State of Crypto

I joined a new company recently after leaving my BD role at Kava for the last 4 years.
4 years is a LONG time to be in one crypto company.
I was the first hire on the ecosystem side to build out their Layer 1 DeFi ecosystem.

So my colleague asks me what I think of the crypto industry currently, and what will happen to these new chain launches.

I think it's one of the most interesting points in time for crypto. On one hand, we have the best regulatory background the history of the space has ever seen.

Trump announced a Bitcoin Strategic Reserve for the United States, Genius Bill passed into legislation for stablecoins, and the Clarity Bill currently being debated amongst industry participants and Congress.

We have major banks - the likes of Citi, BofA, BNY Mellon, Morgan Stanley, who are looking to offer crypto custody, and loans with either IBIT or raw BTC as collateral.

Not to mention FASB accounting changing for corporate holders of BTC to allow companies to actually realize a profit on their balance sheets. And companies like Strategy who have accumulated over 700k (!) BTC alone, and other companies following suit like Metaplanet, TwentyOne, Gamestop, and even real estate/media personalities like Grant Cardone are stacking sats with his Real Estate fund.

Times sure have changed even from just a few years ago when a tweet from Elon would send the market mooning.

Now all these companies, even pension funds, and institutions like Harvard are in on the BTC gold rush.

But alts are at an all time low, and even just 2 months ago in November, crypto fear and greed index hit one of its lowest points ever in history... 10/100, signaling max fear, what gives?

I think this is one of the most interesting points in crypto's evolution. Yes, the industry is maturing. We've gotten big enough for the regulators to have to pay attention, and participate in carving out the regulatory boundaries that this space is forced to grow in in the future.

I think along with that, comes the demise of vaporware. Or at least the majority of it.
It may come as no surprise that 99% of this industry didn't solve for a problem. It was pure speculative extraction by insiders from retail investors.

Sure, some teams had good intentions to compete and build something meaningful and lasting, but when you give teams the power to essentially print their own money, without needing to ship a real product or generate revenue, it creates incentives too strong for most to ignore.

"Show me the incentives and I'll show you the outcome" - Charlie Munger

As a result, 99% of this industry turns out to be vaporware. VC's might argue, well, that's just the venture game, only a small percentage of start ups actually become successful. And I agree.
The difference here is that a series A or B company can have their shares be liquid instead of having to wait for an IPO or exit event.

Either way, I think with the legitimization of this industry, it's shining a light on all the ridiculous and speculative fluff that was going on in this industry in its pure "wild west" days.

By the way, have you read the White House's report on the crypto industry last year? It's really good.

This administration understands pretty well how this technology works.

The jig is up. No more vaporware. No more infinite L1's or infrastructure projects with high FDV, low float, and billions in valuation with $20 in revenue.

I think that's what's happening right now and altcoins.

The market and retail particularly understand this now. Prior to this market crash you saw traders moving and and out of positions quicker than ever. I think the most profitable meme coin traders held for less than a few minutes on average or something.

The market is no longer willing to tolerate vaporware.

I caveat that by saying, this is crypto after all, and anything can happen, but I think the projects that come next are going to have real revenue, solve real problems, and will succeed with real market adoption.
I think it will take time, but underneath the noise, real institutional players are getting positioned, and legislation is getting adopted.

Also, while altcoins may be down, I don't think the market has fully sorted the projects with no value and the altcoins like $PUMP and $HYPE that are still buying back $1m+ worth of their tokens every single day.

Overall, I think despite the current market sentiment, the backdrop is extremely bullish for the long term outlook of this industry.