Your Great-great-grandchildren
In order to remain focused on our goal of capitalizing on this bull market to the maximum extent that might be possible, specifically by exploiting the retail and institutional mania that will likely ensue over the next five months, I want to outline how I see the remainder of 2021 and 2022 playing out. In absence of an overall target as well as waypoints to guide our actions, one might be induced to prematurely liquidate the speculative portion of their portfolio and therefore potentially lose out on the most explosive gains which always occur in the last few weeks or days of FOMO-induced mania. Sitting on substantial gains is psychologically more difficult than capitulating at a loss. This I know from experience. Nevertheless, you shouldn't be disappointed if you realize a profit with your investment. However you finish the race then, be content with your decisions if, at the end of the day, you're in the green. Bear in mind, I am outlining this hypothetical scenario for my own sanity as much as yours. As one who (unfortunately) tends to follow the daily ups and downs of this market with all its emotional turns, I, perhaps more than most, need a sound plan devised during boring market doldrums to orient my later decisions.
Thousands of predictions have been made as to where this market might be headed. Speaking generally, I think the consensus is that we should be happy if bitcoin breaks $100k, ecstatic if we reach $150k. I, on the other hand, think that if we don't reach at least $200k this run then many of our beloved price models will be in jeopardy of invalidation. At some point, they will fail but I don't think that will occur for at least another five years or so.
In short, I still maintain my upper bitcoin price prediction of $290,000 - as ludicrous as that sounds. I have, however, lowered my Ethereum expectation from $30,000 to $21,000. The reason for this has nothing to do with any of the recent "threats" by so-called "Ethereum Killers" (like Cardano or Solana) but is simply based on the historical Ethereum/Bitcoin ratio which typically touches .15 at market peaks, meaning 6.66667 Ethereum will equal the price of 1 bitcoin. Further, Ethereum's 2021 price action appears to be mirroring Bitcoin's 2017 performance, which topped out around $20,000.
Concerning those "Eth killers" such as Cardano and especiallySolana which has heavy VC backing(without a staking lock-up period, meaning they can dump at any time), they are simply enjoying their 15 minutes of fame. None provide a significantly improved product over Ethereum, particularly in terms of security at scale. It's wonderful to "claim" your project can successfully process 2.1 million smart contracts a day like Ethereum, it's another to actually perform under that kind of demand. Solana experienced a successful Denial-of-Service attack against its network on 9/14 which stopped its entire blockchain for over 17 hours. In the words of a Cointelegraph article reporting on the event (my emphasis added): "with Solana’s engineers unable to stabilize the network, its validator community opted to coordinate a restart of the network (!). Solana’s community is currently preparing a new release, with further information expected to be released soon." A restart of their entire network? Imagine the implications if that happened to Bitcoin. Wow, and this for a coin that currently has a $48 billion dollar market cap, much of which is locked in staking contracts, not immediately easy to exit. Unreal. What's more unreal - and further evidence that (1) the market is completely irrational and headed for mania and subsequent disaster and (2) that VC investors, who hold a significant amount of the SOL circulating supply, unanimously chose not to sell (probably through some muted coordination or outright collusion) - is that Solana's price shed a mere 12% of its value during the episode and has since partially stabilized. That the price did not completely tank (as it should have) combined with the fact that the node validators somehow managed to "spontaneously" come together to "unanimously" decide to start an entirely new chain speaks to the degree of centralization and outright manipulation of this project. I guess retail speculators are prioritizing media hype above long-term security and network consistency at the moment, not surprising. Of note, a similar attack was simultaneously carried out against the Ethereum network and it was successfully repelled, for the most part. It certainly makes one wonder the intent of these "bad actors" if it was, indeed, a coordinated undertaking.
