Surviving Crypto Cycles

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You need to survive three crypto cycles to make it. One for learning, one for earning, and one for building generational wealth. As I gear up for my 3rd cycle, this bear market feels like déjà vu, giving a sense of what's coming next: 🧵

I started 'investing' in crypto in late 2017, driven by FOMO. I thought I was ahead of the game. I diversified and believed I was making smart choices, but in the end, I got rekt. A common newbie story.

The downturns and mistakes might discourage many. But for those that stay, study, and learn, crypto offers one in a few ways to 'make it'.

Now, I can't help but feel a strong sense of déjà vu, like in the 2019-20 bear market. That's not just price, but the overall sentiment of crypto 'being a scam', regulatory crackdown, and money rotation down the food chain.

Although the market sentiment may feel like that of 2018-19, we have much more to do now. Back then we didn't have DeFi or NFTs. I only traded on CEXes. It was a simpler time, and believe it or not, much quieter than right now.

Things started to change in 2020 amidst the calm as innovation appeared. Tokens like $AMPL changed the same-old tokenomics game theory. Then came BAL, COMP, and the explosion of DeFi. We went from "WTF I'm getting tokens for free?" to liquidity farming at insane yields.

Token game theory shifted to farm and dump. Pool2 ponzitokenomics strategies emerged, with the early degens benefiting the most. But as in 2017, oversaturation of tokens led to dilution of money and attention, and most tokens went to goblin town. Another lesson learned!

The path to a bull market is intricate. While BTC is the entry point, altseason truly flourishes with innovative money printing within crypto. It's ironic how we criticize fiat printing by central banks but excel in token issuance ourselves. Let me explain what I mean.

In 2011, $LTC launched, then Ethereum, then a bunch of BTC forks. All required POW machines to sustain. But the ERC20 tokens on Ethereum were revolutionary. They made issuing new tokens cheap & easy. Yet with ease came an explosion of tokens and pumps & dumps.

However, the true brilliance of Ethereum and ERC20 wasn't technical, but social. The applications use case of crypto multiplied beyond "currencies" to "tokenize everything" but so did the getting rekt opportunities. twitter.com/DefiIgnas/status/1574675448054751233

In this sense, DeFi summer of liquidity farming resembled 2017's ICO burst. But instead of pure token utility we added the story of governance. Yet, the crash reasons remained same: token supply surpassing fresh capital entering crypto for our limited attention.

Interestingly, infrastructure for DeFi existed before, but few cared until liquidity mining. Now, new innovative money printing infrastructure and narratives are being set up. Below are the two major ones.

First is restaking. By allowing ETH stakers to "restake" their ETH, Ethereum's security can be loaned out. The result? Securing multiple networks at once. The reward? Yep, new tokens with even bigger promises.

Keep an eye on strategies emerging from restaking. The goal is to identify tokens that trigger a flywheel effect. But restaking isn’t exclusive to Ethereum. Cosmos has launched Replicated Security. Expecting more chains & protocols to adopt it soon.

Next up: Bitcoin DeFi. Under-appreciated by EVM DeFi fans but holds immense potential for money printing & storytelling. Ordinals & Inscriptions proved demand for NFTs and DeFi within Bitcoin's realm, but BRC20 lack the flywheel effect to make them investable at the moment.

Here's where Stacks can shine - a layer for BTC smart contracts. They're prepping for a major sBTC launch, facilitating BTC transfers between Bitcoin and Stacks, and improving transaction time to 5s. It's game-changing for BTC DeFi and NFTs on Bitcoin.

With more BTC entering the Stacks ecosystem soon, there are a few places for it to flow. One of them is Alex – leading in Stacks DeFi dApps, emphasizing crypto trading and lending with BTC settlement. Plus, it bridges BSC/Ethereum USDT to the Stacks chains.

Timing is everything. While these narratives can mint tokens & control inflation, fresh capital infusion is pivotal. With the powerful narratives and tokenomics we can attract outside capital, especially ETH for restaking and BTC for its DeFi story. More on this ↓ twitter.com/DefiIgnas/status/1688521068787671040

Inevitably, these bubbles will burst when new tokens are printed to meet the demand and attention begins to wane. Don’t get lost in the hype. Always have an exit strategy. twitter.com/thedefiedge/status/1692132282495357302

Macro-wise, we’ve experienced pressure like the Fed liquidity cycle, wars, & crackdown by the government policies. But winds are changing thanks to regulatory easing with Ripple & Grayscale victories, China's deflation, and peaking interest rates and inflation.

If we believe in historical crypto cycles, then we can expect a $69k all-time high by Q4 2024, followed by a bull run until Q4 2025. There is a possibility of these money printing bubbles starting before the new ATH later this year or early next year. twitter.com/Kevin_Kelly_II/status/1691200100922724353