13th November 2023 – In another edition of Bitrue’s Twitter Spaces AMA, we intend to decipher whether we are in a bull market at the time of recording. With the recent meteoric rise of Bitcoin and Ethereum, many are speculating that the bull market is finally here. However, with everything that has happened this year, there are some who are still skeptical and remain bearish. In the past week or so, Bitcoin has seen a bullish uptick characterized by a meteoric pump in both Bitcoin and Ethereum. Analysts have attributed the pump to a variety of reasons, such as ETF listings to global uncertainty and many viewing crypto as a digital store of value.
Bitrue had the honor of having distinguished guests join in our discussion in the space and have them weigh in on whether or not the bull market is finally here. We were joined by 0xLeon, the co-founder of CrossSpace, Paul Liu, the founder of FAB Chain and President of Pay Cool, and Raymond, the Managing Partner of Mars Capital. Hey, guys, how's it going?
Without further ado, let’s delve into the main Q&A’s of the session:
Q1. What's your take on the recent market trends? Do recent trends suggest that we are in a bull market? What are some signs that the bull market is here?
Well, I think it depends on how you define whether it's a bull or bear market. I think if it was purely based on technical analysis, apparently a lot of moving average lines are in the uptrend, not recently, but since the beginning of this year. If you can remember at the beginning of this year, there were some magnificent rallies where I believe most people were very puzzled because there is apparently no “really good news”. The stock market and the financial market were still in a bad mood. However, Bitcoin rallied a lot and gradually turned around the whole big trend, at least for Bitcoin. However, during the middle of this year, there were a lot of bumpy markets, there was consolidation and ended with a swing mode. So, a lot of people start to feel pretty bearish, not only on the market but also on the whole industry. And at the same time, the trading volume and liquidity kept shrinking. However, if you only judge the market purely based on the technical assets, I think the big trend, the megatrend, is definitely on an uptrend. So my point of view is based on a technical perspective, we are already in the bull market and the momentum is still very strong. That's my basic view of the market.
Yes, agreed. Actually, how to define the bull market? During this run, Bitcoin went from about $15,000 to right now around $37,000. I think you can say it's a bull market already, but Bitcoin has its own four-year cycle pattern. So, if you see it in that way, it's not the main trend and still not the main trend. And I believe Bitcoin or the whole crypto market will still have another major dip next year. So, the “real” bull market" has yet to start. That's my opinion.
I think we are at the beginning of the bull market, definitely. I think there's one data point we can definitely look into, which is the Crypto Fear & Greed Index. So basically, it's an emotional index. It has nothing to do with the fundamental liquidity or Bitcoin price or anything like that. It's basically a reflection of the crypto investor's emotions. So the Crypto Fear & Greed Index today is sitting at 70~72. So, this is actually pretty high in terms of this index. The last time we saw this index that high was roughly, I believe it was the end of 2021. So, that was still the peak of the bull market. So today, maybe the Bitcoin price is still 40%, 35% below the previous high, but emotionally, we are already back to the top.
So I think sitting on this index, this is very obviously a bull market to me. And that's why we are seeing that the number of Twitter Spaces about crypto increased a lot over the last two weeks. Everyone just comes back to crypto space and talks about crypto again. So I think that, emotionally, we are definitely there. And two, in terms of the real support we are seeing, that Bitcoin price finally breaks the $35,000 resistance. So the $35,000 resistance has been there since, I think, 18 months ago, since Luna. So we haven't seen BTC above $35,000 since Luna happened. So I think that's actually a very strong indicator that we are retrieving what we had before. And Bitcoin is coming back, Ethereum is coming back, and all altcoins are coming back. We are definitely standing at the beginning of the bull market.
Yeah, just want to echo what Raymond has just said. $35,000 for Bitcoin is really a big resistance level. Actually, if you look at the chart back in 2021, there is a big pullback during the middle of the year and a rebound after that. I think on that pullback, between $35,000 to $40,000 is a very key resistance level. So if we can stay around this level for a longer period to consolidate, and then we break out, moving upward continuously, that will enhance the trend. And given we are very likely to have an interest rate cut cycle starting from some point next year, as well as positive catalysts such as ETF approval for Bitcoin, and even for Ethereum in the US, I think we have a lot of potential positive catalysts.
