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Mind Of Mav

What Will Reignite The Crypto Market? Part 2

 

The reversal will not happen at a specific price. It will happen at specific market conditions.

So, in part one yesterday, we discussed Bitcoin’s recurring 4 year market cycle and the important role that will play in making the crypto bull market return. I suggest you watch that before this video, even just to refresh yourself on it, but continuing on the topic of what will really reignite crypto markets and see us chasing all time highs again, I’m going to discuss more of the catalysts on the macro side.

Starting off by going in-depth on the state of the crypto markets today, and what’s likely to happen in the days ahead, I think that, with a crash in 2022, Crypto winter is here to stay and that it’s very likely crypto will go even lower. 

As I covered in the other video, something to note about Bitcoin’s market crashes is that going from peak to floor has historically taken ~12 months. I expect that pattern to play out again this year into 2023, especially considering Bitcoin’s most recent peak was set Nov 2021. 

Human psychology will influence this timeline. Crypto price movement is still driven by retail investors seeking novelty and momentum. Those investors are seeing neither right now.

That’s why the bottom will come not during this current fear & loathing phase but later, after indifference sets in, crypto is no longer making headlines, and the tourists have left. That process will take many months

But aside the historical patterns and the many significant macro reasons, one of the main reasons why crypto will continue to go lower this year is that many VC & crypto investors suffer from recency bias, expecting a quick rebound b/c that’s what happened after the 2020 Covid black swan. This bear market isn’t a black swan; it’s the result of rising interest rates in an attempt to curb inflation.

This bear market is also the result of consumer sentiment falling — with drastically rising costs of food, gas, and shelter, people are not going to take risks, such as investing in crypto, if they don’t feel secured in the most essential of Maslow’s hierarchy of needs. These fears are also compounded by our social nature because, after all, compound interest is the eighth wonder of the world for a reason. 

This domino effect – things piling into itself – whether that be fear, anger, hope, FOMO, FUD etc it’s all exacerbated by the human condition — our compounding emotional interests causing compounding impacts, and nowhere is that clearer than in the crypto markets, where increasingly risk-averse retail investors with growing fears of markets going lower will drive the rest of 2022, and is why 2023 will be mostly flat to down until the last round of capitulation is hit and indifference starts to set in, signaling a long-awaited spring thaw. Crypto macro will likely improve in the 2nd half of 2023, paving the way for the halving in 2024 and possibly a new Bitcoin ATH in 2025. 

Will it hit $100k then? No one knows that for certain, but what is certain is that BTC is $20k today, and even if it has further to fall, if you stop and think about it, what is more likely to happen? That it eventually goes to $0? Or is it more likely to eventually go to $100k?

If your answer is the latter, it’s probably because you know that time is on your side. You’re not late to the Bitcoin and crypto party; you’re just in time. Bitcoin is still young. Crypto is still maturing, and is outpacing the growth of the early internet. More and more understand it every year. Sure, it’s the first time Bitcoin is going into a recession and it’s the first time it is up against a shrinking FED balance sheet, and sure, BTC will likely keep going down until the Fed starts sounding dovish, but that reversal is inevitably going to happen someday this year or next.

The end game is when central bankers have to reverse and start printing again causing unimaginable inflation. Central bankers are gasping for air trying to fix the problem they’ve created.

So, what would trigger a return to bullish conditions for crypto? A few things:

An immediate ceasefire/peace in Ukraine combined with a full reopening in China would tank oil and cause a turnaround in commodities and manufactured goods prices. That would buoy the market quite a bit, possibly staving off recession by diminishing the cost of goods by increasing supply rather than reducing demand via rate hikes.

That would have to happen simultaneously. Why?

Because there’s basically 3 main factors causing inflation right now. The first is the extreme excess liquidity created during 2020. The second is Ukraine/Russia war and its effect on oil. And energy being expensive has an effect on literally everything else. Goods cost more to make, more to ship, etc. The third is lockdowns in China, where so much of the supply of goods comes from.

The fed raising interest rates can address the liquidity piece, sure. It does nothing to increase oil production or get supply chains fully up and running at capacity again out of China.

Raising rates is nice, but doesn’t address Ukraine/Russia or China’s lockdowns. There’s only so much we can do, all three need to be resolved to truly alleviate inflation.

Meanwhile, crypto is not dead, and Bitcoin is not $0, and we have the next ATH to look forward to.

So this is the time to prepare and think big 

Web3, DeFi, Metaverse, NFTs, Layer 2, and other nascent areas within the crypto space will grow, mature, and improve, especially now that the hype & speculation isn’t driving everything: utility is. 

My advice now is: Have enough cash to get through the next 30-36 months and, even more importantly, sufficient FAITH to survive the winter without wavering or chasing new and non-crypto directions. Crypto will come back bigger than ever.

 

 
 

The ReadySetCrypto "Three Token Pillars" Community Portfolio (V3)

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The “Three Token Pillars” portfolio is democratically proportioned between the Three Pillars of the Token Economy & Interchain:

CryptoCurreny – Security Tokens (STO) – Decentralized Finance (DeFi)

With this portfolio, we will identify and take advantage of the opportunities within the Three
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The Second Phase of the RSC Community Portfolio V3 was to give us a general idea of the weightings people desire in each of the three pillars and also member’s risk tolerance. The Third Phase of the RSC Community Portfolio V3 has us closing in on a finalized portfolio allocation before we consolidated onto the highest quality projects.

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What is the goal of this portfolio? 

The “Top Ten Crypto” portfolio is a democratically proportioned portfolio balanced based on votes from members of the RSC community as to what they believe are the top 10 projects by potential.
This portfolio should be much more useful given the ever-changing market dynamics. In short, you rank the projects you believe deserve a spot in the top 10. It should represent a portfolio and rank that you believe will stand the test of time. Once we have a good cross-section, we can study and make an assessment as to where we see value and perhaps where some diamonds in the rough opportunities exist. In a perfect world, we will end up with a Pareto-style distribution that describes the largest value capture in the market.
To give an update on the position, each one listed in low to high relative risk:
SoV/money == BTC, DCR
Platforms == ETH, XTZ
Private Money == XMR / ZEC / ZEN
DeFi == MKR / SNX and stablecoins
It is the most realistic way for us to distill the entirety of what we have learned (and that includes the RSC community opinion). We have an array of articles that have gradually picked off one by one different projects, some of which end up being many thousands of words to come to this conclusion. It is not capitulation because we all remain in the market. It is simply a consolidation of quality. We seek the cream of the crop as the milk turns sour on aggregate.

Current Top 10 Rankings:

 

 

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