Moderator: David Hoffman, Bankless
Guest: Ledger, Crypto KOL
Compiled by: Peyton, 7UPDAO Analyst
Has the bull run begun? If not, what does this mean for future prices?
David Hoffman invited Ledger to discuss some charts and describe his views on the future of the market.
The Bankless channel is a media platform focused on cryptocurrency and decentralized finance (DeFi). Founded by David Hoffman and Ryan Sean Adams, it provides news, educational content and analysis on cryptocurrency, blockchain technology and decentralized finance. The Bankless channel has attracted attention for its in-depth market insights, practical investment strategies and analysis of industry trends, aiming to help users understand and participate in the decentralized financial ecosystem.
Ledger
Ledger Status is an active individual on social media, especially on the X (formerly Twitter) platform. His content focuses on the latest developments in the cryptocurrency market, industry news, and market analysis.
Ledger Status has attracted attention for his deep understanding of the cryptocurrency market and timely market updates. The content he shares includes market trends, technical analysis, and predictions for future trends, usually in the form of comments, articles, or videos. These contents are of high reference value for investors and enthusiasts who want to follow the dynamics of the cryptocurrency market. As of the time of writing, he has 233.5K Twitter followers.
He founded Ledger Status, a website for crypto and blockchain enthusiasts in September 2017. It contains a series of basic resources, technical analysis, and exciting stories about the crypto industry. It is designed to serve those who are interested in crypto and blockchain technology. The goal is to provide basic and technical analysis for various crypto assets and the organizations behind them, as well as any ideas about the industry.
Four charts (four indicators)
David Hoffman :
He introduced the discussion with Ledger and showed four charts: Bitcoin dominance rate, ETH/BTC ratio, ETH/Solana ratio, and Solana/USD price. He believes that these charts reflect the current state of the market and are intended to obtain Ledger’s interpretation.
He mentioned the recent increase in market volatility due to the unfreeze of Japanese yen trading, and suggested that this is a good time to evaluate the broader crypto market.
Ledger :
Bitcoin Dominance Rate: Ledger recognizes Bitcoin’s strong dominance and believes that the current market phase is more like the early stages of a longer market cycle rather than the end of the cycle. He compares it to the stage in 2019, noting that the recent volatility may just be an experimental phase or the beginning of a new cycle.
Market sentiment: He observed that despite some rapid ups and downs in cryptocurrencies, there is no widespread public excitement about buying cryptocurrencies or stocks, which reflects a relatively stable market rather than a frenzy.
Solana’s status: Ledger highlighted Solana’s significant progress, resilience and positive development activity despite challenges. He described Solana as having entered the "top league," similar to where Ethereum was in the previous cycle, and highlighted Solana's strong network effects and community engagement.
ETH/Solana Ratio: He noted that Solana has performed better relative to Ethereum and other assets. However, he also mentioned that neither Solana nor Ethereum have reached their all-time highs, and Ethereum’s relative underperformance could be due to a lack of new participants.
Market Dynamics: Ledger is optimistic about Bitcoin, Ethereum, and Solana, viewing changes in their relative value as opportunities rather than negatives. He stressed that these dynamics provide opportunities to identify value, making current market conditions favorable for analysis and potential trading.
Market Sentiment Check
David Hoffman :
Bitcoin Market Dominance: It is observed that Bitcoin dominance has been rising for a year, while the ETH/BTC ratio has been falling for two years.
Solana’s Trend: Noting that Solana’s uptrend has been going on for almost a year, we attribute this to the excessive sell-off during the FTX crash and the subsequent rally driven by the memecoin trend.
Market cycle perspective: He believes that the current period does not reflect a traditional market cycle, but rather an isolated phase of cryptocurrency activity. He believes that traditional market cycles involve new retail participants and major trends like NFTs or ICOs, but these are currently lacking.
Current Market State: It feels like we are currently in a state of stagnation, waiting for new players to define the next cycle, while Bitcoin's market share is rising and Solana's relative performance is also outstanding.