But normally in the bull market, there will always be some dramatic pullback, but don't treat it as we come back into the bear market again. No, I think that would be a great opportunity to add on the long position, even though recently we have seen more and more people getting bullish on the market. But it doesn't mean we are peaking sentimentally because I believe most of the people in Web2, they haven't really captured this trend. They are still ignoring what's going on in the crypto market. So we shouldn't say, “Oh, the market has already peaked because everyone is bullish” because still, the majority of the market, no matter from, especially from Web2, still hasn't built their position yet. So, we are far from the peak of the bull market.
Q2. 2023 is coming to an end soon. What is your outlook for crypto for the rest of the year and for the next? And Why?
Right now, as I said, this is not a bull market, but this, we can say it is a major rebound in the four-year period because Bitcoin has its own pattern, as I said because it halves every four years. Bitcoin is on the right track actually, this rebound, now is November, and maybe by December, by the end of this year, this rebound, the high could be around 45,000. I think it could be that high. And then it will start another major deep, I believe so.
So Paul, may I ask when do you think the major pullback will happen and what is the potential catalyst for it?
Okay. Actually, if you check back the chart or check with the history, Bitcoin, and the drive track, it should hit that in the chart. Actually, sometimes emergencies or some events can affect the market, but the main trend should be that way. I think this year, later this year, maybe in less than two months, there will still be some news like the Bitcoin ETF or something. And next, by the end stop raising interest. Everything could push the market to that high.
You think there will be another interest hike, right?
Interest rate hike next year? I think next year. This year maybe not. But because the government stopped raising the interest rate. So in the remainder of this year, the crypto market will still go up.
All right, so if I understand correctly, you think next year there will be a major pullback and the main reason or catalyst for this is an interest rate hike from the Federal Reserves?
Yes, next year because of inflation, and the CPI is still high.
So the CPI is still high. But why don’t they hike it in the past two FOMCs? So why did they wait?
But at this moment, they are still waiting to see what will happen. But I think maybe because of the market at this moment, they are not in the same view. So some may think they will not raise the interest, but the market inflation will still keep high. So next year, I think the interest will still be hiked. That's the major reason. Next dip, I believe that's early next year.
So what if they don't hike any more? They just finished this interest rate hike cycle. Do you think Bitcoin will continuously rally?
No. Anyway, the market needs another dip because even from the market itself, actually, the cryptocurrency is still in the early days. It's not as stable as the stock market. There is a lot of volatility. So, the market itself needs to shake off the big hand. And there are a lot of leverage funds at the bottom. They must clear that. That's the reason.
I actually completely disagree. So, number one, I think Bitcoin is not a new asset, BTC is actually quite mature as we speak today. We are looking at ETF approval in January from Blackrock, Vanguard, and many other index providers, ETF providers. So these are actually very reputable household names in the US. So what does ETF really mean? ETF for Bitcoin Spot is not just putting Bitcoin into an ETF. It's actually providing, number one, legitimacy to this asset class. Number two, providing retail average Americans access to Bitcoin assets. So it's actually a very different, fundamentally different thing. So that means an average American teacher, and American firefighter, can now buy BTC through the Blackrock ETF with their pension money.
So what kind of country would allow an average citizen to buy Bitcoin if the asset is still young if the asset is still not proven yet, if the asset is still volatile? The whole reason that Bitcoin can be part of the ETF is exactly because the US government is actually slowly, gradually granting legitimacy to this asset class. That's why the whole market is sharing it. That's why we have this huge, huge, huge greed index. That's why everyone is very happy about this. I'm not a fortune teller, but I don't see any major reason for the pullback at all in the next six months.
Yes, actually in a real bull market, even some small positives can drive the market to a big trend. But as I said, Bitcoin has its own rules, its own four-year cyclic pattern. So in this way, if you check back the history, actually in the past like over ten years, I did a prediction every year. That is the way, when the real bull market starts, even small positive events can drive a big market. But now it's not that state.
