"Bitcoin, in particular, of course it's under pressure, because it can be construed as an inflation hedge anymore and what it's trading like instead is unprofitable tech," iCapital Chief Investment Strategist Anastasia Amoroso told Yahoo Finance (video above). "I don't think that invalidates Bitcoin. I think there is a price level of support — perhaps it’s $15,000, which is roughly the cost of production."
The cost of production is the price where bitcoin can be mined by larger operations and still break even or produce a slight profit margin. This breakeven number differs by mining rig.
The crypto landscape has seismic congruent headwinds including the Fed's tightening fiscal policy, the collapse of the prominent algorithmic stablecoin TerraUSD, and a liquidity crunch amid a selloff of highly-speculative assets.
"I think it's kind of a good cleansing process that we're going through," Amoroso added. "We need to weed out the froth, and we need to focus on the applications that have utility, that have an end use, and those are the ones that will survive this."
'That's not a bad thing'
“We are firmly in a bear market,” Valkyrie Funds CEO Leah Wald recently said on Yahoo Finance Live, referring to an asset falling 20% or more from its most recent high. Bitcoin is down nearly 70% since it's November 2021 high.
All that said, as Amoroso suggested, crypto winters can carry some silver linings: During previous downturns, the market seemed to decide which cryptocurrencies are viable assets while discontinuing those that don’t return substantial use cases; new blockchain projects received more reasonable value propositions; and cryptocurrency adoption at lower prices enabled existing tokens to better scale.
"In bear markets, you have a good opportunity to build," Wald said. "In 2018, in the various bear markets, you've seen a lot of projects that weren't built on firm foundations get completely wiped out. And that's not a bad thing."
Bradley Smith is an anchor at Yahoo Finance. Follow him on Twitter @thebradsmith.