Zayden is currently at start-up incubator, WhatNot Studios in Bangkok, Thailand. Originally from Singapore, his inquisitive nature brought him overseas to gain experience and learn new things.
It is that same nature that got him into DeFi and Web3, often spending hours a day reading up on it. Self-proclaimed Web3 enthusiast, and investor in cryptocurrency.
Guest Author: Zayden Qu
Cryptocurrency has been getting A LOT of attention recently after hitting an all time high. Famous people such as Elon Musk and Drake are tweeting about Crypto. A Memecoin, $WIF, is potentially going to be on the Las Vegas Sphere. Many new investors will be coming into Crypto, and if you are one of them, welcome!
Are you too late?
If you’re new, a question you might ask yourself: “Am I too late?”
Well, the short answer is no. I briefly talked about it in the first article in this series. But let’s explore 3 different theses as to why it is still early.
Supply shock thesis
- 900 Bitcoins are mined/produced daily (for now)
- On average, ~3100 Bitcoins are bought by the ETFs daily.
In order to maintain the equilibrium between the basic demand and supply principle, the price of Bitcoin has to increase.
If this trend continues, there will be a supply shock whereby there simply isn’t enough Bitcoin around to be sold, leading to a large increase in Bitcoin’s price.
My Take: Take this with a pinch of salt. The caveat here is if the demand from ETFs maintain at this current level. At the moment, there is nothing to suggest that the demand will drop.
Global adoption thesis
The global adoption of Crypto is still relatively small. There are many ways to view global adoption, one of the most popular way is via Google trends.
Google trends for “Crypto”:
Another way is to look at data/surveys on Crypto ownership:
(Source: https://www.security.org/digital-security/cryptocurrency-annual-consumer-report/)
My Take: In either cases, it is definitely not too late to enter Crypto. Although it is certainly not early, I do believe we still have a long way to go before it becomes too late to enter Crypto.
Global liquidity thesis
(Source: https://twitter.com/Barchart/status/1751121603809943963)
In extremely simple terms, Global liquidity is the amount of money that is flowing within the economy. It usually runs in a cyclic manner in a 65-month cycle, and it suggests that we are looking at increasing liquidity in 2024. Simply put: More money generated = More money for people to invest.
My Take: Again, take this with a pinch of salt, the 65-month cycle is merely an observed pattern rather than an absolute. Global liquidity is projected to be increasing, however, it is important to keep a lookout for any potential black swan event that might change things.
Bitcoin Halving
What is Bitcoin halving?
It is a deflationary mechanic hard coded into Bitcoin that happens every 4 years. Simply put, the daily mining rewards of 900 Bitcoins a day currently will be halved to 450 Bitcoins in April 2024.
Theoretically, the Bitcoin halving feeds into the supply shock thesis mentioned above as it will reduce the supply of Bitcoin. As long as the demand remains, Bitcoin’s price should increase sharply.
My Take: However, Bitcoin halving is public knowledge that everyone knows about. This means it is usually already priced in, the current price of Bitcoin has already “accounted” for the Bitcoin halving. Therefore, this would likely be a “sell the news” event.
Crypto Bubbles
Currently, the two goldmines in Crypto are memecoins and AI.
- Memecoins are basically tokens without any utility and are only valued based on its “meme”. In my opinion, it is risky and unpredictable.
- AI tokens, on the other hand, have projects that has innovative technology.
My Take: AI in crypto is highly undervalued, the AI sector is < 1% of the total crypto market cap. Meanwhile, AI in traditional financial market is arguably heavily overvalued.
Next week, I will highlight some Crypto tokens that I believe could be a good investment in our Token Spotlight! There are several good AI projects that I will run through next week: Autonolas ($OLAS) Netmind.ai ($NMT).
Disclaimer: Not Financial Advice