Well, I think what Paul means is the definition of a bull market, based on his framework, is every small positive catalyst makes the market go crazy. Apparently, now the market is not going crazy, even though it's doubled. But a minor piece of news doesn't drive the market up 20%. So it's not a bull market. If you define this in this way, absolutely, we are not in the bull market.
Q3. In your opinion, what are some factors affecting the outlook for the crypto market?
Bitcoin. I think Bitcoin, the four years halving is the most important factor. And then like the global economy, ETF, inflation, interest rate, and maybe some regulatory policies, all these can affect the market.
Yeah, I think in the next bull market there will be two narratives, which is worthwhile for particular attention. The first one is around the Bitcoin ecosystem, layer 2, or BRC-20, all this kind of innovation around Bitcoin will be a great opportunity because we talk a lot about the Bitcoin ETFs, we talk a lot about the Bitcoin halving. So a lot of narratives, and a lot of major drivers, are focusing on Bitcoin. So that's why I think all of this innovation around Bitcoin needs to be paid attention to.
The second narrative is that I think mass adoption is key. Whichever project or segment can bring in more people and their capital accordingly is a huge opportunity. And I think SocialFi, which I built with CrossSpace, is also another very great segment. Actually, what we are trying to build is not only provide service for Web3 people, but also for the content creators in Web2 as what they can do in Web2 social media, they can do similar things, but on top of that, they can monetize their content and make it possible for their supporter or followers to make investment on their content or themselves, the individuals. This is an experience that cannot be done in Web2 social platforms. So this thing, I believe, could bring in more people from Web2 into Web3 and accordingly, dramatically bring in their capital into Web3, the whole industry, because they will find some good opportunity to make money, and at the same time, they think it's easy to be understood, it's very natural for them and really can solve some real problem for them. This will be the key to mass adoption and it's also very essential for the growth of the whole industry. These two narratives, I think, are very important and need to be paid attention to.
Yeah, I completely agree with Leon. I think social is extremely important. I think we have seen a huge trend, a megatrend led by Friend.Tech this year, and the CrossSpace is definitely a very strong player in the social space. So folks should definitely pay attention to that. On top of SocialFi, there's another thing I want to mention is just about the ETF again. So I think people underestimate the impact of ETFs. ETF is not just a new financial product getting listed. The real reason behind ETF, or I guess the real impact behind ETF is that we don't have that many Bitcoins to sell, to start with. Bitcoin is a scarce asset, so there are only 21 million Bitcoins. Okay, so I recently wrote a post that I actually pinned in the Twitter space, you guys can check it out.
So basically, there are only 2 million BTC available in all exchanges now. So that's roughly 10% of the total supply of the exchanges including Binance, Coinbase, Kucoin, whatever you name it, that's only 2 million Bitcoin available. So imagine the previous program was actually triggered by Grayscale. And Grayscale has only 3% of the total BTC supply. But of all the exchanges today, they only have 10%. If we believe Blackrock or Vanguard, all these giants combined together are going to be three times bigger than Grayscale, or maybe three times more capable than Grayscale, then they will swallow literally every single Bitcoin out there available.
The difference between futures ETF and spot ETF is that the ETF issuer actually needs to buy the Bitcoin, and not that many Bitcoins out there are available. So I wrote a thread, you guys can check it out with specific numbers, I ping it on the space, but that's, I think, a big mover of next year. How many people would actually come out to sell? At what price? And how high can this price go? That's actually a defining factor for the rest of the asset classes, the rest of the crypto space, that's a defining factor for Ethereum, altcoins, and everything else too. So if Bitcoin goes to 100,000 or maybe 200,000 or maybe 300,000, we are looking at a completely different space and we will have a very different conversation.
Q4. Where do you think crypto might see some growth in 2024? Are there any areas on your radar?
