The crypto markets are in full panic mode. While the macro environment has provided a constant backdrop of impending doom for some time now, it’s the total collapse of Luna, Terra USD (UST), and the Terra ecosystem these tokens are at the center of, that has finally brought about a widespread state of capitulation.
Besides Luna immolating from over $80 to a flatline close to zero, the algorithmic stablecoin UST depegs wildly from the dollar, what’s also striking is the wider crowd psychology on display.
There are public expressions of shock and disbelief at the crypto crash that is occurring, and it is understandable that committed participants in the Terra ecosystem who have been hit badly might be feeling distraught.
And yet, more widely, while the exact circumstances vary from cycle to cycle, it has been explicitly predicted by many observers and analysts that crypto moves in repeating cycles, all apparently anchored around bitcoin’s roughly four year halvings.
Cycles Repeat, Details Change
The dominant thesis was that, similarly to 2017, and 2013 before that, we would see an enormous bitcoin run in 2021, which would cause Ethereum and altcoins to bubble up spectacularly, and then following the bull run in 2022, we should witness echoes or reruns of the crashes that occurred in 2018 and 2014.
That means that right about now we should have been expecting carnage, capitulation, precipitous drops, menacing red candles and expressions of apocalyptic sentiment. Or in other words, everything that we might have been braced for is now unfolding accordingly.
This is not to say that details don’t change from repetition to repetition. Certainly, no one knows for sure the depth or length of the comedown and hangover. Also, it is reasonable to expect a gradual leveling off in cycle volatility over years and decades, as crypto, or Bitcoin, at least ,matures and integrates. This would suggest, over time, peaks that are less dizzying, and dips that are more manageable.
What’s more, the triggers and side-plots will vary from cycle to cycle, and UST depegging while Luna plummets are brand new catalysts. It might seem dismissive to refer to a calamity on the scale of what is happening within Terra as a side-plot, but, for those who have always drawn an unwavering distinction between Bitcoin and crypto, it’s not an unreasonable classification.
Crashes Forge Maxis
That leads us to another question, which is what the ramifications of all this will be, moving forwards. Many people were traumatized by the 2018 crash due to losing significantly on altcoins, causing them to walk away entirely from anything blockchain -related.
However, not everyone gave up, and of those that stuck around, some came to the realization that, when it really came down to it, bitcoin was the asset that mattered, that had purpose, and that would still be around in another couple of years, halvings and hopefully decades too.
Essentially, that cycle four years ago forged bitcoin maxis in disguise, who would maintain some degree of interest in the gains that could be made from altcoins, but no interest in the actual altcoins themselves, always knowing that Bitcoin is the endgame.
One variation this time around, is that it might not be just Bitcoin that comes out the other end with a few more high conviction holders on board, but Ethereum too, with its expansive, operational ecosystem and connection to web3.
Something else that is different in our current cycle, related to Ethereum, is NFTs. Due to NFTs being primarily (but not only) Ethereum based, we have an attractive future dynamic.
If you are into crypto to the extent that you start to see Bitcoin and Ethereum not as risky, but actually the opposite, as astute long-term holds, meaning you never feel under pressure to sell, then NFTs can be your fun-and-games wild card, but denominated in ETH and not requiring you to leave the Ethereum network.
It is apparent, then, that for all the emotion that is flooding crypto at the moment, this current crypto crash has come along exactly when it was predicted to, even if some of the precise details were uncertain.
That being the case, it makes sense to carry the patterns forward and begin, even if the bottom is not yet in and maximum capitulation has still to occur, to start planning ahead on a month-to-year scale.
Looking at the market in these longer terms, and with trends continuing to play out, there are, or soon will be, if you’re expecting more blood, some bargains coming on to a market in the process of clearing out. This situation is made all the more interesting by the existence of NFTs, which will present some inviting entry points for those looking ahead.
There is no need to hurry, plenty of time to research, and there may well be further detonations yet to occur, but what is certain is that there will be opportunity-laden wreckage to pick through for gems.
As always up to now, while the headlines are a wild ride, crypto’s overall trends and cycles are doing nothing out of the ordinary. For investors that recognize this, it might soon be time to go discount shopping.