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Cryptocurrencies are now going through a period vaguely reminiscent of the dot-com crash of 2000. At the same time, bitcoin has the highest chances of survival, says Ari Paul, founder of the BlockTower Capital crypto fund.
Imo, crypto now going through something vaguely like post-2000 tech crash. We proved modest product market fit in several areas, but A. Products and infrastructure need to be much better to truly cross chasm to mainstream. B. And adoption is ~5 years behind where some hoped. /1
— Ari Paul ⛓️ (@AriDavidPaul) June 14, 2022
In a bull market, he said, it’s easy to overlook the industry’s problems.
“High profitability in DeFi? This is not an indicator of the imminent default of counterparties, but “free money”. A constantly non-functioning Solana is seen as a cost of growth. The delays in scaling the ether and the problems of The Merge seem insignificant. Securing the Bitcoin network – we’ll figure it out over time,” Paul wrote.
With the arrival of bearish sentiment, abstract optimism leaves the market because people hold billions of dollars in various coins:
“Then there are questions: is the assessment reasonable? Is the approach fundamental in terms of indicators? Will the existing leaders survive in 5-10 years?”
Ari Paul stressed that over the past six months, the crypto community has gotten rid of excessive naivety, but has not yet learned to see the shortcomings of cryptocurrencies.
According to him, the current quotes can be a good entry for the next bullish rally, although with some degree of risk. He believes that most alts will not survive the protracted bear market, or will come out of it in zombie form – similar to Litecoin, EOS and Ripple after the dump in 2017.
“The whole cryptocurrency is still risky for me. The industry has reached an early level of maturity with proven product suitability, working infrastructure, and real value. However, most of the market leaders are likely to be replaced by new, improved versions,” Paul suggested.
He recommended investing in digital currencies as investing in tech stocks after 2000 – combining basic “value investing” in existing projects and exploring new startups that could lead to the next bull cycle.
According to Paul, the only independent asset in the portfolio for a period of more than 3 years can be considered bitcoin, since it competes not for the technology or product, but in the categories of “security” and “stability”.
“Even if bitcoin fails, it’s probably not because it will be replaced by something better. In my estimation, there is a 50% chance of bitcoin crashing within 20 years, but its chances of surviving are much better than those of any other crypto asset offering a higher but riskier return on investment,” he stated.
Finally, Ari Paul added that now is much closer to an “honest” assessment and this is the best time to buy than at any time since February 2021.
“I am much more optimistic about crypto in the horizon of two years than 9 months ago, when many tokens were worth 3-25 times more expensive. However, you need to be careful with what you buy if you are trying to save capital for the long term,” he concluded.
Recall, according to Glassnode analysts, many indicators indicate the market’s entry into the “deepest phase of the bear cycle.”
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