Will bitcoin go up this year? How do VCs view the market outlook?

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Since the market entered a deep bearish market at the end of 2022, people's expectations for the next round of the market cycle are mostly placed on the halving of Bitcoin in 2024, and the market conditions in 2023 are not optimistic. Judging from the performance of the market at the beginning of this year, it seems that this is indeed the case. Although market sentiment ushered in "spring turmoil", what is more showing is the rapid rotation of sectors and hot spots, and there is no sign of new funds entering the market.

Earlier this month, Silicon Valley Bank was hit by a thunderstorm, and the ripple effect spread to the encryption market a few days later. USDC has been squeezed because its issuer, Circle, has deposits in SVB, and there has been a sharp decoupling, and the market seems to be slipping into a freezing point again. But what is surprising is that the Fed's rescue arrived in time, which temporarily eased the Liquidity crisis in the banking industry. Immediately afterwards, Bitcoin ushered in a round of "violent pull-ups" in the next two days, with a rare intraday increase of 20%. The sudden rise has disrupted the position of many investors. After regretting their failure, everyone began to think again: Will Bitcoin continue to rise this year? In this regard, BlockBeats listed 8 questions that the market is most looking forward to answering, and solicited opinions from the following well-known institutional investors:

BMAN, ABCDE Capital. ABCDE was co-founded by Huobi co-founder Du Jun and former Internet&crypto founder BMAN, dedicated to investing in and supporting Web3 Builders;

Jason, Folius Ventures. Folius Ventures invests, popularizes, and participates in the construction of the Web3 ecosystem, and is committed to supporting Asia-Pacific and Chinese entrepreneurs;

Pima, Continue Capital. Continue Capital was established in 2016, focusing on investing and incubating global blockchain technology, early technology start-ups and providing quantitative trading services;

Bill, Cypher Capital. Cypher Capital is a multi-strategy Crypto investment fund headquartered in the UAE, covering VC, secondary market, nodes, BTC mining and other fields;

Jerry, Synergis Capital. Synergis Capital invests in the next generation of early-stage startups and drives their growth by activating its network of paradigm leaders.

BlockBeats notes that there are more answers in this article than before March 24. Many unexpected events have occurred in the past week, and the price trend of Bitcoin has also undergone major changes, which further highlights the insights of investors' opinions. The following are questions from BlockBeats and answers from institutional investors:

1. BTC has risen for several days in a row, and it is poised to hit the $30,000 mark. What is your judgment on the direction of the crypto market in the second half of 2023? How long will this BTC bull market last?

BMAN - ABCDE Capital: The market has experienced multiple rounds of deleveraging. We have observed that a large number of institutional funds have bought BTC in the range of 18,000 to 20,000 US dollars. We tend to believe that the bottom has already appeared and will not make new lows. In the second half of the year, a number of large-scale projects will be launched on the test network. Next year, Bitcoin will be halved again. The market is still one narrative away from the bull market, just like the DeFi Summer in 2020, which is worth looking forward to.

Jason - Folius Ventures: Personally I am pessimistic. The transition from tightening to loose is taking place, but the risky asset prices after loosening and the possible return of inflation may lead to policy mistakes by the Federal Reserve. At the same time, superimposing actual thunderstorms will cause the United States to enter a deeper recession. The market is likely to price in this in Q3. Personally, I prefer to work hard in the first half of the year, and take one step at a time in the second half.

Pima - Continue Capital: Above $40,000, cautious in the second half of the year.

Bill - Cypher Capital: After BTC fell to a range below $30,000 from the LUNA incident in 2022, BTC has been consolidating in this range for more than half a year. Since the LUNA event is due to the superposition of macro factors that caused some funds to leave the market and lead to the decline, if we can see more funds re-entering the market, we will have confidence in the follow-up trend of BTC . In this SVB incident, for the first time, there was a completely different market between bank stocks and BTC . We think that there may be more such market divergences in the future.

Jerry - Synergis Capital: The overall direction of the encryption market has a lot to do with the macroeconomic environment. The Fed raised interest rates by 25 basis points this time, and the market reacted that the current round of interest rate hike cycle would end after the May rate hike. the result of. Although the Fed is more hawkish than the market expects on the dot plot for the time being, this is also an expected means to keep the loop until inflation does not come down. Generally speaking, we believe that the peak of short-term tightening has passed, and the Fed will continue to ease the recent Liquidity needs, so we continue to be optimistic about this round of bull market in the short term. As for how long it can last in the medium term, it mainly depends on how weak the US economic environment is in the second half of the year, as well as inflation data from the most sticky wage and non-housing services sectors. In the long run, the main theme of the cyclical macro narrative has changed from the bottom, and the dominance of the U.S. dollar and U.S. debt is being shaken. With the change of the new order under deglobalization, encrypted assets have the opportunity to make a big impact on the stage of currency competition. Brilliant, but it will also be accompanied by continuous fluctuations.

