If you see us restart our newsletter, you know the news must be good. Bitcoin has once again crossed $120k. Interest rates are going down, liquidity is rising. The pathway to a new Bitcoin All-Time-High seems firmly in sight. Even Altcoins, not a source of great joy so far this cycle, have seen momentum. Ethereum, Solana and other large-cap Alts are hovering near all-time-highs. The ‘meta’ of Perp Dexes has propelled HYPE, the currency of Hyperliquid, into the Top 20 Market Cap coins. The ‘catchup trade’ for other Perp Dex tokens such as Aster saw tokens jump 100%+ in a matter of hours. The animal spirits are back.
In each crypto-cycle there are multiple simultaneous trends. Some of the are purely speculation, others are actual technical innovations, others are on the political front. This cycle so far has seen the by-far most positive political breakthroughs for the industry. Stablecoin bills and regulation in jurisdictions such as the US and Europe allowed stablecoin use-cases to reach breakout velocity. In line with that comes accessible yield, as stablecoins are often backed by US bond yields, and payments. On the scalability front, rollups, extremely fast chains, zero-knowledge scaling technology and next-gen chains such as Monad or MegaETH have become available and at least somewhat battle-tested. There is still no solution to the Blockchain trilemma of how to achieve scalability, speed and decentralization. Yet it is obvious that we are on the road to a solution. That is extremely bullish for the promise of Blockchains to eventually become the backbone for large parts of finance.
In the meantime, this cycle’s crypto price action has not managed to keep up with stock markets. The boom of AI has led to ever higher highs for the largest benefactors such as Google or Nvidia. The proliferation of ETFs that give exposure to new ‘hot’ topics, from modular nuclear to data centers, has made stock investing extremely accessible to retail investors. Many of these retail investors have previous first-hand knowledge of crypto markets’ volatility and have so far refused to re-enter in the same numbers as last seen during the 2021 Bull market.
Will a new Bitcoin all-time-high change this and lure traders back into crypto markets? The probability of this happening remains but the pathway is less obvious. First and foremost, Crypto needs to see ‘large new winners’. Nothing gets a retail trader back like watching their friend earn significant returns from a 100x on a new coin. But too many retail traders lost out in this cycle’s launches due to insiders, overvalued market caps and a general lack of demand. Too few genuine retail participants have ‘won’. For now though, Bitcoin continues to rise higher. The cycle continues. We ride on.