We are still in a secular bear for cryptos
I haven’t been active on PP for quite awhile, but I still do listen to most every FV and logged in today to comment on one. Thought I’d take a look here and see what the activity is like since the January collapse.
It was truly an epic run in cryptos. The likes of which are unprecendented in modern financial history. I’ve been peripherally involved with Bitcoin since 2013, when my main business (easyDNS) started sponsoring the LetsTalkBitcoin podcast and we became the first ICANN domain registrar to accept bitcoin.
Over that time, I saw price spikes and declines and the dynamic was usually the same, except the magnitude was bigger each time, the spike over $1000, the decline, $2000, the decline, etc etc. Until that run up to near 20K (over 20K in CAD), it was unreal. I had a guy calling me on my cell phone, whom I didn’t know, but who had learned “I was a bitcoin guy” through their friends, who literally wanted me to meet him in person to hand me a briefcase full of cash in exchange for bitcoin. And he wanted it to do it today, not next week, today. People I hadn’t heard from in years emailing me asking if they could hire me for a bitcoin consultancy, just so they could invest in it. It was nuts.
It seemed different from all other spikes because this time, it was out in the wider public. It was a mania.
Around the same time I posted a three-part series on Medium and my own blog about bitcoin,
- This Time is Different Part 1: What Bitcoin isn’t
- This Time is Different Part 2: what Bitcoin really is, and
- Welcome to Bitcoin’s Trough of Disillusionment
which is where I think we are right now and will be for awhile. Crypto-Currencies were in a secular bull market from 2008 to 2018. Nearly 10 years. All the intervening pullbacks were counter-cyclical bears within a secular bull.
If crypto really is a new kind of asset class, then we would expect it to behave like other asset classes: That means secular bulls are followed by secular bears. That means the secular bear could last in terms measured by years, not months. That means it won’t be over until we reach maximum pessimism. That means nobody will believe it when it finally does rally for real. And finally, it might mean that when that when the next secular bull finally starts, there will be a change in leadership. The crypto that leads the way next time might not even exist yet.
I expand on all that more on that third blog, but that’s where my head is with it these days.