There have been a lot of exciting movements in the crypto space from bullish runs on various tokens to large corporations adopting cryptocurrencies as part of their business strategies.
With so much happening this quarter, we invited Mati Greenspan, Sam Bankman-Fried, and Jason Choi to our Virtual Meetup #8 on Wednesday, November 25 @ 8AM EST to discuss the state of the crypto market in Q4 2020.
Held monthly, CoinGecko’s Virtual Meetup is our live online community event where we explore different key topics in the crypto sphere and invite industry leaders to share their two satoshis.
In our discussion, we talked about what’s happening this quarter, the anticipation of retail companies, and what’s possible in 2021.
Here is a quick breakdown of what we discussed with Mati, Sam, and Jason.
What is happening in the space this quarter?
Jason addressed institutional adoption by saying, “We started the quarter seeing large institutions coming into the space such as MicroStrategy.” He also pointed out that the performance of 2017 ICO coins which are doing well is one of the clear signs of retail coming in.
“Previously in 2017 it was with hype and fanfare but now it’s more to do with stealth. We’ve seen legitimisation by some major players like MicroStrategy and Square adding Bitcoin to their balance sheet,” added Mati.
Sam notes that, “It’s been one of the clearest bull transit that we’ve seen in years but it also seems a lot more concentrated and a lot of people deep in the crypto space itself are feeling very confident.”
What’s the narrative behind the differing prices during Asian and Western trading hours?
Sam highlighted that back in late 2017 and early 2018, the Asian markets were driving the moves. “The recent rally has seen more of a Western focus with billionaires algorithmically buying during the Western trading hours and making the price go up,” he adds.
Is the mass retail market in the crypto space yet?
According to Sam, “Volumes are massively up, buying is massively up, most metrics are massively up except new sign ups which are also up but they’re not increasing as much as the rest.” He adds that, “This is looking like massive activation of people who are already crypto-adjacent or already in crypto.”
Jason continues by saying, “There’s probably an element of funds trying to frontrun the retail.”
Mati concludes with, “I believe that if the narrative of billionaires and hedge funds buying is correct, then other projects such as XRP and XLM are better positioned.”
What do you think will happen in 2021?
“There’s an enormous amount of anticipation and excitement right now in crypto and there’s an open question of what is it anticipating and would it happen?” said Sam before adding, “But what if these institutions never come in? Then it could be very bad."
Jason simply puts that, “We’re going to see more inflow of capital.”
What are some indicators you look at to see if the market is dumping?
Jason looks at, “A lot of different metrics.” A newer data point he is looking at is MVRV which is market cap to realized value. Other than that, he aso checks on, “Typical things like RSI, stochastic, moving averages, and c-score.”
When it comes to Mati, “Momentum indicators are not as strong with Bitcoin as other markets. Anybody’s guess is just as accurate as my own.”
What are some of the fundamental frameworks that you guys use when valuing tokens, especially DeFi tokens?
For Sam, there are two ways when valuing tokens. Firstly, “Let’s say everyone is unexcited about the coin, what is the price I’m willing to buy it at since the business is worth more than that.” Secondly, “In general, look at some sort of version of cash flow divide by market cap.” He then ends by saying that, “No formula is going to tell you.”
Meanwhile, Jason adds that, “There’s no real way to project a fair value on most tokens. Most promising is DeFi with users who pay millions of dollars in fees. But do most people who trade these tokens care about that? Do people have consensus around this valuation model?”
Mati agrees that, “There are no comprehensive valuation models for utility tokens nor even money tokens.”
Do you think we will see crazy yields on Yield Farming again?
“It was quite a wild summer with DeFi but who knows what the future holds. What the summer showed is that there’s a lot of appetite for DeFi,” said Sam.
“I don’t see yields with 10,000% APYs coming back,” Jason added.
Mati added that, “It’s not realistic and it’s telling of the immaturity of the market and there’s not enough activity to support a normal market flow.”
If you had $1 million, how would you allocate your portfolio if you had to hold it for 3 to 6 months?
Sam clarifies that it is not financial advice before saying, “Some people believe that ‘Trump Stay or Trump Go’ tokens are quite good for the next few months.”
Meanwhile, Jason notes that, “Most of my bags are DeFi bags and they are to do with products that can do things that you typically can’t do in Centralized Finance (CeFi) just yet.”
Mati claims that, “Part of trading for me is about being able to jump in and jump out. If it’s a long term hold it’s going to be Bitcoin at this point but of course there are so many attractive assets out there.”
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