The Bottom is Almost In
When the market smells, it gives you tells.
I am going to keep this short and sweet. The markets are looking ugly, with a good 5 months of downward trending chop and a level of crypto Twitter depression we have not seen since the bear market blues. Even the more die-hard crypto optimists are quietly asking themselves if this time really is different.
The red charts slowly eat away at market confidence until enough people have mentally capitulated, and enough lettuce hands have sold their bags and applied for manager positions at their local McDonald’s. Then, and only then, will we finally be ready for bull market liftoff. We are very close.
The Tells:
- Open interest and funding rates are very low
- Volatility is compressing and preparing for a massive move.
- EVERYTHING apart from BTC is heavily oversold
- Capitulation happened last week wherein many alts saw 20–40% selloffs, including some of the blue chips
- Sentiment is in the crapper, and even die-hard bulls are questioning their thesis.
- The 2020 bull market kick off tracked a VERY similar path, with a lull in the $9K BTC and $200 ETH range starting in May 2020 and lasting until October 2020 (5 months) before finally blasting off to $40K in less than 3 months.
- New token launches and airdrops are selling off to below VC funding levels, indicating a deeper level of capitulation
- BTC capitulation seems to have reversed, with miners stacking their BTC for the first time since the halving.
- ETH ETF listings are in the final stages, with amended S-1s having been provided. The fees are even more competitive than the BTC ETF Launch, which bodes very well for demand on launch.
- Macro tailwinds are building (QE, Rate Cuts, Election window dressing, liquidity reversal, TradeFi markets near record highs, lots more)
- The longer the re-accumulation phase, the stronger the bull market. We are roughly 5 months in, and this reset is a great sign for the continued strength of the bull market as it builds a new base.
2024 Thesis:
My thesis remains very much unchanged. The Crypto community has a particular inability to see past the last few days’ price action. Despite the lull and general malaise, this bull cycle is right on track and preparing for the next leg. Whether lift off is in July or a couple months later is largely irrelevant. Sure, it is no fun having to weather the storm, and boredom is one of the most dangerous emotions for an undisciplined portfolio.
If you zoom out, and buy predominantly into conviction plays, you will look back at this turbulence and be hard pressed to find it in the charts.
It is my expectation we see a resumption in the bull market, and another leg up starting by end of July. I stand by my predictions made in Aug of 2023 and Jan of 2024, and consider that they may actually be a tad conservative (summary below):
Aug 6th, 2023: Full Article
BTC was at $29,000, ETH was $1,825
- BTC at Halving: $55K–65K ✅ [ACTUAL $63.9K]
- ETH at Halving $3,000 — $3,500 ✅[ACTUAL $3.1K]
- BTC at new ATH: $185K — $250K (12–16x from lows) ⌛️
- ETH at new ATH: $18K — $25K (20x — 28x) ⌛️
- Total Crypto Market Cap: $7–10T (3x) ⌛️
- 2026 Bear Market Drop (BTC) 70–75% ⌛️
- Timeline: “My base case assumption is that we accumulate into early next year with some sideways chop and steady mild rise in prices towards mid 2024. I expect the full on bull run to start towards June/July of 2024 and extend well into 2025, fading out in the fall of 2025 near Sept/Oct.” ✅
Jan 2nd, 2024 : Full Article
BTC was at $44,100, ETH was $2,600
- End of Year 2024: BTC $85K–90K ⌛️
- End of Year 2024: ETH $7,500 –8,500 ⌛️
- ETH will outperform BTC in 2024 ⏳
- BTC and ETH spot ETFs will both launch in 2024 ✅ ✅
- Total Stablecoins outstanding will hit $750B to $1 Trillion ⌛️
I expect a narrative shift from Meme coins to AI, Gaming and other projects with a focus on strong fundamentals. Many of those are heavily out of favour, and looking way oversold. ETH has already begun a reversal, and with the launch of the ETF and should have a very strong second half of 2024. ETH proxy plays should also strongly outperform in H2 2024.
Conclusion:
There are no crystal balls, and no one gets it prefect. Nor are there any guarantees. But with conviction, and a general ability to zoom out and maintain perspective, much of the noise and hysteria can be safely ignored.
I confess to being 100% deployed against my own advice, and to feeling the niggling tendrils of doubt at the edges of my periphery. But having experienced this feeling many times before, and with a high degree of well researched conviction in my investments, I have come to recognize that this is exactly the time when the tides have reversed and are poised to rise again.
If you have cash, this is an excellent time to deploy responsibly. If you are fully deployed as I am, it is the time to hold strong and sit tight. Do not overtrade, do not sell your conviction plays, do not leverage looking for alpha, do not overextend yourself. Simply sit and wait, and exercise more patience than ever before.
By end of this year, your friends and family will be calling you lucky and marvelling at the size of your portfolio. You will know how much stress and conviction and patience it took to buy when others were selling, and to swim against the herd as a contrarian investor.
Good luck out there, and see you on the next one!
Sovereign Crypto (aka RickyBobby)
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