The charts are not looking good and Ran decided to bring Rudo, Vinny, Jose, and Bill on the show today to speak about the market conditions and what we will likely see in the coming days.
- What are the charts saying?
- What’s the update on institutional adoption?
- How are Fantom and Astroport doing?
What are the charts saying?
The charts are currently not looking good, but Rudo says he’s bullish even though people are still conflicted and nobody is sure if we’re going into the bull run or not. Rudo said the reason why he’s bullish is because there’s a big imbalance state and the whales are going to want to cheat us out of our Bitcoin. He talked about USDT dominance and he feels like we’re getting to a point where people are tired of holding their dollars and they want to start making money again. He has actually been focusing on the 36.5 dominance for a while and he has two indicators to prove this: Fibonacci levels and his seismogram meter.
Ran brings Vinny on, he thinks this is market correlation with the Nasdaq, and other markets. The (US Federal Reserve (Fed) is threatening to raise rates and the mere threat of raising rates is having a massive impact on the market. He thinks there is no reason for the market to react like this, other than for the Fed’s gum-flapping, and it spills over from the traditional markets to crypto.
The Fed knows that the markets are overheated and therefore we have inflation. Logically, they have three courses of action. One is to start buying money out of the economy or stop putting money into the economy. The second is to increase the interest rates, which will have some serious implications. And the third is to send signals to the market to cool it down and make people spend less. Of course they decided to go with the third option and indeed this is exactly what’s happening – an overall market slowdown.
Vinny thinks finger-wagging is the culprit for the current market conditions. So, what we’re going to see is that when the Federal Open Market Committee (FOMC) comes up with this current market situation, the Fed will probably want to hold out for a while because they can’t afford to destroy the markets. And this is because basically all of the politician’s money sits in their 401ks and the stock market. The Fed has also been buying up corporate bonds since the crisis. We’ve got a situation where their assets can turn very toxic if they crush the markets. Therefore, if they raise rates and destroy the value of the underlying assets on the balance sheet, they can’t wind up the balance sheet at the same time. Vinny thinks they’re going to realize that it’s a difficult game they’re playing and they can’t afford to raise rates in this environment. Vinny said he simply doesn’t see three rate hikes this year, as the Fed announced earlier this month.
Moving on to Bill, he thinks it’s a “sell the rumour, buy the news” scenario and all the yapping is beginning to cause some sort corporate level recession, and we’re going to have this dynamic where short-term inflation will come down but long-term inflation will sky-rocket or remain at a high rate. Ultimately, we are going to have a dip in inflation, which is going to be caused by the lack of corporate spending going on, and it will quickly have a trickle-down effect. As the bond market absorbs this idea that rates are going to have to come down again, there’s going to be a massive buy-the-news rally.
In addition to this, China has launched a new round of increasingly aggressive easing to avoid property collapse. And China is now in a pickle because they cannot contract and have to start doing a fresh round of easing. The Fed is talking about tightening and at the same time, the European Central Bank is increasing spending in their economies. But the two can’t diverge for long.
Vinny spoke about how this is a good time for the US economy because we need a period of “growth-flation.” Considering that Europe is dependent on the United States if Europe keeps printing money and devaluing the currency, they’re going to have a lot more of competitive advantage to export to the US because it makes the products in Europe cheaper. This means the US can’t raise rates when the rest of the world is dropping rates because it offsets the trade balance.
Ran brings up the Grayscale Bitcoin Trust (GBTC), we know it holds more BTC than anybody else in the world today. It is a pseudo ETF, and it holds only BTCin the trust. And today, you can buy Bitcoin in the trust at a 27% discount to net asset value. The trust has a management fee of 2% annually. Why is this not the best trade on the market today?
Bill thinks this isn’t the best trade out there because the premium can go lower. If we happen to get a spot ETF announcement, that premium will go to zero overnight and anybody holding Grayscale will look like a genius. But even with Bitcoin rebounding, Bill said he can still see Ethereum going up and the premium going down. So, there is kind of a waning interest right now in anything but a true spot ETF.
Vinny also said he won’t be buying GBTC. He thinks the reason for the discount on GBTC is because the stock market is down and people are searching for other places to put their money. So, the money that goes into GBTC is stock market money. If you think the stock market can crash a lot more, then don’t buy GBTC, but if you think the stock market is going to rebound, you can buy GBTC because it’ll probably spill over into GBTC and crypto. And right now, the Fed can’t destroy the stock market, because all their retirement money is sitting there. In fact, the political strategy of the US has been to make sure the stock market never crashes.
What’s the update on institutional adoption?
With the market collapsing, institutions are hunting for yields and they might come looking for these yields in Decentralized Finance (DeFi). And this is already happening. Vinny thinks DeFi is the underlying infrastructure for centralized firms to build upon and offer better yield products to their clients. It doesn’t look like a lot of institutions will be going directly into the DeFi ecosystem and putting money into smart contracts because, they don’t know how to qualify, plus there are still some compliance issues. Because of this, it looks like DeFi will become an underlying rail for the Centralized Finance (CeFi) services that these institutions offer.
Since we know the institutions are coming, and to an extent already here, there’s going to be a floodgate of money coming into the crypto space in 2022. Crypto is a liquidity blackhole that sucks people in and it’s probably going to be the same with these institutions. They’ll start by buying up BTC and ETH, and then they’ll try to understand DeFi blue chips. In addition, we already have a lot of these institutions asking about play-to-earn, LUNA and various other hot projects. Despite what’s going on now, LUNA is holding pretty well. This is due to a combination of their DeFi play and the growing network effect of their ecosystem.
How are Fantom and Astroport doing?
Speaking about Andre Cronje’s approach to the airdrop, we know there’s been a massive increase in FTM’s Total Value Locked (TVL), which has even surpassed Solana’s. Right now, there’s a risk of a big sell-off of Fantom and a drop in TVL after the wallet snapshots have been taken. In other news, Astroport had a successful launch, with a huge TVL. The team has a long way to go in developing their product and they currently have big plans on use cases for the token. Right now, staking is not live but will be very soon.
With the current situation of the crypto market being what it is, if you haven’t already, you should buy into quality. Bag a lot of strong coins and wait for their comebacks.
Also, If the institutions are coming into the DeFi space, you should be buying into the front running protocols. It’s all about positioning.
Finally, the market will definitely recover. So, unless you want to buy the dip, step away from your computer, switch off your phone, and chill. This bearish trend will pass and if you’re holding onto good projects, just relax.