Algorithma Crypto Brief # 5 - Signal vs Noise
Crypto market structure, capital flows, market movers & narrative
NOTHING HEREIN IS FINANCIAL ADVICE. PLEASE READ THE DISCLAIMER BELOW
Take a step back from continuous flow of information in the modern world. Most of us never sit down and take a break, especially for the monkey mind that is always wondering - even while sleeping. In words of Blaine Pascal -
“All of humanity's problems stem from man's inability to sit quietly in a room alone.” — Blaise Pascal
Crypto is no exception, in fact, more noise in cryptoverse than anywhere else. Especially since it trades 24/7. You seem to always stay occupied. But it is prudent to always step back and separate real SIGNALS from unending NOISE.
Over the last couple of months, those decibels continue to go up if you can hear it. Lot of news from institutions, smart money and govts/regulators (across the globe - El Salvador/ Tanzania / China / india / US ) etc etc. Even our beloved CNBC, covers crypto almost daily now in their markets section. Not only more retail is joining the bandwagon, but smart money is entering in hoards as seen by statements from Bank CEO’s, Stanley Druckenmiller, Paul Tudor Jones and the likes.
Governments all over the world, national and local levels, have been quite vocal as well. Some politicians are worried as the only solution to every problem for them is to print more, while others look at the future and accept this new monetary system that is rising across the globe…and how to cope with that.
Either way, regulations are coming. CBDC’s are coming. They are here in case of China at least. Then the question is - Is China trying to undermine the USD or do they really think decades ahead? DO they accept crypto as the next monetary ramps that will rule the future world and like everything else in recent times, they want to stay ahead?
Leaders and smart money (aka institutions) realise that crypto is here to stay. Not just infra (exchanges, rails, derivs, custodians, ramps etc) but also products (defi, NFT etc). You cannot take this back now and this will continue to expand.
MARKETS
What does this mean for markets, especially King BTC? Smart money has been accumulating during this dip. They see real change. And these are no clumsy hands. More than 50% of BTC hasn’t changed hands for more than 3 years. Can you imagine the HODLers holding that?
We live in a world of narrative economics and perception. When the herd starts going - everyone jumps in. Ethereum, as the second cousin, with 90% of dev activity and use cases, could actually surpass BTC - an event called as Flippening. Actually, the best trade of last three years was simply holding ETH, and doing nothing. As Buffet would say - Power of Compounding. Add some DeFi and some crypto VC equity to that mix, the returns would be almost impossible to beat in coming years on CAGR basis IMO.
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