SVET Reports
Three Main Arguments for the Ten Years Bear Market in Crypto
I strongly believe that promoting decentralization on a world-scale is one of the best chances, which our civilization must to take, in order to achieve the rapid social and economic progresses. However, implementing distributed ledger technologies (DLT) on all levels of our global society might take time. A lot of it.
Concurrently, we - proponents of DLT - have been already tested by one year of continuing price downfall, and so many experts now predict that the recent dismal state of crypto market (and, consequently, the slowing down advent of DLT) might last another 2-3 or, even, 4-5 years. Some, in contrast, continue to be "half-fall glass" people maintaining that we have already passed the bottom and prices are very likely to spike again in the nearest 6-12 months or even earlier. But what if they all wrong? What if the crypto bear market will last 10 years or more?
Just in case you start to hate me right away, let me officially pronounce that I'm keeping myself for 50% on the side of "half-fall" individuals, while another 50% belongs to 2-3 years camp.
I refuse to trust my own logic willingly associating myself with the majority. Obviously, I have made this choice emotionally and this continues to worry me. My practical experience as a long-term investor and a participant of three major market crashes tells me that the majority is always wrong. Because of that I continue to mentally revisit three main arguments, which, IMHO, justify the Ten Years Bear Market in Crypto. Let's us confront my worries (and I assume yours as well) head on right now.
The first of those three argument is political, the second is technical and the third - economic.
In modern times, we have never witnessed such almost unanimous and well organized world-wide governments resistance to the new tech as in the past two years in crypto. Though, the political argument, basically, stipulates that the regulatory pressure will gradually increase to the point, when it became too risky for an average individuals as well as economically and politically infeasible for businesses of all sizes to use or to adapt decentralized DSL and associated crypto-currencies. As a result, the state of limbo (regulatory, business and technological) in crypto-market will be reached within 10 years and it will last until the visible generational shift happens on the highest levels of governments all across the world.
There are three popular counter-arguments to that.
1) "many officials speak positively about blockchain": Nonetheless, we have to assume that this largely depends on the type of branch those gov officials belong to. Many state agencies might be exited about DLT because keeping so many individual financial transactions on-line provides them with innumerable clues. However, exactly because of that, those agencies will put all their energy into generating as much "information requests" and new "regulations" as they physically can.
2) "the anti-gov protection has been initially build-in to cryto": At the same time, that only creates "an arm race" and will provide agencies with additional ammunition for their pleas for budget's extension.
3) "crypto is good for economy and most governments clearly realize that": That well might be true, however, it might also put one branch of government against another. As global geopolitic situation will continue to deteriorate the "national security" advocates will have the decisive upper-hand over "innovators".
The second argument is the technological. Many technical observers predict that the rapid spread of crypto will be achieved when massively adapted and user-friendly applications are created by largest crypto-companies, which were exaggeratedly benefiting from 2017 ICOs craze. This development stage usually takes up to 3-5 years, state those experts.
However, it looks like already, at the beginning of 2019, we have a massive wave of lay offs and business reductions, particularly, among the largest crypto companies. Those public credits might not simply last so long as 1-2 years, let along three.
Additionally, the current DLT platforms might turn to be simply too technically complex and incongruent for the great majority of apps developers. The whole generation of old, experienced blockchain coders must continually hold their noses to a grind stone of current protocols for quite a long time producing ten of thousands of barely usable applications. Only after that we might have the third gen of mass adapted applications, which might be built only "on top of" the second ones. Consequently, it'll take twice as much time as predicted by 3-5 years school of experts, or, basically, 10 years.
The third "economic" argument is based on the good, old theory of credit cycles. Basically, in the past 10 years (2008 - 2018) we have had an "expansion" phase, now, however, we will be facing another 10 years of credit "reduction" supported by rising FRS rates and confronted by the slowing tempo of economic growth in all countries.
The preceding 10 years (1998 - 2008) had also been a period of massive credits contraction (specially in developing countries), however, during that time we also had had an active phase of "globalization" and an Internet expansion supported by big corporations and sponsored by major Western governments.
The third ("economic") argument seems to be working against the first ("political") one. However, as I have already pointed out, it might all came to the tug-of-war between security "hard-liners" and "progressionist" in government.
In conclusion you might ask "What's the difference? Whether bear market will last 2-5 or 10 years - both those periods now look almost identical as an eternity from a practical, business stand point. How shall our reaction be different if it is 10 - not 5 years?"
That is a very good question, indeed, which I intend to address in my next posts. Meanwhile you can watch this video (https://youtu.be/vey_bgMdYWc), where we review some of the above-mentioned arguments in more details.