I get the sense that the end of this year, is going to be quite chaotic financially, as there is one large cost (we knew about it) coming in, Due to a few other unexpected factors, we can still cover it, but it is going to make things far tighter than anticipated. Yet, I get the sense that this is only part of the disruption and it is going to be a winter of contradiction.
I am not very good at predicting market movements, but I do get the sense that there is a turning of sorts in the global economy, where while the winter will be harsh on energy prices, there could be significant movement in the financial markets, including crypto. I am still not ready to predict "out of the woods" yet, but I do "feel" that while consumer confidence is at the lowest points in a very long time, investor confidence that is happening in the background has already been picking through the bones of the fallen, scraping opportunity.
While all the indicators are showing investors are fearful, I generally think that the largest of them are continually taking the opportunity to get in before the sentiment turns. Market volatility over the last months has been pretty low and investors are looking for safe havens with opportunity, which means the business models that are going to last, rather than the riskier investments that have a high rate of potential default, like junk bonds.
But, for example, while the market prices are falling, the volumes are increasing, which means that more "tokens" are being traded, but they are traded at a lower price. As a simple example, if TokenX is 10 dollars and has a trade volume of a million dollars worth, 100,000 tokens were traded. If the price of TokenX drops to 5 dollars, it would take 200,000 to make the same trade volume value. At the lower prices, more trading can happen, which means more of TokenX is moving, because for example, people are wanting to sell to cover various costs or, people are wanting to buy in order to build their portfolio depth.
Lower prices can give the impression that less is happening in the investor markets, but it could also be, more is happening at a lower rate. And, while I have very little experience in traditional markets, in the experience I do have, the majority of wealth is made in the bear markets, it is just that the return is not going to be felt until the bull arrives and those tokens bought in the lows start to gain in price.
There is no real trick to this, but if there were, a couple might be to ensure two things:
- Have resources available to buy the lows
- Be willing to spend those resources and buy
The first one seems like the hardest to accomplish, but it is going to depend on a number of factors, including what one has now. But, at least in my own experience and watching many others, the second one can be a just as large or larger challenge, as people always want to buy at a lower low. And on top of this, there is the fear driven by the various sources saying, "this is the end" and "more pain coming" to contend with.
And, this is why so many people don't get in and so many others, miss the lows, because they are looking to maximize. Once prices start to go up again, people don't want to buy because now it looks expensive compared to the low, but I think it is more beneficial to look at the upside potential, or at least the "willing to sell" point. If hoping to buy TokenX at 4 dollars in the hope to sell at 10, buying at 6 dollars will still attract a 66% return. Nowhere near as good as the 250% return from buying at 4, but still - not really something to sneeze at.
There is a risk of looking at it from percentage gains though, especially in crypto, because even if setting sells at a 5x return and getting it, those same tokens might see 10x, or 50x - if they do that, buying at 4 or 6 is still a massive difference in final outcome, but both buy levels are going to have some happy investors. For example, buying $100 worth at 4 will be 25 tokens, at 6 will be 17. A 10x ($1000) return will be the difference between selling at a price of 40 dollars or at 60 dollars. However, the low buyer could sell at 50 dollars for a 1250% gain to someone who will buy it and sell at 60 for a 20% gain.
But, while it is fun to play with numbers and imagine 10x and 50x gains, most of the tokens are not going to see this kind of return and many are going to fail. Because of this, it is very hard to predict what will do well, other than the "solid" tokens that are expected to survive long-term, but won't return those kinds of numbers, anymore. It is going to be a very, very long time (if ever) before bitcoin returns a 50x gain again, which would be around a million dollars per BTC.
If it were to reach that point, what happens to all of the other tokens in the marketplace? What happens to HIVE? That would put it at $25 a token, which seems insane right now, but might be possible, given other market conditions. And this is what needs to be remembered too, as while any individual token is hard to predict, in the advent of a strong market movement upward, pretty much every token is going to see gains, with some magnitudes more than others.
That is far too far in the future though and for most people in crypto, they are looking for gains in the near-term, not even the mid-term. And, it is because of this mentality that most of the projects are going to suffer, because they are supported through investment potential for close gains, not business potential for offering a strong usecase as a business model. Most have no "product" at all and offer nothing of substance to keep people using it and investing. Once the potential for fast gains start to reduce, investors will jump to the next ship, because there is nothing compelling them to stay.
Crypto has to mature to be business, not tokens. Tokens are not the economy, they are just representations of the trades between goods and services of value. Sure, there can be some that are valuable because of them just being a token, like Bitcoin at the moment, but overall, they have to be attached to value generating business activity in order to hold value and, offer returns in the future.
At the moment though in crypto, people are chasing the return without the business, which means that most of the trade is being done on worthless "assets" that have no resource to apply to create anything in the "real world". But, because despite what many people say about supporting crypto, what most people are actually doing is looking for a better fiat life, so they take their gains and cash out, leaving those who are into crypto, holding bags.
But, those bags of tokens today, could be highly valuable chests filling vaults in the future, if the tokens in them are attached to usecase providing, in-demand, business models. And at some point, all the cash out to fiat, will start demanding a piece of the business. This means that people who sold a crypto token at 5c, might be compelled to buy into the same business in the future at 50c or 10 dollars, depending on what that business provides.
Crypto is a young model though and a lot of the people getting into it are also young, meaning that they don't have a lot of experience as investors, as business people, or as consumers. For many, their consumer experience is jumping from one trend to another, without care of the business ups and downs that happen in the background. However, once they start investing into these trends, they will start to realize that investing into trends is a losers game, unless investing in before it is a trend and getting out, before it loses its trend status.
But, also as they mature, they will start to recognize that outside of the trends, there is a larger and more valuable meta of "always in demand" products and services that provide usecase to the consumer for long periods of time, in relatively secure fields. These will increasingly be brought onto the blockchains and have their activity crypto powered, meaning that the investors into these will be able to shift wealth from traditional to digital economies without too much hassle, converting the "fiat-first" economy, into a digital-first economy.
The disruption to the global order of trade is going to be immense and it is going to cause all kinds of problems at every level of society. But as I have kept saying for years now, this is the battle at large - centralized versus decentralized ownership and governance. An investor hopes to be on the "right side of economic history" - so, they have three choices.
- Support centralized
- Support decentralized
- Support both by hedging bets
At the moment, all in crypto (including me) are hedging bets, because not everything can be done using it, but in time and as more business models move digital-first, there will be increasing momentum to shift more business value and therefore wealth, into the digital economies. This inspires change of behavior and innovation at an economic level never seen before, but it is going to take time and a lot of pain for it to reach its potential.
How much time, how many cycles?
No idea. But a decade from now I believe we will have a pretty good idea of whether we have succeeded or failed in changing the global mentality toward the economy and, who owns it.
The investor in me wants to be wealthier in the future.
The human in me wants the future to be better than today.
The traditional economy could make me wealthier, but I see very little chance of it satisfying my human wants and needs for a better future. All I see is degradation, division, conflict and violence - with the people who own the least, suffering the most. We should be able to arrange ourselves better than this, but it is not going to come through centralized power, and economy is the driving force of all power at scale.
We don't need to grab power to wield it, we need to own the economy that enables it. And to do this, all we need to do is generate usecase value that is more compelling for the consumer than offered elsewhere, because incentive drives behavior. And the economy and all the power potential it holds, depends on how we act.
Taraz
[ Gen1: Hive ]