Let’s decode the crypto bull – Current market cycle position

Crypto expert Smac is skeptical about the so-called wisdom of crowds, especially in financial circles, where overconfidence and irrational behavior are rampant. His observations follow the November 2022 FTX collapse, after which only a fifth of people thought the market would stabilize without major downturns.

Market Trends and Predictions

A year post-collapse, Bitcoin had doubled to around $35,000, continuing its ascent. Smac’s surveys showed mixed feelings: only half expected a further 30% increase, while fewer still anticipated ongoing rises. Despite initially predicting Bitcoin would hit both $45,000 and $60,000, Smac’s confidence has waned slightly given the unpredictable short-term movements.

The core question Smac explores is “where are we in the cycle?” He finds the common mid-cycle theory—often dubbed as the fifth or sixth inning—a noncommittal hedge more than a conviction. Smac contrasts time and price to provide a clearer cycle analysis: from a time perspective, we’re about 70 weeks into the bull market, but price-wise, Bitcoin is roughly 3x off its lowest point.

Dynamics of This Crypto Cycle

This cycle differs markedly from previous ones. Traditionally, the flow went from Bitcoin to Ethereum, then to a broader array of crypto assets. This time, the sequence has been disrupted, leading to frustration among investors as unexpected assets surge. People who witnessed significant gains from newer cryptos like Solana feel left out, causing a sentiment of a compressed or irrational market cycle.

Despite skepticism, the recent approval of a Bitcoin ETF represents a monumental shift, allowing massive capital inflows from institutional investors. Yet, Smac criticizes the market’s overconfidence in predicting the effects of such inflows, highlighting a general misunderstanding of crypto and traditional market structures.

Bitcoin’s price trajectory has been relentless, with little room for new investors to enter. This strength continues despite a broader skepticism about further rises without new narratives, as past gains overshadow potential future increases.

Where the Market Stands

As for the market’s structural changes, Smac notes that even if the BTC ETF has brought new investors, the broader impacts are yet to be fully realized. The gap until the ETH ETF’s likely approval by late 2024 or early 2025 is seen as a necessary period for market digestion and education.

Regarding on-chain activity, there’s been a noticeable increase in stablecoin supply and active addresses, indicating we might be earlier in the cycle than many think. Yet, retail participation remains low, as evidenced by Coinbase’s app rankings and user activity, which suggests that the market could still significantly expand.

Lastly, Smac passionately argues against the cynicism surrounding the current cycle’s potential, especially criticisms that focus solely on meme coins or speculate about an impending downturn without substantial evidence. He concludes, emphasizing we’re likely just a third into this cycle, with much more development and innovation yet to come, particularly in areas like SocialFi, decentralized personal identifiers (DePINs), and real-world assets (RWAs) moving on-chain.

In a final, emphatic note, Smac states:

“If you couldn’t tell, I think we’re in the early stages of this cycle still. My guess is we’re about 1/3 of the way through. Despite a lot of cynicism that everything has exclusively been about memecoins, there are other things going on and being built.”

Smac remains “turbo optimistic” about the future of crypto, driven by both ongoing projects and the promise of new innovations that continue to emerge at the intersection of technology and real-world applications.