The Cyclicality of the Crypto Markets Shows Its Hand Once Again

Like clockwork, 36 months after a debilitating bear market, we shake off the psycho-social anxieties of -90% drawdowns and blast out into all-time highs.

Coupled and amplified by the highly favorable outcome of the US presidential elections, the cyclicality of the crypto markets has shown its hand once again.

Unless you are a seasoned expert like GCR; during these boom times, reality becomes blurred as our blood pressure runs high alongside the floods of FOMO-inducing PnL screenshots and serious sums of money hanging on the line. Man regresses into his most primitive on the fervent instinct to accumulate wealth. The dualities of his intentions shall rise to surface his true character.

Banana Zone.

Up and to the right.
“ But Sir; physics says its not possible.”
“ Who is “Physics” and why are you listening to him?”
Up only I said.

Prices are rising,
Cults are forming,
New narratives are capturing attention.

And retail is only starting to arrive now.

Things are about to get wild.
Very wild.

WAGMI, they say.
Supercycle, they say.
This time, it's different, they say.

As we accelerate upwards through explosive/chaotic market expansions that allow us to enjoy the onset of fresh liquidity driven by FOMO, we shall bear witness to the intellectual atrophy of the industry’s subject matter(s). The quality, depth, and honesty of content will recede as soulless conversations about price take front and center.

Gamified, “funny”, socially cognizant, and absent of liability, this cycle's domineering theme of Memecoins is an apocryphal example of the double-edged dualities and paradoxes of web3.

While these wonderful, retail-oriented instruments have done (and continue to do)amazing things for the industry, such as:
- blessing us with glorious double, triple, and even quadruple-digit returns
- bringingsoulback into the industry by acting as a counterbalance to the ETF/tradfi crowds
- embodying the purest realizations of crypto/blockchain’s innate power*(borderlessness, permissionlessness, censorship resistance, opposition against “Goliath”)*

They simultaneously bring with them a behavioral virus…

Belligerent greed driving manic levels of grifting.
Vaporware heralded as a new paradigm.
New millionaires popping up daily.

The delicate social thread of attention upon which the memecoin market hinges forces market participants to resort to extreme measures. Provocative marketing, eclectic branding, and traumatizing market-making; whatever it takes to trigger intense emotional responses that capture that very scarce and erratic resource of attention. This is a very steep, slippery slope leading to moral and psychological deterioration, especially when factoring in that prolonged exposure to the sector’s toxic, demoralizing culture of degeneracy and low IQs skews perspectives and incentivizes malicious behavior (scamming).

Regardless, when measuring industry growth over time, not just “Top-to-Top” but also “Bottom-to-Bottom,” Memecoins are a huge positive for the industry.

Possibly as a result of the “knock-on” effect, where simply due to the egregious amount of volume, some degree of liquidity permanently spills over into adjacent areas such as infrastructure and DEFI where it will increase the baseline, or into the portfolios of diamond handed veterans, which will reliably continue to steer the development of this industry.

When prices are flying and emotions are high, our job is to enjoy the ride as much as possible while always remaining grounded.

The best way to do that is by taking a moment to look at the big picture.

To remember the deeply philosophical foundations upon which this industry was born and upon which it continues to blossom… The existential distrust in government and elegance of the human psyche.

Nothing is personal.

Nature does not discriminate or play favorites.

It explicitly indicates that intelligence will always optimize for energy efficiency, and over time, all resources will flow there where they require the least effort and produce the most effect.

In the case of human attention and capital resources, this environment is a decentralized one.

Decentralization.

The diffusion of control/authority over a system from a single source to many.

Promising to radically transform the economic fabric of society through the synthesis of cryptographic, economic, and social primitives, Blockchain technology (namely Bitcoin) captured the imaginations of a very small, special circle of people known as cypherpunks back in 2009–11.

Witnessing the exponential technological developments in computer science while living through the dotCom and GFC bubbles, these people were united and incentivized by their belief in technology as a natural extension of human rights and self-sovereignty.

Hard-coded and isolated from politics, Bitcoin was the perfect instrument to transform power structures, circumvent government oppression, and rehypothecate value.