Well, I think both ETF and the mass adoption, is very important for the next bull market. And the two forces together will form a huge power and even a bigger bull market than compared with the lesser one. So the ETF definitely is very important for institution money. At the end of day, it's the retail who buy Bitcoin or Ethereum through ETFs, through institutions. But at the same time, if you follow what's going on, such as in Hong Kong or Korea, I think the government is incrementally friendly to the crypto industry or Web3 industry. Recently Bithumb, the top two crypto exchange in Korea, is going to be listed in the Korean market, which I think it's a big positive from the political stance.
At the same time, in Hong Kong, a lot of positive policies have come up during the past year. As a local web3 company in Hong Kong, we already received a lot of support from the Government Science and Technology Park. Also regarding the local licensed crypto exchange, two licenses have already been issued and more is on the way. There are even licensed OTC companies that can facilitate people to exchange their fiat money for crypto. So a lot of this institution arrangement has been done in the past one or two years during this bear market. So in the next bull market, if people would like to build positions or allocate their assets to the crypto industry, I think they will find more reliable and safe ways.
Regarding the mass adoption from a retail perspective, I think that if there are more DApps or more applications, and infrastructures that have matured compared with two years ago, there will be more people that are attracted to this industry through GameFi, through SocialFI, and through DeFi. So people will find some real use cases in Web3 that cannot be solved properly in Web2. And then I think at the end of the day, if there are more real users in this industry, it will make the cycle more sustainable and not so up and down, so bumpy like the previous cycles. This is my view on this question.
Yes. To say Web3, that's a wide area, there are too many things covered. But I think RWA will be one of the most important factors for the next run. I think recently the market has noticed RWA. Not to say RWA, there will be stable tokens or something else to link the real-world asset to cryptocurrency. I think RWA is a specific area that's worth everybody taking a look at.
I think maybe ETFs or whatever, this kind of thing can be a trigger. It's not the main move for the market. It could be a trigger. Actually, there are some other things like emergencies. Say if one day another major, like a major exchange crash or something that could cause another big dip, there are always some emergencies. I think it will happen early next year. Again, it's hard to say which one will be the problem.
Yeah, I agree. I think we all need to be data-dependent, right? We can't be really fortunate tellers, and just say that there's a black swan event coming up, so we just stay cautious. Of course, we need to embrace the changing environment. And back to the question. I think it's very important to notice that in my perspective, the biggest mass adoption in the crypto space, number one is Bitcoin for sure. There's a mass adoption of wealth accumulation and wealth storage, and number two is actually stablecoins.
So I think for crypto to go much bigger, it's not really about people using Ethereum or maybe Avalanche or like PolkaDot or whatever. It's actually about people using crypto, blockchain as a technology, as a new way that can potentially replace the traditional finance system. I think Leon and I, we both came from a traditional finance background. We know what these investment banks look like, we know what these hedge funds look like. We know what the street looks like. We have been there, and done that.
So I think stablecoin is actually a very important part of mass adoption. Why do I say that? If we look at the Binance BlockchainWeek is actually hosted in Turkey, in Istanbul this week. Turkey is actually a country, it's very famous for its high inflation. High inflation is actually a thing that is killing the normal average people because inflation literally just wipes out all your income, wipes out all your wealth, and wipes out whatever you have. So inflation is very toxic, and that's why the US government is fighting so hard against inflation.
Yeah, in my opinion, today, I think Bitcoin, you can see it as the reserve currency, but one day, we don't know when, but maybe like 20 years or 30 years or 50 years, Bitcoin might become the only currency. But before that, stablecoins remain the most important thing for adoption, especially for businesses, in the real world. Because today Bitcoin still fluctuates too much, it cannot be used in real business. So that's why stablecoins are important. I think even in the coming 20 years it will continue to be very important. But in the end, as I said, when the entire world, when everybody uses cryptocurrency, probably, it’s going to be Bitcoin. If everybody could be using only one currency, one day, for the whole world (maybe there will no longer be legal tenders), nothing else, only Bitcoin will be used. I think that is a dream. But as a Bitcoin believer, I think it will happen. We just have to wait and see. We don't know when.
Q5. Do you think Bitcoin and Ethereum will continue to lead the bull market, or will other projects come to the center of attention?
