Little Boredom Can Be a Dangerous Thing
The current stage of crypto market and thoughts on the future.
Intro
Almost a year ago I asked myself a question - How can I make the most out of the bear market? After reading dozens of articles, listening to countless hours of podcasts, and delving into the depths of crypto Twitter I had some ideas... but no clear plan.
An abundance of information often leads to mental masturbation - we consume content but gain nothing from it. Days pass and we forget what we've covered. Months later we wake up only to realize that we haven't made much progress and have wasted our time and effort.
"Direction is much more important than speed" - one of my favorite quotes.
With so much information at our disposal, we are often too lazy to sit down and create a plan, to write down a strategy that we will follow. It's much easier to rush and do something, as it gives us a false sense of achievement. But does it really bring us closer to our goals? Do we truly know what our goals are, or are they just vague aspirations like wanting to be rich or wanting to be happy, etc.?
Writing the article a year ago was my way of organizing all the information I had consumed and creating a strategy to follow.
To be honest with you, it was one of the best decisions I made at that time. It was the decision that led me to where I am today.
If you’d like to take a look, here’s the link to the article - https://moderneremite.substack.com/p/take-advantage-of-bear-market-244c8b5dde9
The time of publishing was closely correlated with the bottom prices at that time. You can imagine that the sentiment wasn't too euphoric, and the prospect of enduring the entire bear market ahead was far from uplifting. If you haven’t been there at that time, let me recall the prices and add some visuals so you will get a sense of pain people were going through.
ETH was trading at around $1.1k-1.2k
BTC was trading at around $19k-$20k
Almost a year has passed since then… Where are we today?
Current Stage of the Circus
If you are not sure at what stage of the market we are, just take a look at your Twitter feed - this is one of the best indicators of the market sentiment.
What does my feed tell me?
Boredom and Apathy.
Even though I have spent countless hours creating and honing my Twitter lists, I am aghast at how much noise there is… tweets having nothing to do with crypto, irrelevant polls on food or sports, “engagement farming”, etc.
When prices nuked a year ago anger and depression is what you could have found on CT. It is hard to stomach the reality, especially when you have not secured the profits and your portfolio value evaporates day by day.
However, there is one question worth asking - Is the sentiment a sole reflection of prices?
The price action of an asset is the major force of shaping the emotional environment. However, staying too long in a choppy market can be mentally overwhelming. The boredom sets in and our attention shifts elsewhere.
Where - you might ask?
In times of boredom we are more susceptible to anything that evokes emotions, especially the negative ones. We, as humans, are emotional creatures afterall.
The headlines today are all about regulations, SEC suing everyone, the collapse of the crypto industry in the US, and Gary Gensler’s face around every corner. This type of news is not the one I’d like to see first thing in the morning, and I guess neither do you.
All of this can effectively discourage us from staying active and up-to-date with what’s going on in the crypto industry. The deadliest temptation one might feel is taking “some” time off. Taking breaks is vital for long-term growth, but what’s dangerous is the lack of plan on when to get back.
This way a few days off become a week, a week becomes a month, and a month makes you feel that it’s not worth going back until we enter the next bull run.
The tricky part is…
How would you know when we’ve entered the bull if you’re not here?
Glorious Comeback
Assuming you have taken a break from crypto the moment I published the article about bear markets - at the beginning of July 2022…
What would be the sign telling you to go back?
Rising prices of crypto assets, that’s for sure; it’s hard to miss it… but what else would be your golden indicator?
You wouldn’t be able to correctly check the sentiment as you have no data on how low we’ve been - maybe there was no despair stage at all? You wouldn’t be able to tell why prices kept rising, what was the catalyst and what narratives have emerged. Not to mention being late to trends…
While I might be wrong, my bet is that the only thing telling you to go back would be feeling the FOMO when prices will rise and you will not be well positioned for the rally.
The result?
Glorious comeback just to become exit liquidity at some stage of market rally.
Becoming exit liquidity sucks, that’s for sure. Everyone becomes exit liquidity at some point… me, you, even OGs with their cartels might fall prey to becoming the exit liquidity of someone else. That’s just how it is.
What we can do though, is do our best to minimize chances of becoming exit liquidity, and maximize the information asymmetry - the greatest edge you might possess.
Missed Opportunities
“This bear market is the worst ever.” - That’s the statement I hear quite often recently. While I am not saying it is a false claim, it all depends on the perspective.
FTX gave us the shitshow rollercoaster your kids will be taught in schools about. Gary and SEC are suing everyone they find, and operation Chokepoint 2.0. is trying to remove all on-ramps to suffocate the entire crypto world. Add Terra collapse, all the FUD on various topics, and we get quite the list of negative events happening one after another.
