My current best model on crypto markets is that we’re kind of 4-12 months into a relatively mild winter. 4-12 months because different themes topped at different times, more dispersed than in previous cycles. Could use grayscale premium going negative to mark start of bear. /1

2/ retail inflows probably peaked Feb-April last year. Yes, many assets made marginal new highs after that (or for some themes like metaverses, major new highs), but talking crypto as a whole, I’d call it a rounded top February-November.

3/ I think we likely would’ve gotten an extension to new ATHs that would’ve looked like a minor blow-off top in q4 2021 or q1 2022 if not for the macro tightening and global risk asset sell-off. That cut off the last inning or two of my 9 inning baseball analogy.

4/ consider the defi basket (FTX perp) for example. When did defi bull run end? Imo, nothing in this thread is bearish. On the contrary, noting that crypto as a whole is kind of well into a mild winter has me starting to look for value (cautiously.)

5/ I don’t have much to offer as a forward looking statement or prediction. Everything I look at suggests this is kind of a “middle of the road” entry point. Not an ideal bottom of bear entry, but nor is it a dangerous late inning entry.

6/ macro matters. If global equities tank 30%, crypto will be down substantially and vice versa if equities rally. If we assume macro is flat, I expect a ranging market (possibly a very broad market). A huge amount of cash was raised by crypto institutions and projects in q4.

7/ that cash helps provide a “floor” to prices. If macro doesn’t collapse, that cash will look to buy value. Those bids might be 50-70% below current prices, but still a meaningful floor.

8/ similarly, in the current macro/psychological climate, extreme rallies likely get sold into by “bagholders”. I’m sharing my high level thoughts, all of this is a low conviction simplified mental model. And as always, I’m guesstimating, may be wrong about everything.

9/ an important thing to note, however bearish markets get, it won’t be a winter in building. VCs are flush with cash, projects raised massive ecosystem funds. There’s enough cash to hire tens of thousands of engineers, cryptographers, biz dev people etc.

10/ we’re likely to continue seeing high dispersion across projects. Increasing regulatory scrutiny will produce winners and losers in defi. In bull runs, a rising tide lifts all boats in sexy themes. In bears, the weaker competitors are often abandoned.

11/ imo, this is a good time to be cautiously shopping for long term value, and likely a great environment for asset selection and rotation; a “medium term trader”’s paradise, as we’re likely to see dispersion rising even higher.