Ledger :
Solana’s Rise: Agreed with this view, adding that Solana’s rise is driven by the meme coin trend, which may be similar to the rise of DeFi on Ethereum. He also mentioned that Solana has the ability to capture market segments like decentralized physical infrastructure networks or quasi-real assets.
Ethereum’s role: Noting Ethereum’s focus on durability and its role in major financial markets, hosting large lending platforms.
Ecosystem Differences: Emphasize that while Solana excels in speed and specific market niches, Ethereum is focused on reliability and large-scale financial applications. Both ecosystems are thriving but serve different purposes.
DeFi Resilience: Impressed by the resilience of cross-chain DeFi, despite challenges such as liquidations on Curve or attacks on platforms like Compound.
Market Cycle Perspective: Skeptical of extremist views and believes we are in a consolidation phase rather than the end of a market cycle. He points to the lack of new major narratives or outside capital entering the market, suggesting that pessimism about the end of the cycle is misplaced.
Price Discovery
David Hoffman :
Bitcoin and Ethereum Price Levels: Bitcoin has only briefly surpassed its all-time high in 2021, reaching $72,000 in March and $71,000 in May, but has failed to sustain these highs. Ethereum has also failed to sustain above $3,000, struggling to reach its previous high of $4,000, with its all-time high now appearing out of reach.
Solana Performance: Noting that Solana also failed to hit old all-time highs, the lack of new users in the cryptocurrency space despite ETF (exchange-traded fund)-related news suggests that no significant new price discovery is occurring.
Ledger :
Market cycle hypothesis: Challenging the four-year cycle hypothesis based on halving, arguing that ETFs may have a greater impact on demand. It also points out that global market and election-related uncertainties may affect the crypto market.
Consolidation Trend: He believes that consolidation after reaching an all-time high is normal and advises patience. He believes that while Bitcoin consolidates, other areas of the market may gain growth, leading to a reallocation of funds into the broader market.
DXY and Crypto: Highlights The DXY (Dollar Index) measures the strength of the U.S. dollar and its decline is generally good for cryptocurrencies. Longer periods of consolidation are normal and a weaker dollar is usually associated with bullish phases in cryptocurrencies.
Economic Context: Agree with David on the potential for a soft landing, noting that if inflation remains manageable and the economy balances without excessive money printing, this could be positive for assets like Bitcoin and Ethereum.
Ethereum's Status: Points out that Ethereum is weak relative to Bitcoin and needs significant progress or adoption to surpass it. He believes that if Ethereum's technology is used by large-scale finance or governments, there is potential for growth.
David Hoffman :
Future of Ethereum: Agree that Ethereum needs real-world adoption and significant progress to regain and surpass previous highs.
ETH / BTC Ratio
David Hoffman :
ETH/BTC Ratio: It is noted that the ETH/BTC ratio was close to parity with Bitcoin’s market cap. This suggests that Ethereum has the potential to be equal to Bitcoin in market cap, reflecting the concept of “flippening”.
Ledger :
Flip Discussion: Recognize that the term “flip,” referring to Ethereum surpassing Bitcoin’s market cap, was once an important discussion point, but is no longer common. While not expecting Ethereum to surpass Bitcoin, Ledger still sees potential for Ethereum to regain strength.
Target Range: Setting a more realistic target, ETH is expected to reach a range of 0.075 to 0.08 relative to Bitcoin, with the possibility of reaching 0.1, which shows that Ethereum is performing strongly but not surpassing Bitcoin.
Performance vs. Moving Averages: Noting that the ETH/BTC ratio has been declining in recent years, Ethereum has underperformed Bitcoin and Solana in past cycles. Ethereum’s 200-week moving average, which has historically supported Bitcoin during bear markets, has provided less support for ETH. Ethereum is currently below this moving average, indicating relative weakness.
Future Outlook: Despite the current challenges, Ledger believes that Ethereum remains an investable asset with the potential to reach new all-time highs if Ethereum’s technology gains large-scale financial or government use. It noted that removing Grayscale ETH from the ecosystem could improve market dynamics.
ETF Impact: The belief that ETFs could provide significant purchasing power to retirement accounts and large investment pools would benefit Bitcoin and Ethereum. However, addressing existing challenges is critical to fully realizing these benefits.