Solana is undoubtedly faster and cheaper to transact than Ethereum among smart contract platforms. (Bitcoin, the most secure network, has the lowest transaction fees overall, particularly on its Layer 2 Lightning Network, which has near-zero fees and settles instantaneously off-chain). Ethereum's transaction fees (i.e. "gas fees" measured in "gwei") are continuing to squeeze out microtransactions as well as small money players who want to speculate on NFTs and participate in"decentralized" finance. Retail money is thus flocking to the Solana Network in order to satisfy their degenerate inclinations. Speed and cheap transactions, if baked into a protocol from launch, always come at the price of security. Network, and by extension value security (i.e. "store of value security" over decades and centuries) is, in my opinion, the whole point of "crypto" currency in the first place and from it stems all of crypto's worth and utility to our world beset by censorship, government control, capital controls, onerous taxation, lack of privacy, lack of banking access for millions in the third world, and the rest that results from our "permissioned" digital mediums of communication. If a protocol prioritizes speed and transaction cheapness before it can achieve robust decentralization, it must be centralized, rendering it vulnerable to single points of failure, malicious attacks, and insider price manipulation. Decentralization, which eliminates single points of failure and thus greatly enhances network security, takes time and dedicated patience among its participants. Further, it is extremely difficult to achieve in a ground-up, community-driven fashion. Truly decentralized and absolutely secure blockchains will undoubtedly be slower than centralized options like Solana, Visa, or Mastercard which, as in the case of the latter two, can process1700 transactions per second. Visa and Mastercard, however, are utterly centralized and make no claim to the contrary. If either company ever fell out of favor with regulators, shutting them down would be swift and decisive. That would never happen, of course, because Visa, Mastercard, and the US government are cozy bedfellows. Indeed, all centralized birds of a feather flock together, while their wings are given flight by the likes of large Berkshire-Hathaway investments - all of which, in my eyes, are appendages of a vast criminal financial complex akin to the military-industrial complex, one which the American people endorse via their 401(k) and pension contributions, among much else.
One last point about Solana: running a hardware validation node is expensive and complicated, as in the case of Ethereum. I tried pulling the hardware requirements from their website as of this writing but the site was down, surprise, surprise. From my understanding, it costs between $3000 - $12,000 in hardware alone, this is not much for large players with deep pockets, but it is for the average user. Also, there is a financial incentive to run a hardware node, which again leads to centralization over time of the very people who should be providing the essential security for the network. Worse, if hardware nodes are in charge of recording and verifying the authenticity of blocks on Solana's chain, combined with the fact they are financially incentivized to do so, it is easy to see how a bad actor might seek to centralize power so as to take a majority share of the network and confirm fraudulent blocks (and profit along the way, no less). Even if they don't, the threat that someone could easily carry out such a nefarious act should not engender confidence in this project over the long term. As explained in the past, Bitcoin node validators, who are not financially incentivized, call the shots in the bitcoin blockchain. They unanimously decide which blocks are authentic and which aren't. They also decide which Bitcoin core software upgrades they want to adopt, a process that again takes time and is completely voluntary. As such, it is their job to prevent a single miner from cornering the network by rejecting any fraudulent block that such a malicious actor might attempt. Even before China's bitcoin mining crackdown greatly decentralized the mining network away from its authoritarian borders and dispersed those miners around the world, the Bitcoin protocol was decentralized due to the global distribution of its node validators. Small, "slow", and stable blocks (as in the case of Bitcoin) allow for limited hardware to run a node and also maintain the full digital ledger. Larger blocks or quicker blocks rapidly outstrip the capacity of small, inexpensive hardware devices from holding the large amounts of data that quickly result from those kinds of consensus protocols. Bitcoin achieves speed by its layer 2 (and soon layer 3, 4, and 5) networks that are built on top of and satellite around its blockchain.
Though the altcoin market will undoubtedly explode in the coming months, I don't see Cardano or Solana significantly outperforming the rising altcoin waterline at this point. They made their moves too early in the hype cycle. In 2017, NEO, Tron, and especially EOS were billed as the next best smart contract platforms, which is to say, the first "Eth Killers". Where are they today? #46, #23, and #35 on the market cap list as of this writing and falling by the week. The primary weakness of these platforms, from a simple marketing perspective (which is everything when it comes to shitcoins), was either the lack of a strong cult of personality figure or in the case of Tron's Justin Sun, the utter chicanery of the founder's actions. NEO, "the Chinese Ethereum", could not effectively market to a Western audience for obvious reasons while EOS did not have a visible charismatic leader of any sort. In fact, Dan Larimer, the co-founder of block.one who built the software powering the EOS platform, left the company altogether in January of this year. One need only google the name "Justin Sun" to glimpse the state of his mental (in)stability. He recently spent half a million dollars for an NFT jpeg of a pixilated rock. Cardano enjoys a strong cult following of its leader Charles Hoskinson, so, while investors continue to wake up - along with the rest of humanity - to the reality that we now inhabit a "Post-Trust World", it should fare decently well, which is to say, it probably won't collapse in the overall market cap listing in 2022 and 2023 as long as Hoskinson can keep convincing people not to dump it.
