A lot of friends ask me whether I think BTC is pivoting into a bull or bear market, and what number I see being the bottom or top. I believe it’s hard to predict these targets with accuracy. However, I am convinced that BTC will always continue to rise and fall in cycles, from feelings of where the price can only get worse forever, transitioning to where it feels the gains will go on forever and the future price prospects of BTC have unlimited rosy upside. These cycles will go on forever, and they can be especially dramatic for BTC as it is not backed by any intrinsic value, such as revenue or earnings. The sentiment and psychology of the market can change rapidly or be irrational for long periods of time.
The unique qualities of BTC are how it’s known as “digital gold” and most recently labeled as a “hedge against monetary and fiscal policy irresponsibility,” as my friends at Ikigai Fund put it very well. No matter how much BTC’s price goes down, there’s always a merit of truth in the asset in that it really does it what people say it does: it’s a decentralized store of value that can be moved in a hostile environment. Therefore, there’s always potential for a camp of bargain hunters who will buy the bottom and the markets start moving up, forcing the short positions that seemed like sure-bets in a downward market to cover their positions.
The problem with most altcoins is that they don’t have a story or widespread narrative or paint a clearly proven picture on a future with how they will be adopted in decentralized applications. Retail investors and crypto funds generously over-funded many dapp infrastructure protocols in 2017–18 when the market was doing well for pre-traction protocol tokens, but the sentiment has gone from over-euphoric to one of difficulty and lack of product-market-fit.
My opinion is BTC and ETH have successfully added unique value that wouldn’t be possible without blockchain. With BTC, it’s a censorship-resistant movement of value, with ETH, it’s applications like ICOs and DeFi that clearly showcased it’s value to the world, and I’m optimistic for the widespread adoption of decentralized stablecoins. $DAI is clearly a unique product of Ethereum that wouldn’t be possible without the traction ETH has in terms of liquidity as well as smart contract functions of the protocol. I am also optimistic about the impact that DAOs can have by creating decentralized governed bodies of people regarding the flows of money, value, data, decisions and more. The signing of a private key is a way to guarantee consent and authority, which is a fundamental quality to forming decentralized financial organizations. I believe ETH already has killer applications are in plain sight today with DeFi and capital deployment via DAOs and (formerly) ICOs; UX improvements and discovery of specific use cases will spread both into broader adoption in the months to come. In light of this, the major news on how the CFTC said ETH is a commodity reminds of the news event in 2014 when the IRS ruled BTC as property, which was great news at the time yet the market reacting irrationally to it in the short-term, in my opinion.
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