An alternative monetary regime,
Governed by all,
Owned by none.

To stand against Big Brother.

First, it was an idea that was dismissed.
Then, a working product that was laughed off as a toy.
Then, a threat to governments that was harped on and revolted against.
Today, it is the cornerstone around which modern finance is coordinating.

By lowering the barrier to entry, abstaining from the enforcement of arbitrary social laws, and detaching from the confines of geographic borders, we equalize opportunity and open up the playing field.

Crypto

Economics are massive social emperiments, always have been, always will be.

The premier application of Blockchain technology, cryptocurrency, is a tokenized unit of account, medium of exchange, and store of value. Digitally native money that is cryptographically secured.

We won't go too deep here, but money is an abstract concept that acts as a vehicle to simplify and facilitate the measurement and exchange of value between people. You acquire it by exchanging your most scarce and precious resources, time, energy, and knowledge for the resolution of people's problems/creation of solutions rather than on yourself. For your contributions, society rewards you with resources that allow you to experience something else. It is stored energy that signifies acquisition through the expansion of effort over time in the pursuit of a desirable outcome.

Crypto’s esoteric money-like nature pushed humanity into challenging the status quo and reconsidering what value truly is and how it is ascribed.

After public disillusionment from the surfacing of truths around conspiracy theories, governmental corruption schemes, and blatant economic manipulation collided with the arrival of blockchain technology, a revolution began.

Individuals gathered to build digital communities comparable in size and influence to nation-states to declare economic emancipation by naming decentralized crypto networks’ computational resources (coins) to be valid, alternative, independent forms of value.

Fast forward 10 years, and in addition to the radical new class of wealthy people rising around the world, cryptocurrency birthed an entirely new sector based on an alternative monetary system.

The impact of crypto’s innate technical primitives of sovereignty, borderlessness, accountability, interoperability, and divisibility naturally apply to and extend the utility of money. By decreasing transactional friction while increasing security, cryptocurrency unlocked the concept of superfluid finance.

Nearly, if not all, applications and institutions have either already integrated or have shown intent to integrate crypto/blockchain into their operations. From payment megacorps such as Cashapp, PayPal, Transferwise, and Moneygram reducing costs and settlement times with stablecoins; to wealth managers like BlackRock catering ETFs to their legacy clients, to enterprises like MicroStrategy building reserves on their balance sheet; the list of experimentation is limitless.

Crypto has seeped so deep into society that we no longer bat an eye at the fact that ETFs hold over 5.8% of Bitcoin's total supply or that government ownership is over 2.5%. Over the last 3+ years, El Salvador incessantly added 1 $BTC to its reserves every single day. Today, with ~5,750 BTC (~0.027% total), it ranks as the 6th largest country to hold $BTC. It could be coincidental, but governments, including Dubai, Singapore, Russia, Brazil, Sudi, and others, have been pushing crypto-friendly policies and, in turn, drawing in capital, residency, tourism, or otherwise flourishing.

Stablecoins hold over $120 Billion or >2.5% of US Government Treasuries. Tether (USDt) is the 16th largest holder of US government debt in the world, accounting for over $105 Billion. Circle (USDc) is sitting at $31 Billion worth of USTs/REPOs. MakerDAO (DAI) holds over $1.2B.

It's crazy when we realize that these numbers will continue to go up.

It's almost poetic, that the technology they so vehemently fought against turned out to be exactly the remedy they needed most. From polar oppositions wanting to tear each other down to a mutually beneficial partnership building each other up.

Rarely discussed anymore, but well-known is the super-symmetric alignment of crypto as a technology with the fundamental forces governing human life.

Designs of economic systems are logically rooted in the physical laws of thermodynamics. Energy cannot be created; it can only be transferred — crypto does not randomly create money; it simply packages it. Over time, entropy pushes atomic life to chaos —  the more decentralized something becomes, the more challenging/messy the coordination. Finally, how temperature overlaps with social interest is mindboggling; markets get “hot” when new people/capital resources enter and “cold” when interest leaves; flux is necessary for a harmonious existence.

