Crypto Newsletter: Jan 10th '22
Crypto markets recap, altcoin '22 predictions, Monero and DCG events
This newsletter is focused on current events in the crypto space, sharing projects and people I find interesting, and serving as a resource for upcoming crypto events; locally here in Colorado and also larger events across the U.S.
Howdy crypto-heads! For this edition I’ll be sharing some end of year thoughts on Bitcoin, some altcoins I’m looking at for 2022, an upcoming Monero mining event and the DCG meetups for January.
Bitcoin EOY thoughts
Altcoin strategy for 2022
Upcoming events
1. Bitcoin and beyond
What a wild ride it’s been! While I’ve been in this space for 5 years and been exposed to most facets of the cryptosphere, I still wake up most days in amazement at what the awesome people building out the decentralized future get up to.
When I first became interested in cryptocurrency the idea that it would ever be taken seriously by the mainstream was a hotly debated topic. Fast forward to today and Bloomberg is regularly interviewing top crypto entrepreneurs, the legacy financial world is acknowledging the “threat” of cryptocurrency and federal politicians are seriously stirring the FUD pot. And even though we’ve come a long way, the most exciting part of all this is that we’re still soooo early!
User experience is still crap (better than 2017 but still…), the learning curve for self-custody and management of your cryptocurrency is still steep, and many exciting projects that are already creating massive amounts of real world value are still not even close to their “final form”.
Bitcoin in review
The story of Bitcoin for 2021 is easily summed up with one word…volatile.
We saw top Wall St. companies like Tesla and Microstrategy purchasing Bitcoin as an investment and then a few weeks later Elon slamming Bitcoin for using too much energy. We saw multiple, new all-time-highs following the disbursement of Corona virus checks and a sneaky push (mostly counteracted by the crypto community) to get some anti-crypto language into the massive federal stimulus bill. We saw the country of El Salvador set up a volcano powered Bitcoin mine along with making Bitcoin legal tender and we saw how Ciphertrace and the chain analysis companies can peer into every crypto transaction you’ve ever made (except for Monero) and send a copy to the highest bidder or the IRS.
I could keep going since what’s above is still not the entire story for 2021 but I hope you get the idea…
Bitcoin in 2022
With the new year upon us it’s hard not to look ahead and speculate on what 2022 may bring for Bitcoin and by proxy the world of cryptocurrency. I get the feeling that many people are unsure of what the future holds however, as the opinions and pieces I’ve been reading are all over the place.
After sorting through a lot of noise the two most compelling narratives I’ve heard are at opposite ends of the “Number Go Up” spectrum.
The FED is going hawkish and will be raising interest rates. They want bonds to be more attractive which will cause $$$ to flow out of risky assets (aka cryptocurrency) and into more “traditionally safe” havens. Get ready for a stock market crash and a 2-4 year bear market with Bitcoin under $10k folks!
A lot of cryptocurrency innovation has been cooking in the background and will debut in 2022. Institutional money wants access to this global ecosystem of emerging technology and has spent 2021 either dipping their toes or preparing to enter this market. Additionally, more countries will follow El Salvador in making Bitcoin legal tender to escape the fiscal control being exerted by USD backed banks, Belt&Road and IMF loans. Get ready for $200k-$300k Bitcoin this year folks!
So which one is it?!?! In my opinion it’s gonna be somewhere in the middle as I think each perspective offers some valid points.
1. FED starts hawking
My main problem with this narrative is that it assumes the price of cryptocurrency is mainly determined by the United States and the participants of our financial markets. While we certainly control enough wealth to move crypto prices one way or the other (thank you stimulus checks!), whether this is actually the case for a majority of crypto crashes or runups hasn’t been proven to me.
Additionally, if the stock markets really start crashing due to quantitative tightening and higher interest rates there is a small chance that cryptocurrency markets de-couple from stocks as younger investors view crypto with less risk than older, more traditional investors.
Overall, while I do see the FED’s raising of interest rates causing some short-medium term downward price pressure, I am doubtful that this would be enough to cause a multi-year bear market. I see a floor of $20k for Bitcoin even if stocks take a hit this year.
2. The Web3 Utopia
Eth2.0 with ZK rollups and sharding. NFT’s. DeFi. Web3. DAOs. Scalable blockchain networks, i.e. Avalanche, Solana, Cosmos, Polkadot. Layer 2’s. Crowdloans. Lightning.