Yeah, for sure. Bitcoin will for sure take the lead in the next round. I think every round is the same. As I said, Bitcoin in the future, maybe in 20 years or 50 years, it will be the only currency. But the market is always like this, Bitcoin first, especially when the market reaches the peak and the market goes crazy, all other cryptocurrencies may rise sharply. But anyway, at the beginning, Bitcoin will take the lead.
Yes, I agree with Paul, because this cycle, if we consider the huge positive factors from the ETF approval, especially on BTC and ETH, and it will create a great alpha for these two tokens compared with others. Because I don't think other altcoins have a high chance of being included in the ETF basket. And at the same time, I think everyone will agree that Bitcoin will remain the absolute leader, at least during the first half of the bull market.
I think probably after a huge rally there will be a consolidation of Bitcoin. And then during that time period, other coins or tokens will have the chance to rally. The rally could be even higher than Bitcoin because their FDV, their fully diluted valuation is much smaller than Bitcoin. Their circulated flow tokens on the market are also smaller, which means the price is easy to manipulate and ready up a great way.
But for the next bull market, I think the other layer, at least layer 1, like Cardano, and Ripple, their performance is very likely not as good as Bitcoin or Ethereum, or even as good as the other layer two like arbitrum, optimism and some upcoming launch tokens such as Scrawled. These EVM layer two tokens will definitely have better performance because I believe there will be more and more real use case DApp infrastructure built on these layer two. Because of these infrastructures, their transaction cost is lower. They still enjoy the EVM programming language, they still enjoy the EVM consensus and ecosystem benefit. So very likely these layer two tokens will have a better alpha compared with Cardano or Ripple.
Yes, when the market goes crazy, there will be many tokens rising sharply. But that doesn't mean, does not mean you can make money. Actually, every round is a similar thing. The market goes high a lot, but still, there are a lot of people, who lose money because high reward means high risk. Especially all the other tokens at the peak period. When the market goes to a peak, that risk is very high. You need to be careful.
So I think either you are a long-term investor, just we say HODLers, when the market goes down, I think it still is possible next year, like around early next year, maybe probably below 20,000. If that happens, the chance is still slim, but it's possible if it goes down below 20,000, I think that will be a big chance for long-term investors. If you day trade or something, it's different. But in day trade you need to be skilled enough. Even in a major bull market, the bear trader could still lose money because the market is fluctuating. Cryptocurrency is not the metro market, so it's risky. I think the market will hit the bottom. Another deep is around April next year, maybe one or two months difference. And then you can say the real bull market starts. You can take a hold for over a year. That's the major bull market. That's the major trend. I think for these four years, from 2021 to 2025. So the bull market, the peak should be 2025.
So that's my opinion. Actually, this is not an investment suggestion or advisory. I'm just giving my own opinion.
I actually, unfortunately, disagree again. I think we need to look at numbers, we can't really be fortune tellers. So basically, I think I agree with Leon's point earlier. It's about alpha generators. So if we look at historical numbers, which I have a thread, I just happen to have covered all these topics before in my previous threads. So, basically, if you look at Bitcoin, Ethereum, stablecoin, and the altcoins dominance from 2021, compare that with today, and you can see that back in 2021, the altcoins were actually 33% of the total crypto market cap when the total market cap was around 3 trillion back then. So actually like one-third of the crypto market cap was in the altcoins.
So like the host mentioned, like Ripple, Solana, and Avalanche, are all different altcoins, right? They took up 33% of the total crypto market cap. And if we look at today, they only take 20% of the crypto market cap. So that's actually a much smaller slice of the smaller pie. So if we assume that the pie is going to grow again, we will be seeing the dominance of altcoins go back from 20% to 33% if we believe in the bull market and the bear market switch. If that bull market, bear market switch actually happened, and this dominance actually changed from 22%, to 33%, and all these altcoins will outperform. All coins combined will outperform Bitcoin and Ethereum for sure. So that's just a number.
