally shifting its focus.
Analysts say current downturn differs from past cycles
Bernstein analyst Gautam Chhugani echoed the view in a note published Monday, describing the present phase as “the weakest Bitcoin bear case in its history.” Analysts led by Chhugani wrote that the recent price action represents a crisis of confidence rather than structural damage: “Nothing broke, no skeletons will show up.”
Jeff Mei, chief operating officer at the BTSE exchange, said the recent sell-off was driven largely by non-crypto factors, including concerns that a slowing AI technology boom could weigh on equity markets, along with expectations that Kevin Warsh’s appointment as Federal Reserve chair could reduce liquidity in the financial system.
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