That was not on my bear market Bingo if you ask me…
Staying away from crypto might have saved you A LOT of nerves and emotional breakdowns. However, let’s look at the bright side and all the opportunities you might have missed if you decided to take a break and touch some grass.
AI Hype
The introduction of ChatGPT and improvements across the AI industry was the spark igniting the fire of speculation in crypto yet again. Everything that has been associated with AI - even by having “AI” tag in the project’s name went up.
Arbitrum Airdrop
Being active on the Arbitrum chain could have been the best ROI activity you could have done. Even using the single account you were able to get a couple thousand ARB tokens. And if you farmed the airdrop on multiple accounts… oh man…
PEPE & Shitcoin season
The climax of the rally that began in January was a typical shitcoin season - nothing unusual when capital gets bored and narratives dry out. PEPE was the leading force that sparked the casino-vibe and there was not a single day without a tweet saying PEPE is the new SHIB. Well… there was also BEN and BOB… and people sending ETH to private wallets when someone claimed to create a shitcoin… you get the vibe…
NFT Mints
If you thought the times of NFTs were forever gone, well… tell me what’s the difference between an average shitcoin and a new NFT mint?
Both try to capitalize on the market emotionality and excess liquidity.
I’m not an expert on the NFT market, but I’m doing my best to stay up to date with what’s goin on. That is why I can tell you all about the MadLads mint that got postponed due to enormous interest or a niche NFT mint on Canto called YAYO collection. Not to mention other mints that did not catch so much attention. Most of them were either free mints, or required a WL that was not so hard to get. Free money anyone?
Ordinals
What began as a tweetstorm ended up becoming the biggest rally in Bitcoin network usage ever. Suddenly Bitcoin became something new, something to explore, something to speculate on. Inscriptions and various types of Ordinals took crypto twitter by storm leading to Bitcoin having its own shitcoin season and NFT mania all at once - yes, I know inscriptions are not NFTs, it’s just for the sake of simplicity.
China Coins
The AI hype was the most heated event in crypto since the last bull run. Emotions came back along with the casino-vibe… and if one narrative weakens, you gotta find the next one to keep the emotions high and capital engaged. The narrative for Chinese coins did not last long - couple days, maybe a week…
You might think that's a crazy short amount of time. Well… that’s how it is. So you either get used to it, or you shouldn’t touch the most heated trends. The general rule of a thumb is the following:
If it’s on your Twitter feed - it’s already too late.
*It might be obvious, but it’s worth stating - the rule applies to the heated trends, not long-term narratives, e.g. you have already seen the LSD season, but it was just the beginning.
A Billion Dollar Question
How much of the bear market we have left?
This is the question haunting you all the time… if you already knew the answer, how simple it would be to accumulate and just wait, right?
Markets either Range or Trend - there’s no third option; at least that is what I have learned from the best in the crypto space.
Maybe it’s not very intuitive at the beginning, but markets trend either upwards or downwards. After all, the trend is the direction we’re heading. After the trend leading to rising prices during a bull market we shift to the downwards trend when entering a bear market - with the range part in between if we don’t have a blow-off top scenario. After some time the market agrees on prices and we enter the phase of the ranging market with no clear direction.
So… are we currently in a range, or have we already shifted to the trending phase of the market?
This is the question we have to ask, instead of wondering how long this bear market will last. After all… we might have already entered the bull market.
While it might sound counterintuitive seeing the prices today, there are solid arguments supporting the thesis saying we have already entered the trending phase with the January rally marking the end of bear market.
I am not an expert in technical analysis so I won’t post any charts claiming “I know” something - I don’t, just as you and everyone else out there. However, I hold very high respect towards some individuals specializing in technical analysis who use it along with their common sense, and not as a “sacred indicator”.
My way of understanding the market is collecting present and historical data, looking at various indicators, doing my best to stay up-to-date with what’s goin on, and then trying to make sense out of all the noise with the use of two priceless things - experience and common sense.
What my common sense is telling me, is that we have been in this ranging market for almost a year now, and the next Bitcoin halving happens in about 300 days. I don’t know whether we have already entered the trending phase or we are still in the ranging environment. What I do know - or at least assume - is that we will see the next bull market sooner or later.
Entering a bull market does not mean prices will skyrocket immediately. The sentiment has to be built gradually, emotions have to come back, and the liquidity has to flow into the space once again.
We need a spark. A signal shifting current boredom into excitement, entropy into hope, and apathy into optimism yet again.
Will EIP-4844 be the spark that ignites the next bull run?
