They say good things come in threes. In the case of crypto, it may well be that good things come in fours. We are, right now, in the midst of the apex run of a four-year cycle. A cycle that for 12 years running has produced a staggering bull run, ridiculous surges in price (and therefore gains) for those that chose to invest. While the past cannot predict the future, there is certainly something interesting about pattern matching and consistency. Yet there are still some naysayers. With all of that said, let’s dive in and explore the pros, pundits, and pessimists.
What in the World is Happening?
Bitcoin this month tested, crested and, yes exceeded its prior all-time high, reaching $66,975 on 10/20/21, many people are scratching their heads. “How can this be?” and “Is it too late?” are common questions that I get. Let’s break these down.
I mentioned the bull run in this month’s prelude. Let me get more specific: from our purview we’re at the top of the 5th of a 9-inning game. That game, of course, is the current bull run, which still has a lot of life in it. Consistently, after every halvening event, bitcoin has surged. We’ve discussed this many times, referencing the Stock-to-Flow (S2F) model, so this comes as no surprise. Of course, this isn’t the only data point we use at TRADECRAFT, however it is certainly not one to be overlooked. Outside of S2F, as of this writing, we see all green lights across the board in our proprietary TFA model, something we never seen before. Good signs indeed. China failed to take down bitcoin (twice in the last six months), acceptance is at an all-time high, retail adoption is growing, institutional money is flowing in. There are so many positive factors.
So, what about the “Is it too late?” question, which is often followed by its correlate statement, “I heard it’s going to have a massive correction”. Of course it will. That’s how these things work. The question is, at what point will it have such a correction? In the last big bull run Bitcoin had seven 40% corrections. The real questions, as I see it are, where will it settle after this run and, importantly, what comes next.
Let’s say bitcoin spikes to $200K for just a moment – consider it a rising knife instead of a falling knife fueled by mania. A 60% correction from $200K leaves us at $80K. Still above the all-time high today. Of course, any prediction is a fool’s errand and I want to acknowledge what I just wrote as such. Let’s not try to guess price.
Instead, what if the focus was not on the monetary value of the asset, but the systemic value of blockchain technology over time. We’re entering a world of decentralized finance, peer-to-peer exchange, and technologies built by the people for the people and, also, governed by the people. This technology is going to be the new backbone of our world over the coming decades. Will it be regulated? Of course. It must be, and that’s OK, because as blockchain technology matures and becomes more mainstream, the entire market will thrive. So, my answer to “is it too late” would be more akin to someone asking me in 1998 if they were too late for the internet. No. No it’s not. You just have to have your expectations on point.
Have a vision that is longer than the immediate. Not that the immediate is a bad thing as, right now, the immediate is the best it’s ever been. What if, however, this was the prelude. As crypto has greater and greater adoption, greater and greater participation by institutions, greater and greater purpose in our world, and that this is all driven by blockchain technology, it’s safe to say that this technology will be truly transformative. There is one thing we also know from things that are transformative – and that is that they are lucrative.
Hypocrisy and Money
It is amazing that we hit all time highs. What is also amazing is that JP Morgan CEO, Jamie Dimon, has doubled down on his perspective that bitcoin is “fool’s gold”. Look, I get it. You get it. JP Morgan is a big bank and the reality is that the crypto markets will end up disrupting the big banks. When every person on the planet can be their own bank, transact without the blessing of a third party (bank), earn yield on their money without a third party (bank), and invest without the intervention of a third party (bank), then the big banks are going to be in a world of hurt. So, from a fiduciary standpoint one could consider that Dimon must by nature be anti-crypto in the same way that flat-Earthers are anti-science. But let’s get real. This is happening, and the crypto naysayer is becoming a lonely island indeed.
Here’s the thing that really gets me though. While publicly, Dimon denounces crypto, JP Morgan has multiple crypto offerings, including four from Greyscale Investments, one from Osprey Investments, and one from NYDIG. I mean, if there was ever an example of pure profiteering, this is it. It’s like saying “I don’t believe in this, but I’m going to sell it so I can make money from it.” By the way, this is why crypto.
So, just last week ProShares ETF, a new bitcoin futures ETF, was launched. Note – it is futures which means it’s not quite bitcoin itself. Having said that, it’s a big step into the world of awareness and adoption of the apparently now mainstream crypto asset. I mean, you simply cannot put on any financial network without hearing “bitcoin” and/or “crypto” every third minute. It’s exciting. At the same time, this is a big reason we have a bunch of frothy investors without understanding of the underlying markets.
If there was ever a question about retail adoption certainly the largest movie theater chain in the world accepting crypto should certainly allay that concern.
Lovers. Haters. It doesn’t really matter. The simple and indisputable fact is that crypto markets are performing, adoption is happening, and change is in the winds.
Conviction, however, comes from knowledge and education, which is why we focus on exactly that at TRADECRAFT. I would encourage everyone reading this to NOT buy bitcoin or any crypto asset because it’s mentioned 100 times a day on the news, or worse yet due to FOMO. Instead, I challenge everyone to truly unpack and understand the foundations of this new asset class and why it has so much momentum.
This blog was probably a little soapbox-y this round so thanks for getting this far. The simple fact is that we believe this opportunity is available for everyone and I, personally, don’t want anyone to miss this bus.
That’s all for now. Until next blog be well, stay safe, and we’ll continue to Decrypt Crypto for you.