Thread by @dkcrypto13

2022 in crypto.

Pretty much every larger account that made a name trading is Bearish.

Funding is leaning negative (traders press shorts).

Everyone expects the Fed to kill the party & regulators to finish it off.

Everyone has learned crypto can only really rise if $BTC rises.

I am not sure.

I know the Fed is fighting inflation and has historically always caused a recession in doing so successfully.

I also know $BTC behaves like digital gold and gold itself is a pretty stupid idea & only really works when liquidity expands.

I also know, historically all of crypto has been extremely correlated to $BTC and its chart looks sh1t.

So these aren’t amazing conditions for a rally in crypto prices.

However, I have long held the view if crypto is to be an actual asset class, altcoins have to de-correlate.

The innovation and the different uses we are seeing from ‘altcoins’ really scream decorrelation at this point. We’ve all seen that one thread on $YFI but it’s a great example: how long is a productive, earnings-generating asset going to be subdued because ‘gold’ is weak?!

By the same token (pun intended), how long will a layer 1 chain that offers truly new possibilities at scale and with low cost, sees high increasing usage and is being traded vs USD and not vs $BTC most of the time going to be subdued because ‘gold’ is weak?!

The fact is - if people keep using crypto, the assets being used will be productive and the most productive ones of today are no longer denominated vs bitcoin on exchanges but vs Dollars so they have every chance to swim free.

Aside from that, the Fed is fighting a different kind of inflation than the times before IMO. ‘Transitory’ was always a bit of a joke, but there are actual reasons the smartest economists labeled it so at the start - because supply chains breaking due to covid measures caused it.

So in theory, if omikron turns out to be the first step to covid becoming endemic and the pandemic ending (something I think is very clearly a possibility based on the data), then supply chains should mend and inflation should come back down. We may actually see that pretty soon.

So I see a lot more risks to crypto prices from central banks,regulation & token unlocks in 2022 than in 2021 and I recognize the charts look weak. I would not be surprised at all to see prices 50% lower than today. But I don’t think that is as clear a case as many are making it.

I think most of the negative stuff I say here is already known to most market participants and stocks go up 7 in 8 years pretty much and I expect crypto to be in a similar category medium term. So I don’t think it is unlikely prices at the end of 2022 are higher than at the start

The future rarely turns out the way everyone thinks. Right now everyone sees only risks. So maybe, just maybe, covid & inflation won’t be half as much of a problem anymore six months from now.

Crypto still needs a new narrative, as do stocks. But sometimes price makes narrative

Anyways, just some lose thoughts. Not advice in any way as always.