As I've said repeatedly, Bitcoinisthe cryptocurrency market. Period. Without bitcoin's mania-inducing halving cycles which throw it into the media spotlight every four years, "smart contract, Dapp, decentralized finance, non-fungible token platforms" blah blah blah would be relegated to the closed world of gamers, hackers, and other internet-only populations, cut off from dumb money speculators who always seem ready to throw their hard-earned money at the next snake oil that promises to cure their financial woes. Who are all these shitcoin promoters on Youtube, Instagram, and Twitter kidding? When Bitcoin goes up, it allows all the others to go up. Without bitcoin's media cycle, the world would not know about "smart contract decentralized application cross-chain interoperability" or any other nonsense. Maybe someone would come up with the idea in the future, but it would be difficult to find an audience outside the aforementioned internet-only groups. When Bitcoin goes down, it all goes down, horrifically. Most projects don't survive bear markets - why? Because the media "juice" runs out. Altcoins will not, I repeat, not decouple from bitcoin's price movements within the next 8 years because Bitcoinisthe cryptocurrency market and will remain as such until it transcends "cryptocurrency" and thus sheds itself of any association with the rest of the "crypto". Ethereum, and by extension the rest of the altcoin forest, only begin a sustained uptrend when bitcoin starts its post-halving bull run. This cannot be disputed. Simply look at the charts. Sure, there are altcoin fits and starts, but they do not last. Bitcoin must prove to investors that it is entering a bull run before any of these shitcoins begin to wake up the broader dumb money market. Case in point: the price of Ethereum fell against Bitcoin from September 2020 all the way to January 2021 before it began to sustainably move higher. Bitcoin had been moving higher from October 2020 onward and broke its all-time high at the beginning of December 2020. Eth didn't hit its high until a month and a half later. It took the rest of the altcoins even longer to wake up and hit theirs if they even have as of yet.
Altcoins, as I continually say, are - unfortunately - for ignorant retail "investors" who are perennially vulnerable to get-rich-quick schemes from which they never learn their lesson. As always, I am not a fan of Ethereum and never have been, but it is the best, most secure, stable, and "decentralized" of all the shitcoins on the market (which, of course, isn't saying much). As such, it is the most reliable proxy for the market mania that will likely ensue from now until the end of the year. Eth going to $30,000 this cycle (my initial price prediction) would only come to fruition if Eth and BTC peaked at the same time. This, however, has never happened in Ethereum 's existence. I know we're working with a small sample size, I just don't think the price patterns will be significantly altered in the near term. So, if and when Eth reaches .15 Eth/BTC ratio, Bitcoin - as crypto's first-mover - will have already peaked and be on its way down. Further, as mentioned above, Eth's 2021 price action is more or less mirroring Bitcoin 2017. Ethereum tends to overshoot Bitcoin’s historical moves (both to the upside and down), so if Bitcoin topped at $20,000 in 2017, I believe Eth will overshoot that and peak at $21,000. That also coincides with a falling bitcoin price at the time of this move which could easily see the Eth/BTC ratio touch .15 or higher, if only for a day.
