Fallout - The Daily Gwei #480
It's finally time to accept reality - the party is well and truly over.
The crypto markets are wildly unpredictable and pretty much no one knows where prices are going to go in the short to medium term. Even in the longer term it’s very hard to predict which projects will survive and I think there’s really only 2 that we have any certainty for - Ethereum and Bitcoin. In the meantime, and for the next several months at least, we are going to be experiencing the fallout of the 2021 excess.
As I said in my tweet above, crypto bear market bottoms are formed when there is a “max pain” of sorts throughout the industry. This usually comes in the form of lots of people getting absolutely obliterated, a cleansing of all the trash projects that pumped during the bull market, a humbling of egos and a feeling of a “reset” across the industry. Though just because a bottom may be formed it doesn’t mean that prices are going to start going back up immediately - it usually takes quite a while for the market to turn bullish again after events such as those we’ve experienced over the last few days.
The craziest thing about the last few days is that what happened to the Terra ecosystem is quite literally unprecedented within crypto - especially at the scale it happened at. Of course, we’ve had other big things blow-up over the years (Mt. Gox, Bitconnect, the March 2020 crash) but never at the scale or speed of LUNA and UST. It’s hard to tell right now, but I think the effects of these last few days are going to be felt for a long time to come - the tens of billions of wealth that has been destroyed in such a short period of time will take a while to recover from.
Obviously I’m still very bullish on Ethereum and ETH - actually even moreso after the Terra collapse - but unfortunately it is not immune to broader crypto market movements. I do think ETH will fair better in the recovery and that many of the most popular 2020/21/22 era tokens won’t ever see their all time highs again (or even close to them). Ethereum will also keep shipping its major upgrades regardless of market movements - The Merge, sharding, layer 2’s - all of this is still going to launch and continue to be worked on.
The crypto industry has been through market cycles plenty of times now and the quality projects have come back stronger every time. Though a key difference now compared to previous cycles is that the macroeconomic environment has completely shifted and is in uncharted territory with things like inflation in the U.S at 30 year highs. It’s always good to keep things like this in mind as not to get sucked into deterministic thinking as this often leads to rash short-term decision making which can then leads to monetary losses.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.
Look up IRON. Failed stablecoin, a year prior to LUNA nobody learned a thing from. Except a few who profited greatly. Caveat emptor.