Where we are – or are not – in the crypto cycle
YOU could be forgiven for thinking we are getting back to business as usual, but I’m afraid I must beg to differ.
Why is Bitcoin going nowhere? Why is the crypto total market cap supported and growing only because there are more and more coins being created?
As I recently said, there are hundreds and hundreds per week, never mind per month. Bitcoin and Ethereum between them continue to be nearly 71% of the total market which has never made it back to the all time high of around 20% above where it sits today. Stable coins continue to grow, because, indeed, they offer some advantages over Tradfi currencies.
In other words, have we reached the cash limits of what people will put into something they don’t fully understand? Or are we all about to get blindsided by an amazing bull run that will once again lead to stories of $100 turned into millions at the drop of a hat? Just think about this: BTC: -21% ETH: -36%
SOL: -33%
Some will argue this is normal volatility, especially at this stage of the cycle (whatever that is). As I say above, I beg to differ.
Looking at the macro situation, falling interest rates should lead to more risk-on investment.
The fly in the ointment here is that inflation is quite clearly not dead (did you notice yet another Starmer pledge going up in smoke with the increase in the energy cap rising?). But despite Jerome Powell saying interest rates were due a fall, I can only see it happening very slowly – so slowly in fact that it won’t have much of an effect until quite some time from when they start.
And what of the XRP settlement? Or is it? The SEC could still appeal and (as I continually say) they could change the rules to suit themselves. Even XRP’s people, despite saying only paying $125 million is a win, seem to be doing their best not to antagonise Gensler.
There has been a plethora of stories touting XRP from suggesting that owning only 8,000 odd XRP will be life changing to suggesting a price of $100 ( from its present $0.44) is going to happen. Such determined boosting leaves me distinctly dubious about XRP’s future prospects.
Whichever way you look at it, as we speak, every serious crypto is struggling. None of the price predictions have come true, and we are getting all the “if this then that – maybe” predictions yet again.
I have actually seen a so called pundit saying (with lots of odd lines drawn on charts) “Bitcoin is set to trade higher in September. Or it may break back down again”. How useless is that? The most interesting conversation I had recently was with the listing manager of a very large Tier 1 exchange, who told me he only held Solana – and he was thinking of getting out of that.
Something I perceive as an ongoing problem is the inward looking nature of new and existing crypto. Surely, in order to thrive, it needs to be outward looking and answer real issues with solutions. I see precious little of that.
The original use case for tokens was that they enabled cash to be collected for the project. Now, the tokens have become an end in themselves. The only crypto that that should apply to is Bitcoin, with its built in deflation and immutable records. According to Glassnode, “Bitcoin demand growth remains at low levels and even has turned negative in the last few weeks”.
There could be a slightly more promising scenario here. If in fact crypto is on its back, then now is the time to look more favourably at it – and this is not a recommendation. But even so, in the vast majority of cases, you will simply be partaking in a quasi-Ponzi scheme and looking to get rich quick.
A recipe for disaster if ever there was one. There is no free lunch!
