Cryptogram-24JUN2022

BTC below $20k: Death sentence, or rite of passage?

June 24, 2022

24 June 2022

In this issue

Hello, As expected, BTC dropped below $20,000 this week – marking the crossing of an important psychological barrier among most crypto investors. The reactions to this have been as fragmented as the market itself. Some think BTC has pretty much bottomed out now and it is time for a slow and steady climb to another all-time over the next two years or so. Others think it could (or should) drop below $10,000 before it bounces back. And, of course, there are the lovely crypto skeptics who are saying that BTC will hit a zero.There is too much noise and as your trusted companions in your crypto journey, we want to parse out the important signals and give you a fair picture, so you can decide for yourself on the future course of action.

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio.

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THE BIG STORY

BTC bounce back: Why it’s not ‘if’, but ‘when’

Let’s start with a history lesson.Many newbie crypto-investors today perhaps aren’t aware of the crypto winter of 2018. Compared to the ongoing 2022 crash, 2018 was brutal. Back then, Bitcoin’s value dropped by more than 80% and Ethereum, the second-largest crypto, followed suit. Many top altcoins moved into oblivion. The downturn began in early 2018 and lasted about two-and-a-half years.Crypto wasn’t quite as mainstream as it is today, and definitely not as closely linked to the larger macroeconomic situation. Many countries were still discussing bans on crypto, with China enacting another pseudo ban. The consensus was that developed countries like the US would follow suit.The use cases for blockchain/crypto were limited. DeFi was not that popular. NFT marketplaces were mostly ignored. A new offering called ICOs allowed many to create a token and grab investors’ money with wild promises. Speculation was rife. COVID-19 hit early 2020 and stifled BTC’s rebound action. There was a genuine worry among many investors and builders that crypto, as an asset class, would never hit its 2017 highs again.Brutal. But come December 2020, all those fears evaporated when BTC topped $20,000. BTC came back and registered an all-time high that was more than 3x the 2017 high, and more than 20x the cycle bottom. 

  2018 vs. 2022 

Now let’s compare that with what’s happening now.BTC has lost about 72% value from its cycle high, and there is room to drop more. Many analysts in 2021 were calling for an all-time high of $100,000 or above. Now, some analysts are calling for a $10,000 BTC. Terra (LUNA) has collapsed and this bear market may likely consume a few more top altcoins. There is a genuine worry among many investors today that crypto, as an asset class, wouldn’t go back to its November 2021 highs. Many believe that this downturn will last at least 2 years. This is how BTC looks now. 

Bitcoin is down 70% from its November 2021 high

Source: TradingView, Bitstamp

And, this is how BTC looked towards the end of 2018, before picking up and reaching new highs over 2 years.

Bitcoin lost 83% value in 2018 and regained this over two additional years

Source: TradingView, Bitstamp

Looks familiar, right? What we can take away from this comparison: one, it is unlikely that crypto market will go up or down forever – it moves in cycles of bull and bear markets; two, BTC trends up with time and creates new all-time highs every new cycle.The signalsBut it is not just pattern-spotting that gives us the belief that a BTC bounce-back is not a question of ‘if,’ but ‘when.’ Here are a few facts to consider: 

  1. The industry is in a stronger place now with more crypto use cases and users. 

  2. The fundamental views on the industry’s promise haven’t changed. 

  3. A few countries have adopted Bitcoin with key developed economies regulating the asset class. 

  4. Digital art NFTs have attracted millions of buyers. 

  5. Decentralized finance (DeFi) applications have grown steadily, although some have also flamed out in a spectacular fashion.

  6. Metaverse seems to be the next big thing.

  7. Talent is flowing into the ecosystem and innovation continues to proliferate. 

  8. It’s the first time that crypto and Web 3.0 have existed in a macroeconomic bear-market environment – that’s only going to help bring in new ideas.

The two larger points we are trying to make: one, crypto asset class makes sense if you have long-term conviction that blockchain technology is here to stay, and will be the backbone of the future internet and applications; and two, volatility is necessary for high growth.Once you believe in the future of crypto, and accept that highs and lows are par for the course, it’s easier to invest and not panic when an inevitable short-term crash occurs. And remember, as we have always told you – invest safely, don’t take high risks.

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  THE TOP FIVE 

Stories from this week you cannot miss

1.  Decentralized exchange (DEX) Uniswap acquires the non-fungible token (NFT) marketplace aggregator Genie.2. Teller Protocol partners with Tower Fund Capital to bring DeFi into real estate. The move will allow DeFi lenders to earn interest on real-estate secured loans.3. Visa announces launch of crypto-enabled cards in partnership with fintech companies in Latin America.4. Deloitte and New York Digital Investment Group (NYDIG) announce partnership to help businesses adopt Bitcoin.5. Meta founder Mark Zuckerberg confirms that Instagram and Facebook will soon display NFTs.

  EXPLAIN, PLEASE 

Demystifying the world of cryptocurrency

This week, we explain NFTs – Non-Fungible Tokens.You’ve definitely heard of them, and I am sure you have wondered why people are paying millions of dollars for what seem like just jpeg images which can be downloaded and circulated anyway. “Fungible” means replaceable by another identical item. It refers to a piece of something which is not so unique that it cannot be replaced by another unit of the same thing, like an apple or a currency note. Therefore, non-fungible means it is something which is unique and cannot be replaced with anything else. Like the Mona Lisa hanging at the Louvre – there can only be one of its kind. NFTs are digital assets which are non-fungible. Each NFT has a unique ID. They can only have one official owner at a time and they're secured by a blockchain – no one can modify the record of ownership or make a new one. Some NFTs have other features, like the ones supported by Ethereum are supported by smart contracts which can record their transfers and changes in ownerships. This will help artists get royalties in perpetuity whenever they are sold and re-sold, and it is an automatic process. Here’s a video explainer on NFTs.

So, that’s it for this week’s newsletter, see you next week!If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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