And I agree with Paul in a way that we need to be careful with what tokens we invest and what's the horizon, right? So at Mars Capital, we 100% believe in fundamental research. We don't believe in gambling. We don't just throw money at a random project. We actually buy things that have sustainable business models, have real value to society, have real revenue, real yield, and real stuff. So we actually believe in these projects and we recommend and strongly encourage everyone in this trading space, at least to do more research before you put your hard-earned money into crypto space and buy the tokens.
Yes, I agree. For any around of bull market, altcoin has more opportunity. Usually, there are many altcoins that will grow many times more than Bitcoin. Bitcoin in the next round, could be around 180,000 from now on, maybe three or four times but many altcoins, maybe some hundred times or more. But how to take the opportunity you need to do research? What project has a real practical project and what's the major main trick of the next bull market? I think RWA and BRC 20 and some other projects have real practical projects to serve real businesses. That's the main area to research.
Q6. Adoption has been described as something that needs to happen in order for crypto to go mainstream. What are some areas that need to be developed before we can see wider adoption from mainstream users?
Well, I think in this cycle, given we already have a lot of infrastructure deployed, there will be a lot of layer III or application chain launched by web2 companies such as Sony, Panasonic or whatever, or even Adidas or Nike. I mean, these web2 companies, if they come into web3, tend to launch their own blockchain. And technically it's much easier now than before. You have a lot of Raas service providers. You can launch a layer III chain by simply clicking some configures and then you launch it. You don't even have to maintain your own validator.
There are already a lot of solutions for that. So this will help these big corporations to build their own blockchain ecosystems, for example, Coinbase. This year they launched their Base chain, which is built on the OP stack technology. So technically, they don't need to put a lot of resources into it. They just need to really build their own application on the chin as well as invite other external partners to build on top of it.
For the new bull market, there are a lot of opportunities. There are many projects, but choosing which one, especially when you want to pick an altcoin is really a challenge. Which one is the best project? It's very hard to say. Actually, it’s even a real practical object for some big companies. That doesn't mean the coin will be very good in the market. It's hard to say. Today, there are many coins they use for trading or for their business. I don't think this is really to pick.
So for the area, as I said, if you are an investor in the market, stuff like RWA, BRC-20, and you need to pay attention to some really good projects, or some big company, that could be a big chance.
I actually think we don't need to really rely on the web2 companies, or maybe the traditional companies. In a way. I think we definitely will be seeing some other new companies pop up in the industry. We definitely will be seeing a lot of maybe SocialFi, GameFi, or DeFi companies that could solve real problems.
We shouldn't be thinking of crypto as a space where we need people's recognition. We are just engineers. We are problem solvers. And we go out there, find a problem, solve it in a crypto way with blockchain technology. So that's the thing we should do. I don't like to narrow or maybe just squeeze myself into a little box called crypto. I want to be a real-world engineer so that I can solve problems in the real world. So I think that's probably the real way to go mainstream. This is not really going to the White House and begging for recognition, going to the SEC, or maybe going to the Hong Kong government to beg for recognition. This is not how crypto goes mainstream. This is really about crypto folks actually using our own skills, using our own tech know-how, and solving real problems.
The stablecoin was the case I mentioned, right? And I'm sure that there are a lot of other problems that need to be solved around the world. So that's how I see this. That's why I believe that crypto has its own very unique value proposition. We would just solve problems one by one, and before they knew it, we already took over the world.
The information provided in this article is for informational purposes only and should not be considered as financial advice. The content is based on the author's opinions and observations and is not intended to be a substitute for professional financial advice, diagnosis, or treatment. Readers are strongly advised to conduct their own research and due diligence before making any investment decisions. Investing in financial markets involves risk, and readers should be aware of the potential for both gains and losses. The author and the publisher do not assume any responsibility for financial outcomes based on the information provided in this article.
All investments carry risks, and past performance is not indicative of future results. Readers are encouraged to consult with a qualified financial advisor and to carefully assess their own financial situation and risk tolerance before making any investment decisions. By accessing and reading this article, you acknowledge and agree that the author and the publisher are not responsible for any financial decisions made based on the content herein. The information presented is subject to change without notice and is not guaranteed to be accurate, complete, or timely.