David Hoffman :
Market Environment: Acknowledging that Ethereum faces mixed challenges and opportunities in the current market environment, this echoes Ledger’s analysis.
Narrative Direction
David Hoffman :
ETH’s struggles amid market dynamics: Reflecting on the recent challenges Ethereum has faced, particularly during the unwinding of the yen carry trade, which resulted in significant selling pressure. He acknowledged a misconception that Jump Capital was involved, but stressed that it was a certain player with significant leverage that had to go, similar to what happened with Three Arrows Capital's liquidation. He emphasized that because Ethereum is often used as collateral, it is often more impacted during the chain liquidation process, thus having a significant impact on the ETH/BTC exchange rate. He noted that despite Ethereum’s rebound, current market trends are not favorable for Ethereum, with Bitcoin (BTC) and Solana (SOL) showing stronger momentum.
Ledger :
Market Timing vs. Assessing Strength: Agreed that ETH could test the 200-week moving average again and discussed the difficulty of market timing, specifically the timing of ETH/BTC. He highlighted Bitcoin’s strength and Solana’s relative weakness, in part due to the decline of memecoins. He noted that many memecoins have lost money significantly, causing holders to disperse or capitulate, which has had a negative impact on Solana.
Solana's Potential and Risks: Sees Solana as having potential, especially if deeper projects make progress, but also sees the potential for further weakness. He mentioned that if Solana is unable to consolidate or rebound from its lows, it could face challenges, especially until later in the year when market conditions may improve. He suggested that strong market moves are typically seen after elections, and 2025 could bring price discovery for crypto assets.
Current Market Priorities: It is recommended to prioritize Bitcoin over Solana and Ethereum, as Bitcoin appears to be the strongest of the three, although it is still hovering in a range below its 200-day moving average. He predicts that if Bitcoin falls to $40,000, it may pull Solana down to below $100 and Ethereum down to below $2,000, which may lead to liquidations of leverage and speculation, especially in meme coins.
Strategic Positioning: It is recommended to position yourself to take advantage of potential market declines before the end of this year. He stressed that it is crucial to be ready to seize opportunities that may arise as market dynamics change.
Relatively weak
David Hoffman :
Discusses Solana's relative weakness, Ethereum's clear downtrend, and the worrying pattern that Bitcoin has failed to break out of. He noted that Bitcoin has been consolidating below its all-time high for a long time, which is worrying in the impatient crypto market. He mentioned that in the crypto space, if prices do not rise, there is a risk that prices may start to fall, which would trigger fears of the end of the cycle and could lead to a sell-off.
Ledger :
Underperformance relative to stock markets: Highlighted the dismal performance of crypto markets compared to stock markets, especially the divergence in performance between stocks and Bitcoin. He added that other assets like gold have broken out and entered a price discovery phase, performing well over the past few months, further highlighting Bitcoin's lagging position. He mentioned that a reversion to the mean in 10-year Treasury yields would be positive for cryptocurrencies if there is no recession, and a soft landing for the economy would be the ideal outcome.
Interest Rates and Macroeconomic Impact: Discusses the pressure that rising interest rates will have on crypto markets, and the importance of a soft landing for the broad economy to avoid further underperformance in crypto markets. He noted that despite some weaknesses, the NASDAQ has been relatively strong over the past year compared to cryptocurrencies, which has exacerbated the frustration of crypto investors.
David Hoffman :
ETFs’ Impact on Traditional Cycles: Agreeing that ETFs may have disrupted the traditional four-year cycle, disappointing crypto traders and investors who were expecting a more explosive growth model, he noted that while ETFs offer a steady, reliable source of growth, they lack the adrenaline rush that many speculators expect, which dampens enthusiasm in the market.
Ledger :
Stable Growth vs. Fast Gains: Acknowledging the slower pace of growth due to ETFs, but emphasizing the importance of demand for these financial products, especially as younger generations become more open to crypto investing. He discussed the importance of long-term thinking, noting that millennials are entering their peak earning years, providing a strong driver for future growth in the crypto market. He advocates a 10-year investment perspective, highlighting the potential for significant gains across major crypto assets.
