From: thepipeline_xyz
Future Potential and Adjustments in Crypto Cycles
The trajectory and nature of cryptocurrency market cycles are a recurring topic of discussion among crypto enthusiasts and investors. While some believe that fundamental market dynamics remain consistent, others foresee significant changes driven by increased institutional adoption, regulatory clarity, and technological advancements.
Bitcoin ETF and Market Dynamics
The approval of the Bitcoin ETF is seen as “super bullish long term for this space” [11:18:04]. Larry Fink’s public discussions about crypto, including Bitcoin and the benefits of blockchain technology, suggest he is “super super bullish crypto” [11:29:08] and that an Ethereum (ETH) ETF is “definitely coming” [11:45:00]. This institutional interest signals a shift towards broader acceptance.
However, some anticipate that Bitcoin may not lead the market as much from here, expecting “alts kind of reacted harder after post ETF” [12:20:00]. It’s predicted that Bitcoin will “chop around” [12:24:00] while alts perform well for the next month or so [12:28:00]. A potential pullback on Bitcoin to the high 30s is noted as a “dip you want to buy” [13:36:00], although some expect a sideways trend before a “leg up on alts” and then a pullback when “everybody starts to Pile in” [13:00:00].
Evolution of Market Volatility and Efficiency
While any parabolic asset is expected to eventually retrace significantly, the current cycle is anticipated to feature “more passive flows” [35:37:00], reducing overall volatility as the asset class matures and grows to a “10 trillion dollar asset class” [35:57:00]. It’s believed that volatility will “gradually go down” [36:02:00].
Regulations are expected to lead to “less Bad actors” and “less scams” [36:12:00], with current financial rules needing updates tailored to crypto [36:44:00]. The market is also becoming “more efficient as opposed to less volatile” [41:35:00], making it less likely to find opportunities from inefficiencies [41:44:00]. This means fewer “wipeouts” [41:48:00].
Despite this, the fundamental human impulses of “fear and greed” [41:02:00] are still expected to drive market behavior, making it a “copy pasta” of previous cycles in terms of human psychology [35:09:00].
Future Applications and Scalability
The coming cycle is expected to be driven by “consumer facing application” [45:18:00] that leverage crypto without users needing to understand the underlying blockchain technology [46:05:00]. There is a strong bullish sentiment on “apps that are blockchain based that are benefiting the user because of its its use cases but you don’t have to be some kind of like super blockchain native human to use it” [46:38:00]. This represents a significant shift from focusing on educating everyone on bridging chains to creating seamless user experiences [46:21:00].
It is believed that this cycle will see “two or three” [46:58:00] mainstream applications that pop off, potentially reaching “over a million daily active users” [46:00:00]. The technology and teams are seen as ready to build social or consumer-driven apps that are “simple to use Simple to onboard offboard” [47:53:00].
Shifting Investment Focus and Opportunities
While previous cycles saw many alts move together, the maturing crypto space in 2024 offers “a lot of different sub sectors” [38:42:00] for altcoins, meaning they won’t necessarily move at the same time [38:54:00].
Areas of particular interest for future potential include:
- Solana: Despite being “repriced to a more reasonable place” [50:00:00], it is still expected to go “a lot higher” [50:04:00] and is closing the gap with Ethereum [50:06:00]. The focus on consumer apps and mobile on Solana is seen as significant [50:08:00].
- Cosmos and Rollups: Considered an “underlooked area” [50:15:00], with potential in rollups and IBC (Inter-Blockchain Communication) for building fraud proofs natively [50:24:00]. Projects like Celestia, Dimension, Sovereign Labs, and Anisha are mentioned [50:47:00].
- AI x DePIN (Decentralized Physical Infrastructure Networks): Expected to be “huge” [51:17:00], especially as it improves costs for businesses, which is an easily understandable benefit for traditional investors [51:33:00].
- Memecoins: Predicted to be “ridiculous” [52:03:00], driven by people seeking high returns similar to gambling or lotteries [52:20:00]. This reflects economic situations where people are willing to “throw some cash at things thinking they could possibly get 100x” [52:55:00].
- NFT Resurgence: There’s a prediction that NFTs will have a “Resurgence” [53:52:00], with digital intellectual property becoming a significant topic, potentially catalyzed by the Apple VR set [53:55:00].
Investment Strategies and Advice
- Airdrops: While seemingly “corny” [58:05:00], airdrops are currently “real” [58:12:00] and offer opportunities to make money [58:14:00]. However, it’s increasingly difficult for retail investors to “print money out of thin air” [40:04:00] as in the past.
- High Conviction Plays: It is advised to find “high conviction plays” [57:12:00] and stick to them, rather than being swayed by daily market sentiment or social media trends [57:18:00].
- Diversification: Distributing capital across various projects, especially in promising areas like Solana, is suggested [09:36:00].
- Real-world Utility: Focus on projects with “real benefit in the real world” [55:03:00] that are seamless and easy to onboard [55:00:00]. Parcel, a protocol for betting on housing markets, is highlighted as an example that non-crypto natives can use [56:30:00].
- Patience: The idea of “sticking around through through this is actually really where you make your money” [42:58:00], emphasizing the importance of enduring bear markets as “preparation markets” [42:33:00].
- Caution against Short-Term Hype: Some believe the market could be “muted and boring for 12 months” [43:11:00], as people may be “overestimating the impact this ETF has in the short term” [43:31:00]. Current inflows are still predominantly from “crypto natives” rather than new money [44:08:00].
Ultimately, while the underlying financial impulses remain the same, increased market efficiency, regulatory clarity, and a focus on real-world, user-friendly applications are expected to shape the future of crypto cycles.