Tired of the buzz words yet? Me too…
Want to know who isn’t tired of the buzzwords? Venture Capitalists, Angel Investors and Accredited Investors.
Even with the uncertainty around the price of cryptocurrency many people with wealth to spare are forcing themselves onto blockchain and cryptocurrency projects who need funding. With this comes the dreaded “VC exit liquidity” scenario where a project with great ideals and fundamentals is co-opted by a VC firm whos main goal is to re-coup their investment + some returns as quickly as possible.
This leads to many projects prematurely launching a token, holding a crowd sale or providing a liquidity pool so that a large amount of their projects tokens can be sold by the VC who invested pre-seed.
In my opinion the appetite for funding early stage crypto startups will still be huge in 2022, but a lot of the funders will still not be aligned with the projects they are funding. Fortunately this is an issue that many in the crypto space are tackling, with things like decentralized liquidity providers or DAO’s making direct investments in projects.
I hope to see the crypto community continue rolling their profits back into the ecosystem, but for 2022 the current cycle of Invest>MVP>Tokensale>Exit tempers my expectations for a record shattering year in the world of cryptocurrency.
Are there a lot of cool things coming to crypto? Absolutely. Will many projects with a lot of hype start delivering on their promises this year? For sure (and some already are). Will we see Bitcoin go over a quarter of a million dollars? Probably not.
Lastly, the argument that more countries will turn to Bitcoin as legal tender is exciting but there is a big difference between “making it legal” and people actually using it (See El Salvador’s Bitcoin wallet rollout). There are currently a few S. American countries proposing legislation for Bitcoin to become legally accepted as payment but nothing concrete as far as I’m aware. This will be an area that I keep a close eye on for 2022 however, as a chain reaction of countries offering Bitcoin to their citizens would cause a lot of excitement for cryptocurrency investors.
TL;DR
2022 is a coin flip for cryptocurrency prices in my opinion. There are some good arguments for appreciation and there are some good arguments for depreciation. I don’t believe that we’ll see Bitcoin go over $250k unless a bunch of countries officially make it legal tender, however, I don’t see 2022 bringing a brutal bear market where the BTC price sits under $10k for multiple months.
I expect it to be an OK year with some lows early on and a rally towards fall, with ceiling being around $150k and the floor sitting at $20k for 1 Bitcoin. #RemindMeBot: 12 Months
I’ll be keeping an eye on the FED and their quantitative tightening and interest rate hikes along with watching out for significant Bitcoin/crypto adoption in new countries. I’m hopeful that ETH2.0 comes this summer and drops transaction fees for the Ethereum network as this should open up access to innovative technologies built on Ethereum for a ton of people.
Final thought: I’m a long term investor in cryptocurrencies and plan to hold them until I’m dead, at which point I’ll pass them to my family.
There is nothing I’ve read while researching for this newsletter that makes me question the long-term value of open-to-all, majority governed, un-censorable money and data networks.
If I’m wrong and Bitcoin goes under $10k until 2024 I’ll be buying the dips with my FIAT and accumulating.
2. Altcoin strategy for 2022
With the uncertainty at the macro level for crypto in 2022 I am taking a more cautious approach with the altcoins I’d like to exposure to for this year.
I’ve got 3 main criteria I’m looking for:
DEFI protocols that are generating revenue
Blockchain networks that are growing active users
Projects with compelling use cases for NFT’s and/or gaming.
I am also trying to stay away from projects with an unclear or unproven use case, projects that are early in their product lifecycle, and projects that are trying to “boil the ocean” with their tech.
To simplify: Revenue Generation and User Growth = Good / Whitepaper and a Dream = Bad
The projects I’ve already added since January 1st or will add more of in 2022 are ETH, CRV, AVAX, and RARE. I will likely add more AXS depending on how their rollout of the RON token goes and possibly more SUSHI if they get past their infighting and start vacuuming up AMM marketshare again.
So why these 4 (maybe 6) projects?
For ETH it’s all about Ethereum 2.0. The hype for this is humongous and if the gas fees lower as expected I see ETH outperforming Bitcoin and most other cryptocurrency projects this year. Additionally, with all of the associated projects built on or compatible with the Ethereum Virtual Machine (EVM) the extra value these projects generate from using a more scalable blockchain network should get priced into ETH’s value too.