All seasoned market participants can clearly see the writing on the wall: this market is hopelessly irrational and, given the unheard of amounts of money printing we've experienced in the last few years - combined with the deplorably low yields from traditional investments (aside from overleveraged Real Estate perhaps) - retail investors, as well as hedge funds and family offices, will continue to search for more "risk-on" assets like altcoins, leading to an "alt season" that will rival the most ludicrous bubbles yet witnessed in modern human history. Truly, the gains that await many of the altcoins will doubtless mint many new millionaires - if they can get out in time. The vast majority of speculators, however, believing their pet project will never come down, will not get out in time. After having put their trust in some "genius" shitcoin founder, they will - like the mindless, hypnotized lemming(s) that they are - follow him off a cliff. To return to my earlier point, virtually no one would have even heard of Ethereum, much less Cardano or XRP, if not for Bitcoin's predictable 4-year halving cycle which vaults Bitcoin and thus the rest of "crypto" into the media spotlight for a year; vaulting which sheds light on all its scammy knockoffs principally through youtube, Instagram, and other reputable sources of fact and truth. These scams are meant to draw in newcomers who have little to no experience in these markets and are also ignorant of the technical aspects of each particular project. Most newcomers, however, can understand a catchy slogan like "Solana solves Ethereum's scalability problems and high gas fees". Because it sounds good and appears to be the case, they pile in. Though I've (thankfully) not dabbled in penny stocks, 99% of the altcoin market feels like penny stock "investing" - only more accessible to a wider audience and thus a faster way to lose your shirt. As I explained months ago, there is, tragically, a bifurcation among "crypto investors": bitcoin, as it continues to be adopted as legal tender by more nations, institutions, and high net worth individuals, will - given its intimidating price per coin (which, mind you, can be bought at tiny fractions) - will increasingly be viewed as "institutional money" beyond the attainability of most retail investors, while shitcoins, be it Ethereum, Cardano, Solana, and the rest will be the domain of dumb retail money, endless exit scams, and other white-collar criminal activity. Even Ethereum is now being viewed as an institutional-grade asset among newcomers. Though unfortunate, retail speculators will only have themselves to blame when their bets go against them, particularly if they think they are "getting in early" for "the long term", or, conversely, that they can "get out in time". What sane, rational person would put real money into Cardano for the long term? Does anyone actually think Cardano will, for instance, be made legal tender in a country before it's regulated into obscurity, or simply forgotten? Heck, for the uninitiated, it's difficult to imagine that any nation would adopt Bitcoin as legal tender let alone XRP, Solana, or Dogecoin. (Doge is a perfect example of the media exhaustion cycle I'm talking about: it saw its 15 minutes of fame before the mid-market correction and has now lost all its steam and energy. It will not outperform the overall alt-season that is coming. If you're in Doge, you better move to some other silly thing.) Though the media narrative ebbs and flows, it will eventually circle back to Ethereum in a few months as theEth 2.0 release date draws near (currently, December 1st). At that time, you won't hear much about Cardano or Solana. However, when you start seeing news headlines about Ethereum again, the largest gains will have already been made.
Bitcoin, as always, is a proxy for the entire crypto market while Ether is a proxy for altcoins. Holding Eth gives you exposure to altcoins without the senseless ups and downs of smaller projects which, after their brief stint in the limelight, are quickly forgotten. Such is why I always recommend an initial allocation of 80% bitcoin, 20% Ethereum. Ethereum - which will undoubtedly outperform bitcoin over the next 5 months - is the speculative portion of your portfolio that should be liquidated in the latter stages of the bull run. As has been well said by someone, when it comes to Eth, "Don't love it, don't hate it - trade it."
I need to point out that this Ethereum/Bitcoin trading strategy only applies as long as Bitcoin keeps to its 4-year halving cycles, and as long as Ethereum remains a viable project. Whether Bitcoin is still heavily influenced by its "Halvenings" is, I think, the central question among market participants during this run. It stands to reason that Bitcoin will eventually break from the halving cycle manias and perhaps behave more like a traditional equity that goes up or down in a less "predictable" fashion. Otherwise, as mentioned elsewhere, Bitcoin will - in a few decades - eat the entirety of investible assets. I don't find this likely. However, given that bitcoin is "only" adopted by 2-4% of the world's smartphone-using population, I believe we'll have to wait at least one more cycle before we witness a sustained "supercycle" from which bitcoin goes up but does not significantly come down. Until that time, I will continue to swing trade Ethereum to increase my bitcoin stack.
