We hear more and more around us about the trend of the markets and that we are officially in a Bear Market. The questions that inevitably arise are:
- How long will it last?
- What should I buy?
- What is the return time?
During these times it is very easy to become confused as we enter a new stage of the emotional cycle.
For me personally, a prolonged Bear Market is not a new phenomenon, I could say that I had the opportunity to “struggle” with such a period in 2018-2019 and 2022-2023 so today I can use some of the lessons learned to identify the following opportunities of investments.
Here is some of what I learned:
Don’t rush to buy “the dip”.Everyone would like to say that they have successfully bought off the bottom, but the reality is that we don’t really know how long this Bear Market could last or how far prices could go. It’s a marathon, not a sprint, so don’t rush to buy using all your money at once.
What sustains the crypto market are projects that build interesting and useful things.Market cycles are a normal thing, they bring frustration when they don’t react as expected and trigger spectacular growth when technological innovations emerge.
This has been true in all previous cycles. For example in the previous cycle projects like MakerDAO (decentralized financial system) and Uniswap (decentralized exchange) were launched in early 2018.
But the DeFi (decentralized finance) rally didn’t start until mid-2020 when liquidity mining (technological innovation) didn’t make its appearance. It took over 2 years for the market to react, but now MakerDao and Uniswap are some of the most prominent protocols in use.
I am quite bullish on ETH with the evolution of ETH2.0and believe it will provide a competitive advantage over other layer 1 projects:
- Due to the change in the mining mechanism from “proof of work” to “proof of stake”, it is less likely that miners will want to sell to cover mining costs (which otherwise brought the most selling pressure)
- The annual coin issuance rate will stabilize at 1.71%, that is, the average daily production will be about 5600. If ETH2.0 can maintain the current burning volume by then, it can achieve a deflation of 1% every year.
DeFi is something that crypto cannot live without.
At the moment DeFi is the most important utility for blockchain.
Ecosystem growth is mostly reflected in DeFi TVL (total value locked – similar to bank deposit)
If DeFi as a category is useless, it’s hard to imagine what blockchains will be used for. For this reason, I believe that there is a category of DeFi protocols without which it is very difficult to imagine that the crypto market will develop. Projects like Lido or Aave are just two examples of them.
A blockchain-based game I think is the way to the next 100 million new crypto users. A good game and an economy created to benefit the players can stimulate the exit from the Bear Market and start the next growth cycle.
Identifying the right catalyst could be a monumental investment decision, so it’s worth keeping a close eye on this sector.