The Spark
Every volatile move in crypto - either downward or upward, needs a spark to happen. We can build up the overall sentiment, slowly attract a little bit of new liquidity, and create new solutions. However, all this is not enough to create an explosive move. It is only a warm up before the second stage of the bull market - Full Raging Bull.
DeFi Summer was the warm up before the full raging bull back in 2020. Crazy APRs on various farming protocols attracted liquidity and the DeFi narrative took off. This was the first spark.
Two upgrades on the Ethereum network - Cancun and Deneb, known as Dencun upgrade, will take place somewhere in Q3/Q4 this year.
Among various EIPs being the part of Dencun upgrade there is one you are already familiar with - EIP-4844, i.e. ProtoDanksharding.
I won’t delve into technicalities - it’s of no use here. What is of great significance though is the fact that EIP-4844 will be the major boost for Layer 2 scaling on Ethereum. Pair EIP-4844 with Account Abstraction and what we might get is opening the floodgates to scaling Ethereum beyond what we think is possible today.
It can be the spark we’re waiting for.
Ramblings of Deranged One
Now… putting all of this into perspective… HIGHLY SUBJECTIVE PERSPECTIVE.
We could discuss both regulatory and macro issues for hours and still the one thing we probably end up with would be uncertainty. That is why I will not touch any of these issues and assume macro behaves and we will soon get some clarity on regulations.
Nevertheless, there is one thing I’d like to say regarding legal matters.
We all see the shitshow happening in the US with the regulations, SEC, and Gary who was previously preaching Bitcoin, Ether, and Litecoin are not securities - and applied to work for Binance and FTX but got rejected. Sad story bro.
Some of you may know a rather distinguished gentleman going by the name Patrick McHenry, who seems to be the voice of reason in the US. While I am not saying I fully support his doings, opinions on crypto industry, etc., he seems to be trying to clear the path for the crypto businesses operating in the US.
Regulatory clarity might not come for months or even years - legal matters take time. However, what we might soon get is the clarity of direction, and that’s just what the industry needs to get right on the tracks and build up momentum.
Alright… now’s the fortune telling part.
For a couple of months now I have been revisiting my thesis and discussing it with friends from CT. Each time I did so, I grew more and more convinced. As stated before, I very much believe EIP-4844 can be the spark the industry needs - considering the fact the next bull run will be mostly centered around Ethereum and its Layer2 projects makes it even more sensible.
The current Crypto Twitter seems so bored and exhausted it is painful to look at - where is the excitement we all got used to? Even the most experienced folks begin to feel the boredom and a sense of discouragement after all the nagging from the SEC - and seeing people who’ve been here for years becoming so discouraged and bored is a rare sight to see.
This is exactly the time you should pay attention and… who knows… maybe begin to accumulate long-term bags?
Afterall… it is the easiest to create yourself an edge when the competition leaves.
“Sell in May and go away” - we know this saying all too well. It points out the cyclical boredom seen on markets during summer months. When there is no engagement, liquidity dries up, and with little liquidity prices become more volatile.
But what if… what if we have already seen the major selling pressure caused not by the summer boredom, but by the regulatory shitshow and all the FUD of recent weeks?
I am not saying we have seen the bottom on altcoins. Well… maybe on some of them, assuming the whole Binance will not fall like FTX did. What I am saying is that the boredom I see today and all the sellouts did not change my thesis - on the contrary, made it more relevant.
My thesis is that somewhere around Q3/Q4 this year we will see a gradual comeback of positive sentiment followed by continuous liquidity inflows. This will be the first stage of building up the momentum we need to get to the full raging bull in mid/late 2024.
We do not know the exact date of the Dencun upgrade which will introduce the EIP-4844. It is said to take place by the end of this year - probably late Fall if you ask me, i.e. Q3/Q4. By that time we should get at least some clarity on businesses operating in the crypto industry which will allow CEXes to open their doors to new users - especially in the US, and onboard traditional companies via Wallet-as-a-Service offerings.
We as crypto cannot go mainstream without clear direction and green light from regulators. The more we integrate crypto with so-called Web2 or TradFi, the more intertwined we become with the laws of the traditional world.
That’s the price we have to pay, waiting for the world to open its doors to our offerings.
Final Thoughts
I will not repeat myself so let me be brief here…
Stay active, stay engaged, and you shall be rewarded in the long run.
You will not only get a ton of experience but will also understand how cycles work, what narratives will lead the market, who are the major accounts that create trends, and much much more.
My journey continues as I am far from where I want to be. What about you?
Get to work… and let’s meet at the top someday.
~M.E.