Through my eight-year journey in cryptocurrency, my view on numerous topics have been altered – often, dramatically so. The reason being, that in a brand new asset class, with nothing in common with any before it, the amount of uncertainty has been unparalleled in financial history.
I could write a very intriguing book on my three-decade experience in financial investing – and if I did, the primary lessons would be that only by adapting to changing circumstances; and carefully gauging perceived reward/risk tradeoffs; does one have a chance to succeed.
In my case, successful pivots – often, against the grain of my peer group (and employers) – have served me well. No more so than in cryptocurrency – where I started as a Bitcoin Maximalist before Vitalik coined the term; had doubts, leading to brief dalliances with altcoins; and ultimately, returned to Bitcoin, where I will remain indefinitely (likely, for the rest of my life).
That said, the reason I only hold Bitcoin is NOT the Maximalist view that all altcoins will die; but instead, because the only cryptocurrency application I personally care about is the monetary function only Bitcoin can serve. To that end, I think it’s fair to say that when it comes to SOV and global payments, I am indeed a Maximalist – as by now, it should be clear that ALL altcoins seeking to challenge Bitcoin in these use cases have failed.
However, with each passing day, the title of one of my first CGC articles, from September 2017, seems more relevant; i.e., “Trillions Will Enter the Crypto Space – Perhaps, Half in Bitcoin.”
The reason being, that despite claims by Maximalists that ONLY Bitcoin can survive, there is NO WAY the Digital Age can occur solely on a blockchain where nearly all assets are HODLed; so valuable, few would even lend them; let alone, use them for any other means.
https://twitter.com/Andy_Hoffman_CG/status/1388570144796942339
- Andy_Hoffman_CG
Given my two-decade background in analyzing rigged markets (particularly, Precious Metals and stocks); and the fact that I’ve been watching Bitcoin tick-for-tick for the past six years; it was only a matter of time before I picked up on any anomalistic trading behaviors that might exist.
Those who follow me on Twitter are well aware that I’ve discussed the “ETH Cartel” for more than a year – though I put it in quotes, as I am not sure WHY ETH has essentially controlled BTC price movement for the past (at least) 14 months.
The algorithms employed; on ALL exchanges, in instantaneous fashion; are unquestionably favorable to ETH and unfavorable to BTC, in a remarkably consistent fashion. However, it strains even my highly jaded belief system that a group of powerful, wealthy people could somehow control the price action of a much larger, more valuable network – which, by the way, has far more wealth and power behind it. Thus, it is my increasingly firm belief that indeed, cryptocurrency price discovery is natural, and trading transparency high.
If this is the case, then CLEARLY the market, as a whole, started recognizing more than a year ago the utterly massive potential of non-Bitcoin Digital Asset markets – even if the players change rapidly, given the dynamic nature of this explosive, but highly nascent industry.
So, either the financial community does not yet believe Bitcoin will become a – or THE – world’s reserve currency; OR, it believes, like Raoul Pal, that the market opportunity for non-Bitcoin crypto assets is at least as large. Sure, there is a MASSIVE amount of hype and speculation in the alt space – but what it comes down to, in my view, is the free market telling us something.
In the past month, the “ETH Cartel” algos have demonstrably changed – in my view, for the better. True, Bitcoin rarely violates the established “Cartel rules” I have detailed for some time. However, they have unquestionably been violated on numerous occasions lately – as opposed to the past year, when they essentially never did.
To that end, I’m sensing the first signs of decoupling of the 24/7 nature of ETH price control – particularly, by my observation, when the “BITFINEX WHALES” enter the BTC market. Often, so powerfully they shrug off or even overcome the algorithms. To that end, the ONLY occasions when I recall such algos being overcome in the past were when massive, EXCHANGE-BASED BTC buyers entered the market – and unquestionably, whoever is buying through Bitfinex is massive.
Irrespective, with each passing day, it is becoming clearer that whilst Bitcoin’s dominance of the store of value/monetary space is exploding – to essentially 100% of the market – the potential non-monetary use cases of crypto assets are exploding equally powerfully.
Sure, there is a massive amount of unfounded speculation in assets with not a chance of delivering value (such as, in my view, 99% of the NFT and DeFi market). However, the remaining 1%, amidst a Digital Age when ALL legacy asset classes are displaced, could be unfathomably large.
Thus, amidst the countless assets with no use case; not to mention, thousands of pure pump and dump schemes; I have no doubt there will be massive winners…not as big as Bitcoin in absolute terms, but potentially just as large in percentage terms.
To that end, consider how many firms attempted to capitalize on the dotcom boom – and ultimately, how few survived to reap the rewards. Not to mention, those – like Google and Facebook – that didn’t emerge until AFTER the dotcom bubble burst.
Given my evolving views, I am now taking it less “personally” when ETH outperform BTC – as in my view, the market is starting to realize they are in completely different arenas.
Yes, it is still a great mystery why BTC follows, directionally, essentially all ETH ticks. However, this phenomenon no longer instills “fear” – as the way I see it, the BTC and ETH markets are two entirely different spaces…with a strong directional correlation, but little if any competition with each other. To that end, many other alts don’t even correlate with ETH – a good sign, as it demonstrates an increasing level of investor scrutiny over each individual asset.
In a nutshell…whilst I will ONLY invest in Bitcoin, and tell others to do so, given my PERSONAL financial circumstances, I am increasingly realizing that in the emerging Digital Age, there will be, quite literally, thousands of crypto applications that Bitcoin cannot – or equally importantly, would not – be involved in.
https://twitter.com/Andy_Hoffman_CG/status/1444339455670702088
- Andy_Hoffman_CG