Thread by @OnrampAcademy

1/ Every year, @twobitidiot publishes a must-read report on the outlook for the crypto industry. It's 165 pages, packed with amazing info and insights.

Today, let's cover the most important points from the Top 10 Narratives & Investment Themes section:

2/ The Collapse of Institutional Trust: Skyrocketing public debt, rising inflation, fears about the inability to retire, 70% disapprove of Congress, distrust of Wall St, and concerns about Big Tech’s monopoly power. This is the backdrop for crypto’s rise in prominence.

3/ Whether its ideological, an exit from the current financial system, way to take back control of personal data, or simply for financial gains and memes - crypto has something for everyone to gravitate towards.

4/ “Whether you’re missionary or a mercenary, one of the unifying forces behind this movement is the belief that decentralized technologies with embedded financial incentives offer a compelling, often lucrative, alternative to our decaying legacy institutions.”

5/ Crypto/Web3 is inevitable: a user owned economy will outperform the monopolist owned economy in the long run.

6/ DeFi offers savers 5% vs. Wall Street’s 0.5%. Non-fungible tokens (“NFTs”) give creators monetization opportunities without Hollywood’s 50%+ rents. Open games and social graphs remove the 100% take rate from tech incumbents and eliminate deplatforming risks.

7/ Crypto/Web3 offers better solutions and poses real threats to incumbents in all industries. Crypto will be an order of magnitude larger by 2030 because the user economics are an order of magnitude more attractive.

8/ Bridges and Nifties and DAOs: while there will be growth across the entire crypto industry, three areas are particularly underdeveloped: NFT infrastructure, DAO tooling, and inter-protocol bridges.

9/ NFTs are just getting started, but reliable NFT tools are still in their infancy. As these tools get better, expect the NFT space to only grow

10/ DAOs offer an innovative approach to coordination, collaboration and governance. However, to truly make DAOs viable, we need much better tools and products. Expect 2022 to be the year of the DAO

11/ Scaling and interoperability will be a big focus. As Layer 1 solutions have exploded in 2021 due to Ethereum’s high gas fees, all these new blockchains will need to talk to each other. We need better bridges.

12/ The Decoupling of Cryptos: Different cryptoassets have different value drivers and not all are currencies. DeFi, NFTs, Smart Contract Platforms, Gaming, and more are developing into their own stand alone sectors.

13/ There are still massive information asymmetries due to the specialized knowledge needed for each of these sectors. Because of this, crypto specific funds will have advantages over generalist investors.

14/ Permanent Capital: The amount of capital that has flooded into the crypto market in 2021 is mind boggling. Dedicated crypto funds have seen record new capital raises and record AUM from the appreciation of their core holdings.

15/ Numerous firms have raised $1b or more (Polychain, Paradigm, a16z, Multicoin, 3AC, and more), hedge funds are deploying a larger percentage their assets into crypto and pension funds are buying direct.

16/ Crypto’s $3 trillion of liquid value creation in 10 years now rivals that of all other venture-backed startups combined. Institutional entrants have taken note, and it’s likely they‘ll deploy capital at a larger clip in 2022.

17/ Money coming into crypto may move between less risky blue chip assets (BTC & ETH) and more speculative investments, but the capital isnt leaving the system.

18/ How High Can We Fly: how much remaining upside is there in this current cycle? Fundamentals for BTC show it could easily eclipse $100k in 2022. ETH only needs 3-5x to overtake market cap of Microsoft, Apple, Google.

19/ Surviving Winter: very bullish on the next 3-6 months and the next 10 years. However, if history is any indication, a crash is likely coming in 2022.

20/ For those of you have never experienced a crypto winter before, be prepared for a lot of negative press and critics to come out to the woodwork and say “I told you it was a bubble”.

21/ However, if you still believe that bitcoin is the soundest form of money, web3 offers an optimistic bet on the future and are the building blocks of the new frontier, then continue to HODL through it all.

22/ Other tips. Unless you are a professional trader, steer clear of leverage. Do not short, you’re likely to blow up. Keep track of all transactions for tax purposes.

23/ Public Options: coins have outperformed and will likely continue to outperform crypto public stocks. BTC has outperformed Coinbase’s stock since the IPO.

24/ There are rhythms to the crypto market. BTC often leads, then alt season follows. That rotation is well known so the cycles happen faster nowadays.

25/ Thats it for the first section of @messari’s 2022 thesis. We will be covering the rest of the 165 page doc in days to come. However, we still recommend that you check it out for yourself

messari.io/pdf/messari-re…

26/ Thanks for reading.

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