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Crypto Market Cycles

The crypto market always moves cyclically. The current Bear Market, while discouraging for some, presents some great opportunities (and risks) for good entry points. This article discusses some of the projects I am watching closely during this time.

Handle.Fi – FOREX

Our first article on FOREX can be located [here]. The global futures market is an enormous, with over $1trillion being traded each day. Any project that captures even a fraction of this is going to be seriously powerful. With many smaller and start up projects struggling through the current bear market, the Handle.Fi team has continued to develop and has delivered a really awesome product. The current market cap of FOREX is around $3million. Small cap projects present as much risk as they do upside – but this seems a little different.

The amount of interest in this market globally cannot be overstated. There are a couple other products in the crypto space that do some of this, but Handle.Fi (FOREX) has a few unique features.

1. It’s on Arbitrum and ETH. It’s super easy to bridge between Arbitrum and ETH. The entire Arbitrum ecosystem is growing rapidly and Nitro just dropped.

2. The product works. The team has been extremely careful with emissions and liquidity so the token value is not diluted like many other small projects that require bootstrapping. The yields are sustainable and everything requires collateral. These are key hallmarks of product sustainability.

3. Leverage. Leveraged plays (essentially investing with more money than you have) are risky, but present major opportunities for huge gains if done properly. The Handle.Fi platform allows leveraged plays against real global currencies, not just cryptos. This is majorly appealing to a lot of DeFi participants.

As mentioned – small projects can change rapidly in the blink of an eye. Be careful with anything that isn’t a Layer 1 blue-chip project. For me, the FOREX platform (currently at $.03) presents huge upside at this price and market cap if successful.

Polygon (MATIC)

Polygon has unsurprisingly weathered the current market downturn. In mid-June MATIC dipped to ~$.38. It currently sits at ~$.90. Not a bad return for a bear market, eh?

Most cryptocurrencies, even great projects, struggle with accessibility. Many people interested in cryptocurrency are intimidated by using MetaMask and all of the risks associated with self-custody. Couple in the fact that most people don’t even know where to begin with understanding cryptocurrencies and it’s clear that easy, obvious and accessible projects have a major leg up. MATIC is already available on many major exchanges like FTX, Coinbase and Binance. In the last week, MATIC has also launched directly on Robinhood, giving it even more avenues for users to acquire the token.

MATIC currently sits as the 13th largest market cap project in the crypto space ($6.6billion).  During the last bull cycle (November 2021) MATIC hit nearly $3 per token, with only a fraction of the use cases and projects on the blockchain.

Not excited by Robinhood? How about Disney? What about Coca-Cola? Adidas? Stripe? Polygon continues to establish major high value partnerships across a variety of sectors. As the Web3 revolution continues to take hold – these major partnerships should prove to separate MATIC from the pack in terms of longevity and visibility. The next version of the market will involve major companies relying on technology like Polygon/MATIC in key ways. With a fixed supply and major use cases MATIC, even at these prices is still a bargain.

 

 

Ethereum (ETH)

Look – this is far from a hot take. Ethereum is the second largest cryptocurrency in the entire market. There are constant rumors about the “flippening” – or the day where Ethereum’s market cap will surpass Bitcoin’s. I believe it can and will happen at some point due to the overwhelming breadth of Ethereum’s use and the vibrant ecosystem it boasts. ETH currently sits around $1,550, well below it’s previous high of nearly $5,000 per token back in November of 2021. 

Ethereum has launched some major project updates in the last several months, causing gas prices (a major knock on Ethereum historically) to fall to reasonable levels. One of the most hotly anticipated events in the history of crypto, the Ethereum “Merge” is slated for 9/15. This is when Ethereum formally switches from a Proof-of-Work consensus to a Proof-of-Stake model. The tech behind those two approaches is outside the scope of this article, but it will massively reduce gas fees across the entire Ethereum ecosystem when it goes live.

The image above shows that options traders are willing to pay a premium on Ethereum’s price for long exposure at higher prices. In laymen’s terms – a lot of people think that ahead of and around the Ethereum merge the price could sky rocket. This could be a classic “sell the news” situation, but regardless of the short term price impacts this is a major development for the project. The importance and scope of this merge cannot be overstated. It’s arguably the hardest and most difficult thing any major project has done in crypto and the event, regardless of the outcome will fundamentally change the market and many other areas permanently. Ethereum will require orders of magnitude less energy to validate and function than it currently does, which makes it much more sustainable for the future.

Lastly – and here’s a MAJOR piece – this will significantly reduce the amount of new ETH minted each year. With the EIP-1559 upgrade this past year, ETH is being burned in transactions currently. Over time, especially as ETH continues to see more and more usage/development, the supply of ETH will dwindle and likely become deflationary. When that happens, $1550 ETH will be laughably cheap.

Closing Remarks

Look – the market is a mess right now. The best approach is to use logic and avoid major risk taking. Each of the three plays I’ve discussed here are things I’m planning on holding for a long time. With the Mt. Gox release of 137,000 BTC and other unforeseen macro events looming, it could get a lot bloodier. If it does, I’ll continue to accrue these projects unless something about the project itself (not the market) changes. In addition to these, I’m personally adding ATOM and AVAX as I believe these ones will easily survive an extended bear market and have terrific future outlooks as well.