All to be said, I believe PlanB's stock to flow ratio, among others, will hold true at least through 2026 and can therefore paint a general picture as to where this market might be headed in the next 4 plus years. "So how then $300k for this cycle, that sounds crazy, and in a few months' time!?!"PlanB himself, or should I say his S2F Cross Asset Model, is projecting a $288k price top for this cycle. The S2FX model compares the market cap of different store of value assets in terms of their "hardness" or "stock to flow". Of note, this model has a Correlation Coefficient of .99687, with 1.0 indicating a perfect linear relationship between the examined variables; "stock" here meaning the above-ground supply of an asset with "flow" meaning the number of years required to produce that above-ground stock. A higher S2F means that an asset is rarer, harder to produce, less inflationary, and thus more "valuable" than assets with a lower S2F, equating to a higher market cap. From my understanding, a .99687 R-value is very rare among statistical models, meaning, the data it seeks to portray is extremely concise, if not nearly exact, with few outliers. Since Plan B released his original Stock to Flow Model in March 2019 in the depths of the previous bear market, it has proved incredibly prescient in its ability to forecast a general monthly price range that bitcoin has not broken below to any notable degree in any single monthly close from 2011 onward. There are other models I am following to reach my price prediction as well, specifically the Pi Cycle Top Indicator (a model I thought was being invalidated on April 10th when the moving averages crossed, but actually signaled the mid-market local top) in light of the 2-Year Moving Average Multiplier, plus a half a dozen others that are useful in confirming when the market is overheating. Concerning the 2-Year Moving Average Multiplier, when the Bitcoin price crosses the upper orange line (the Two-Year MA x 5), it either denotes that a big market correction is in store or that we've passed a point of no return until the top, generally reached within 4 weeks. The price of bitcoin normally doubles after this cross. If this occurs in mid-December, the 2-year MA x 5 should be near $130k. If we cross around this time, the price will absolutely explode in a matter of weeks to $280k plus. As confluence, PlanB's S2F (not S2FX) worst-case scenario for the end of December is $135k. Again, this "worst-case" has yet to be broken. I am monitoring other confluence factors as well, all pointing to these astronomical heights.
Speculating further, I believe we're on track for potential all-time highs by mid-October ($65k+), potentially coinciding with a likely Bitcoin ETF approval by the SEC, followed by a local peak around mid-November (the 13th to be exact) followed by a huge market correction that will make many believe the "top is in" before it powers up and blows past 100k in early December, then $150k by year-end, and finally hitting its peak mid-January - around my birthday on the 14th. If the market peaks on my birthday, given all my wild predictions, it will be beyond coincidental. I'm kidding, but not really... Those that think the "top is in" (and thus sell) before December will of course FOMO back in when we're above $130k. These will also be the ones who will say "we're not coming down" and will ride it all the way down for a year. After bitcoin peaks, expect Ethereum to take the lead and peak a month later, with the rest of the alts following a few weeks later. There will be a dead-cat bounce or two, or three, and much speculation that we're entering a supercycle but don't believe it. With all the ignorance and leverage in the system, combined with a likely stock market correction and a possible deflationary "death spiral", the crypto implosion will be swift and painful and will take about a year to fully bottom out. Look, therefore, to the end of 2022 or early 2023 to start reaccumulating more bitcoin for the next halving which will occur mid-2024. If it unfolds faster than this timeline, we probably won't go as high. I will, of course, keep you updated as to when I plan to liquidate my Ethereum. When it's time to dump, one will have to be quick because Eth will, just as bitcoin, double if not triple in a few weeks so it will behoove you to pay attention when it starts getting silly.
A caution to these predictions concerns the currently poor Bitcoin Dominance metric which tabulates how much of crypto's overall market cap is composed of Bitcoin's market cap alone. This number currently sits at 41%, which is almost near its 2017 low at the height of the altcoin mania. For this bull run to go forward, Bitcoin must take a decisive lead and not relent until it peaks, otherwise, there won't be enough monetary steam to pump the remainder of the market in the manner I am describing. There's only so much money that can enter crypto, and because Bitcoin is a proxy for the entire ecosystem, if it starts flatlining or going down, though the alts might have their time in the sun, it will be short-lived. Aside from the news of more nation-states adopting Bitcoin as legal tender or the definite approval of a Bitcoin ETF in the US, I do not know what fundamental event will provide the impetus to kick off the aforementioned frenzy. Only time will tell...
In closing, do your best to keep the long-range view in mind, that image being the end of the nation-state, the collapse of the US dollar, the protection of your wealth, provision for you and your family, and the inheritance for your grandchildren and great-grandchildren, and great-great-grandchildren.
Good luck to you all.
NSV