The philosophic rabbit hole runs insanely deep.

Rather than having me rehash the biblical volumes of cosmic implications that cryptocurrency has on the fabric of society; the most effective way to stumble upon that profound existential coincidence is to DYOR.

Blockchain

Trust, But Verify.

Underneath the hood of this economic revolution, the actual technology powering cryptocurrency, blockchain, is not all that sexy. It is an intellectually dense technology rooted in the subject matters of cryptography, distributed computation, game theory, mathematics, and so much more.

Blockchains are data clouds that store and process information in a structured way according to criteria involving sequencing, speed, reliability, security, finality, etc.

Through an intricate weaving of asymmetric-key cryptography, byzantine fault tolerance, hashing, zero-knowledge proofs, message-passing protocols, and a suite of other computational innovations, blockchains provide a systematic framework that transformed data structures from CRUD to CRU.

By removing the ability to delete information, history became immutable. It was now possible to track and record the state of and progression of information.

Coupling this with its open, distributed nature, we arrive at the big tangible breakthrough that blockchain technology has on society: a tamperproof digital ledger that records data in an autonomous, transparent, and reliable way — the birthplace of triple-entry accounting.

Reduce/Remove Error.
Maximize Accuracy.
Streamline Processes.

Literally, it is the perfect mixture of traits for a digital fabric of trust. No wonder it is colloquially referred to as the “engine of trust.”

Its application is only limited to imagination.

Proving provenance in physical supply chains.

Increasing certainty of an object's authenticity by tracing its originating source while reducing/removing counterfeits has done wonders for collector markets such as wine, art, shoes, watches, trading cards, and luxury goods.

Proving provenance for informational supply chains.

The IOT (Internet-Of-Things) industry is very fragile and vulnerable to manipulation around the edges. Sensors must stream information about their environmental state, and there are a multitude of natural variables that can corrupt this stream. Making sure that there is a consistent, honest set of information building this state requires the “consensus-related” functions of a blockchain to detect and deter malfunctions.

Time Stamping.

The block height of a chain can be used as an alternative measure of the progression of time. By adding an extra layer of validation, in the form of a a blockchain’s block number, we can track series, such as the processes of signing documentation, releasing a newspaper, recording a video, etc.

Social Media Networks.

Incentivized, bot-free, censorship-resistant, unhackable environments that preserve user privacy, rehypothecate de-platforming risks, grant users ownership through utilization and engage in governance. Potential order of magnitude improvement and the powerful wealth effect of transposing the value of the Social Media industry from a single centralized corporation to its million/billion user base.

Digital Identities.

Portable, platform-independent, proofs-of-humanity. An esoteric concept, identity was, is, and will be one of the most important applications of blockchain. Being able to freely travel across borders and not fear citizenship revocation.

Managing Autonomous Agents.

This element is two-fold. Internally, blockchains can be integrated into the operating systems of the AI themselves, to ensure that these agents are kept maximally aligned with protocol and unable to game the system. Externally, assuming crypto really is the defacto digital financial instrument for a hybrid human/AI economy, then blockchains would protect the systems with which they interact. AI will always find the most optimal paths, and those will always be the ones void of artificial barricades.

Crypto and blockchain have secured their roles across a multitude of industries {pharma tracking, timestamping, finance, science research, et al.} and became permanent/irreplaceable elements that will persist alongside the advancement of all technologies moving forward.

Omnipresent

Out of Sight, Out of Mind.

Society exists in a wave-like flux of trends.

Something is generally only considered important if it is loud, grandiose, and/or in your face.

Semiconductors are a component of literally every single electronic device. Tiny, microscopic things we don't even think about, but without which, we would not have the technology that we do, nor its associated blossoming $680 Billion dollar industry.  While we may occasionally take antibiotics, we rarely consciously process the value that this innovation has brought to society.

Since the discovery of penicillin, the average human lifespan extended by 20 years because previously lethal bacteria could now be dealt with. Talk about impact.