Valuation & Belief: “I think Ethereum is undervalued at around $2,000, Solana is undervalued at around $100, and Bitcoin is undervalued below $100,000. For me, $250,000 to $50 $10,000 in Bitcoin, $10,000 in Ethereum, and $500 in Solana are all completely reasonable goals, and I don’t think these are overly aggressive predictions.” Undervalued, with the potential for significant long-term appreciation. He advised investors to avoid being distracted by short-term fluctuations and focus on long-term investments that may bring 10x or greater opportunities in the future, stressing the importance of conviction in holding spot positions.
David Hoffman :
Avoid long-term mistakes: Quote Chris Burniske on the importance of not being too aggressive or impatient. He warned against expecting unrealistic time frames to realize significant gains, noting that long-term success requires patience and calmness.
Ledger :
Low leverage and long-term strategy: Advocates low leverage and focusing on holding major crypto assets, noting that most people have difficulty handling leverage and often end up losing money. He recommends investing a significant portion of net worth in crypto spot positions and gradually buying in periods of consolidation or bear markets. He is pessimistic about quick profits through leverage and trading, and advises not to chase the hot coins of the day.
Identifying Market Shifts: Reviewed past market cycles, noting that major shifts like the DeFi craze in 2020 or the NFT surge in 2021 were identified by people who were already in the market. He stressed the importance of long-term involvement and patience in identifying these market shifts that occur in real time in crypto investing.
DeFi Summer Explosion
David Hoffman :
DeFi Summer Explosion: Recalling the exciting moment when Ethereum broke through from $330 to $425 and then quickly rose to $1,100, he emphasized the strong consensus and unique sense of energy at that time, which he has not felt since then.
Ledger :
DeFi Summer and Market Dynamics: Ethereum was observed to be mostly sideways when the DeFi Summer occurred. The initial breakout temporarily interrupted the DeFi Summer, but as Bitcoin rose and Ethereum remained stable, the DeFi Summer continued. He pointed out that such breakouts are often accompanied by market turns and a gradual accumulation of strength, which eventually leads to strong price movements.
Current Market Sentiment: Shared that he is not feeling the same market energy or momentum right now as he did back then. He expects the market to continue this way and does not see a major breakout imminent. He predicted that if the market were to see a decline before the election, it would not be surprising and would reflect broader macroeconomic factors.
Patience and Market Timing: It is recommended that patience and market timing are crucial. True momentum and significant market movements are felt instinctively by observing and understanding market dynamics. He acknowledged that while some minor trends like meme coins have moved, they haven’t had the same transformative impact as major market moves.
Market Heat and Opportunities: Points out that significant market opportunities emerge when the market heats up and starts to move aggressively. He predicts that with patience, opportunities can be seized when this momentum emerges in the market.
Looking ahead
David Hoffman :
Ledger and the future of content creation: Curious if Ledger will return to podcasts or other content formats, while recognizing the shift in focus. Mentioned the general sentiment within his community about the need to find balance and hobbies outside of crypto.
Ledger :
Current Approach: Plans to continue participating in the market, but with a more cautious approach. He acknowledges the need to slow down and be more strategic. Despite cutting back on high-frequency trading, he still maintains an interest in crypto.
Trading Style and Experience: Shares his trading experience, pointing out the process of moving from frequent trading to experiencing long-term capital appreciation. Describing his trading style as swinging between main ideas, he has reduced the number of transactions in the recent period, but has achieved significant gains.
Long-term gains: Reflected on the rarity of long-term capital appreciation from liquid cryptocurrencies and values this experience. Said that while he traditionally prefers swing trading, he has recently found value in a more patient approach.
David Hoffman :
Market Dynamics: Notice the slowing pace of the cryptocurrency market and how other factors such as ETFs and Fed policy are influencing this change. See a shift from intense four-year cycles to a more sustainable market rhythm.
Ledger :
Embrace Change: Expresses acceptance of slower, more sustainable market dynamics.
