In my time in crypto, I’ve lived through several boom and bust cycles…
I started bagging bitcoin in 2009 – my first cycle in this asset class.
When I was living in New York in the early 2010s, I frequently attended Satoshi Circles in Union Square or at the Whole Foods cantina on Houston Street.
(“Satoshi Nakamoto” is the online name used by bitcoin’s creator. That’s why we called the meetups Satoshi Circles.)
Sellers would write down their 24-word seed phrase on a piece of paper and hand it to you.
A seed phrase is similar to a pass code. As you know, you should never give your seed phrase to another person. So these exchanges were dangerous since both parties had the keys to the bitcoin wallet they were trading.
Some of these trades happened in back alleys. And the threat of violence always loomed large.
Unlike the crypto hacks you see today, back then we had “$5 wrench” attacks. Someone would buy a $5 wrench… hit you across the head with it… and take your seed phrase.
(Fortunately, I’m a black belt in the martial art form of Krav Maga. If I wanted to self-custody back in the early days of crypto, I knew I had to be able to defend myself.)
It was truly the “Wild West” days of crypto… There were a lot of aspirations for bitcoin but few practical applications.
At the time, bitcoin traded at 25 cents. So I got in really early. 12 years later, it was trading at nearly $70,000 – an incredible 27,617,808% gain.
I experienced my first crypto crash in 2011. Bitcoin dropped from almost $23 to $2. It was gut-wrenching.
Things were all quiet on the crypto front.
Decentralized finance (DeFi) had yet to arrive. There were no non-fungible tokens (NFTs). And bitcoin was far off Wall Street’s radar.
But I knew crypto was the future.
My research showed me that it’d change the way we exchanged value for the better. That helped me make it through my first boom-bust cycle.
Things didn’t start getting interesting again until Ethereum launched in 2015. I was an early adopter and began bagging it aggressively that year.
The launch of Ethereum sparked a resurgence in crypto, leading to the second bull cycle of my career. Since its launch, Ethereum is up over 516,029% today.
Meanwhile, bitcoin ran from $254 to $20,000 in 2017 – a 7,774% gain. Euphoria was high again.
That 2016–17 crypto bull market was one for the ages.
But as you know, crypto is highly volatile. And we entered another Crypto Winter in 2018.
Bitcoin and Ethereum collapsed 84% and 94%, respectively, from their cyclical highs. The overall crypto market plunged 88%.
Despair was everywhere. I’d be laughed out of the room at the mention of a token project.
Again, I relied on my research and conviction in this asset class. And that steeled me for my third cycle.
That came during the pandemic-fueled bull market of 2020–2021. Flush with trillions of dollars in stimulus money, investors piled into crypto.
Bitcoin and Ethereum reached new highs above $69,000 and $4,850, respectively. At the peak of the frenzy, the crypto market cap hit a record $3 trillion.
NFTs were selling for millions of dollars. When I went out in public, I’d hear 20-year-olds tell me, “I’m making more money from crypto than my parents made this year.”
That brings us to the current downcycle…
The Current Crypto Environment
Since reaching an all-time high in 2021, bitcoin and Ethereum are down 62% and 67%, respectively. And as I’ve seen in the past, the thaw once again is underway, and a new spring is upon us.
But I’m seeing a major difference between the past three I’ve experienced.
The 2016–17 bull run was a hype cycle full of meme coins and crap projects like Jesus Coin, Dentacoin, and CryptoKitties. It was a pure speculative rush.
An estimated 928 blockchain projects that launched in 2016–2017 went out of business.
During the 2018 downcycle, many of the promising Layer-1 protocols we use today had yet to go live – let alone support other builders on top of their technology.
As we exit this cycle, we’re seeing something much different. The industry has matured.
Major Wall Street firms like BlackRock, Fidelity, and WisdomTree have filed applications for spot bitcoin exchange-traded funds (ETFs).
Combined, these three firms alone manage over $13 trillion in assets.
Corporations like Tesla and MicroStrategy are holding BTC on their balance sheets.
And a slew of new applications have use cases other than speculation. Even in the depths of a shattered NFT market, Nike continues to launch digital collectibles.
The examples I cited portend a new age in the crypto industry.
No longer will Wall Street and the mainstream media relegate this asset class to the fringes… or write it off as a passing fad.
Crypto has grown too big… and too real to ignore.
But of all the exciting developments happening in crypto right now, there’s one that has me really bullish as we head into the next bull cycle.
I’m talking about the launch of Coinbase’s new platform called Base.
The Launching Base for the Next Upcycle
Coinbase is the largest crypto exchange in the United States, with over 100 million users and $128 billion under management.
Like the rest of the Web3 industry, it’s seen its fortunes rebound this year.
Coinbase shares are up 141% since January 1, making it one of the best-performing stocks in the world.
On August 9, Coinbase launched its Layer-2 network called Base. Layer-2 networks offer cheaper and faster transactions than the Ethereum network… but retain the security of Ethereum.
Layer-2 networks execute transactions off-chain (outside Ethereum). After it executes, the Layer-2 network posts the completed transaction back to Ethereum.
Moving executions off-chain uses significantly less block space on Ethereum – which reduces costs to the user.
Since its public launch on August 9, Base has exhibited remarkable traction, surpassing 100,000 daily active users.
It’s seen over $400 million in assets come onto the platform. And at its peak, the network saw over $100 million in daily trading volume.
By comparison, established scaling solutions like Optimism and Arbitrum have an average $15 million and $250 million, respectively, in daily trading volume.
Base will serve as Coinbase’s on-ramp to the blockchain world. It allows anyone to build decentralized applications that can interact with Coinbase’s on-chain products.
Just this month, Circle, one of the largest stablecoin issuers, announced that its USD Coin (USDC), with $26 billion in circulating supply, is expanding to Base.
As more apps build on Base, we’ll see more users and assets flock to the network.
Co-editor, Palm Beach Pioneer
P.S. Daily editor Teeka Tiwari believes this will be the last Crypto Winter we’ll see of this magnitude.
Once the big players enter this space, the crypto market will trade more in line with the broad stock market – just like internet stocks did when that sector began to mature.
And those volatile moves that generate life-changing gains… They’ll be fewer and farther between.
That’s why Teeka recently held a special event called Big T’s FINAL Call. (You can click here to stream the replay.)
According to Teeka, this will likely be the FINAL bear market where you can turn small stakes into meaningful, life-changing returns… And there’s no time to waste.