In the rapidly evolving world of technology, there is a select range of technologies that dominate the conscious due to them, in some way, shape, or form, applying to/measurably touching every industry and facet of human life.

Quantum Computing, AI, Blockchain, Cryptography, Robotics, 3D printing, VR/AR, IoT, Laser Surgery, Renewable Energy, Nanobots, and a few others.

Most of these technologies and their correlating science(s) are actually pretty sexy. They carry a visceral, innate association in our minds composed of sci-fi fantasies and well-spun narratives from theoreticians.

Blockchains and cryptography… not so much.

Perhaps the mother of all tech trends, the be-all-end-all point of computer science, singularity, whatever you want to call it, is AI. Going through rigorous cycles of hyperbolic exuberance flares and prolonged, ice-cold winters since its inception in the early 1950s, AI has experienced exponential improvements while public ideologies remained largely the same. Skynet. Matrix. Terminator.

Even though I undoubtedly believe that in a future where man and machine synthesize and share autonomy, I personally do not believe that the current iteration of "AI" is anywhere near the stage people assume/speculate that it is in. Powerful narratives and well-executed coordination among sophisticated entities have blasted this subject into the stratosphere of public consciousness and drawn attention from everything else. ***Disclaimer: it is possible I am midcurving this one.

Every institution, sovereign, nation-state, enterprise, VC, startup, and software tool is howling at the moon in attempts to get an edge over the other guy to show the world how innovative/special they are. So prevalent is the AI narrative that it has bled into all adjacent technologies, boosting them individually and further diverting attention from them.

No need to look far. When discounting memecoins, AI is actually the hottest sector of Crypto with the greatest growth and returns this cycle. There are even AI memecoins that are printing quadruple-digit gains and forming new cults daily.

However, when times get tough or the "next best thing" hits the markets, our industry loses its appeal. If prices are not going up, then it's not worth the mindshare. Unwinds of over 90% during bear markets are standard.

It's as if the power to be economically independent from governments suddenly provides less value.

If retention was higher and users/use cases were stickier, would these unwinds potentially lose some of the severity, and cycle times would compress? Is any one technology more important than the other? Is this sustainable? Maybe. Maybe not. This is left to greater forces. For society to judge and time to prove.

The human experience is transient; what is here today was not here 500 years ago, and will likely not be here in the next 500.

Onwards.

The Best way to predict future, is to create it.

Human life is like a star looping, drawing circles; time is a 4th-dimensional force that propels the loop into a vacuum. Thus, the human experience is reminiscent of spirals, both on the individual and group levels. Whenever loops have points of overlap, people tend to say that "life may not always repeat itself, but it sure does often rhyme."

Sometimes, in the daily hustle and bustle of human life, we get absorbed in our own microcosms and forget about the infinite wisdom of the external world tucked into the crevices of history.

We forget that seasons change.

That trends will come and go.

That crypto will continue to grow.

Regardless of what inflation in the US might be or what the spot price of Solana is, the sun will shine, the grass will grow, and every 600 seconds, a new block will be appended to the Bitcoin blockchain.

But honestly, when you’re up 3,141% on a shitcoin, all this zen stuff doesn't fu*king matter.

When I got into crypto, it was the time of underground, anti-establishment revolution; when the content was scarce, subject matter experts were basically non-existent, and conversations around privacy as a fundamental human right and code as a form of free speech (to protect it with the First Amendment) dominated the chatrooms.

Yes, of course, money was important, but it was only an instrument to measure how effective this revolution was, a natural byproduct of its truth. I was purely "In it for the tech."

Or so I told myself.

After multiple cycles of absolute financial obliteration and self-reflection, it was obvious that the Narrative hooked me, and the price action kept me.

A rising tide lifts all ships, and Everybody is a genius in a bull market.

As you experience an influx of great wealth, it's easy to detach from reality.

Always keep in mind the humbling reality of nature's cyclicality.

" Hard Times create Strong Men,

Strong Men create Good Times

Good Times create Weak Men

Weak men create Hard Times "

Where will you be in 2 years?

Live Long 💎

& Prosper Anon

I'll see you on-chain🥂