Curve (CRV) is an exchange liquidity pool on Ethereum (like Uniswap) that functions as an Automated Market Maker (AMM). The main hype with Curve is their new mechanism to reward users who lock up some cryptocurrency with their smart contract. The current approach used on Sushiswap and Uniswap is a simple % based reward for locking, however, with Curve’s new update you’ll be able to vote and be eligible for additional rewards so that your lock up is less risky. Obviously this new model from Curve needs real world validation but the DeFi people I know are pretty excited about it.
Avalanche (AVAX) is an ecosystem cryptocurrency with it’s own blockchain network and in 2021 actually performed quite well. I see a continuation of success for them in 2022 as their main competitors (Layer 1 projects supporting dApps like DOT, COSMO, SOL, ADA, etc) are each dealing with struggles of their own and the path Avalanche has chosen to scale their Transactions-Per-Second (TPS) seems solid. AVAX plans to utilize “Sub-Nets” that function similarly to the “Sharding” technology Ethereum is trying to incorporate. Adding in good amounts of new user growth, solid developer community and decent leadership AVAX has a lot of upside and I’m willing to see where it goes for 2022.
RARE is a simple Non-Fungible-Token (NFT) play as it is the token backing the NFT marketplace SuperRare. The digital art space is growing at one of the fastest paces within the cryptosphere and I see 2022 continuing this trend. If NFT’s take another leg up in mainstream adoption I want exposure to that upside and I’m willing to risk some funds for it.
Honorable Mentions
SUSHI, the official token of the exchange liquidity provider Sushiswap has been struggling with some in-fighting about the direction of the project. While I was very bullish on them for most of 2021, the recent turmoil has moved them to a “wait and see” position. I still like them better than Uniswap as their interface seems easier to use, but they need to get everyone pulling the same direction before I’m back on board.
Axie Infinity and the RON token are an interesting play on the gaming industry and a play-to-earn model that incorporates crypto. AXS is the token for the Axie Infinity gaming ecosystem and is developed by SkyMavis, a gaming company out of Vietnam. As of August 2021 they had 1.8 million daily users and daily sales volume that reached $33 million. With all that money pouring in a lot of investors have been waiting to see what they do with it and the answer seems to be the RON token. Short for Ronin, RON will be an Ethereum-compatible side chain that helps scale the customized Axie blockchain that Axie Infinity currently uses. If you want to get your hands on some RON you can currently stake equal amounts of AXS and ETH to earn RON. Unfortunately there is no way to sell these RON yet but in the near future they should become available for trading. Full disclosure: I am currently farming RON using the method above and happy to help if you want to set it up.
3. Upcoming Events
January 24th, 5:30pm virtual event - Mobile Monero Mining
Learn the ins and outs of mining Monero on your phone! Q&A from the chat at the end.
Follow Csill on twitter or subscribe to our youtube to receive the link to the livestream.
We are being hosted by FonzFindz who is a side gig focused youtuber.
January 27th, 7pm - Crypto Investing Round-table, in person and free at Eloise May Library!
For this event we will start with some basic info about beginning your cryptocurrency journey and then move on to discussing the projects that attendees are most excited about. Generally the group shares their opinions on potential projects and asks questions related to it. This is a great way to talk shop with other crypto-heads and make sure you're not missing out on valuable projects in the crypto space.
FYI we are in a different location, we will be in Meeting Room A of the Eloise May library instead of our usual spot. Address is 1471 S Parker Rd, Denver, CO 80231
January 18th, 6:30pm - Crypto Trading Class 1, virtual on zoom
This is Trading Class 1. If you are new to trading crypto or want a refresher on Technical Analysis indicators and basic Quantitative Analysis this is the place you should start!
We will cover:
Setting up TradingView
Support/Resistance, Volume, Candlesticks, EMA’s, Fibonacci Retrace/Extend, MACD, RSI and basic market structures like pennants and flags.
My favorite charts on Glassnode.com useful for quantitative analysis and how to make your own.
The cost is $119 and runs for 2 hours.
Sign up here: https://www.meetup.com/Denver-Crypto-Group/events/282531676/
January 20th, 6:30pm - Crypto Investing Class, virtual on zoom
This class contains all the material used by Matt and many other DCG members to grow their crypto holdings while outperforming the markets.
During this class you will learn the best ways to:
Evaluate crypto projects
Build your portfolio
Manage risk within the cryptosphere
The cost is $119 and runs for 2 hours.
Sign up here: https://www.meetup.com/Denver-Crypto-Group/events/282531633/
That’s it for this edition, stay happy and healthy and I’ll catch you soon!
Much Love,
~Matt