2. Many people believe that the Liquidity crisis is the main problem facing the encryption and even the global market in 2023. In your opinion, after the Federal Reserve announced the rescue plan for SVB two weeks ago and a series of subsequent measures to improve Liquidity, Liquidity Can the crisis be resolved? Has the market's long-awaited "reversal" node arrived?

BMAN - ABCDE Capital: same as question 1.

Jason - Folius Ventures: It has not been fully resolved, but the market has roughly predicted possible problems in the future, and the Fed will make more lenient choices because of these problems. Therefore, even if the problem is not completely resolved, I personally think that risk assets will continue to improve in the first half of the year.

Pima - Continue Capital: The game of all parties puts pressure on the Fed, and Liquidity eases in the short term; global confrontation has led to the reversal of the low-inflation global division of labor model of "cheap energy + demographic dividend, low-end manufacturing + consumption", depending on the least likely decline How to reduce the inflation rate in the first half of the year, the second half of the year is a window period for observation, and it is difficult to talk about reversal.

Bill - Cypher Capital: It should be noted that the bank's Liquidity crisis solved by the Federal Reserve's BTFP plan is not the same thing as the Liquidity of the risk asset market. The BTFP plan does not permanently remove assets such as bonds from the bank's balance sheet, which is different from the previous quantitative easing. The cryptocurrency market has rebounded a lot after the bank bailout, and we should look at the issue of market risk more forward-looking.

Jerry - Synergis Capital: We believe that SVB's rescue plan and the two actions of continuing to raise interest rates have confirmed the Fed's determination to use balance sheet tools to solve the short-term reserve shortage problem, so we think the reversal node has already Arrival, the peak of short-term Liquidity crunch has passed.

3. In the past week, BTC had a rare single-day increase, but ETH did not move much. How do you understand this market performance? Is it new funds entering the market, or is Liquidity gathering?

BMAN - ABCDE Capital: On the one hand, funds to avoid bank bankruptcy flow into BTC, and on the other hand, the initial stage of market rise is the blood-sucking market of BTC .

Jason - Folius Ventures: BTC more follows gold + long-term debt trading recession, while ETH more follows Nasdaq and long-term debt. BTC is generally under-allocated by currency circle institutions. ETH should outperform BTC as risk assets resume their rally on easing.

Pima - Continue Capital: ETH had a round of rebound from $800 to $2,000, touching the long-term moving average; BTC has not experienced such a large-scale rebound, so I will make up for it this time.

Bill - Cypher Capital: Short-term volatility itself is difficult to explain. If you want to pay attention to price trends, there is a saying that says "When in doubt, zoom out." And only looking at the fluctuations of ETH itself is also one-sided, such as ETH Arbitrum in the ecology has been very popular recently, but this may not be immediately reflected in the price of ETH itself. In addition, if we compare the Crypto industry with traditional industries, then BTC is "gold" and other currencies are "business". In the past week, BTC has played the role of "safe haven asset gold" in a sense.

Jerry - Synergis Capital: We don't think that a large amount of external funds have flowed into the encryption market. After the FTX incident, the encryption market has been in a state of rotation and PVP. The rise of Bitcoin this time is mainly caused by the entry of funds from Stablecoin and other currencies into Bitcoin as a hedge. Another part of the reason is that U.S. regulation has the possibility to treat all cryptocurrencies other than Bitcoin as securities, which leads to a relatively lower security of Ethereum’s value storage properties. Bitcoin has historically been seen as a hard currency in the encrypted world and a substitute for the traditional financial system, so the current narrative of the banking system being under pressure has also added to its performance. We expect some of the funds to flow back from Bitcoin to Ethereum and other coins with a higher risk appetite as fears of a collapse in the U.S. banking system recede.

4. If there are indeed new funds entering the market, will these funds entering BTC continue to flow into ETH or other public chain ecosystems, driving the growth of DeFi, NFT and other sectors? Which sections will you make layouts on?

BMAN - ABCDE Capital: We believe that there will be a rotation of capital sectors in the future, and we will deploy leading projects in each sector.

Jason - Folius Ventures: High probability. The existing plates are not very flexible. Individuals are still waiting for the application layer. You can follow the flow of ARB AirDrop funds.

Pima - Continue Capital: If there is new capital, it will be diverted, and it will not increase generally; personally, it will lay out new public chains, L2, and ominchain directions.

Bill - Cypher Capital: Definitely. Cypher is not going to be an ETF for a certain sector, so we will make a layout in each sector, and we also expect entrepreneurs to take us to witness the birth and growth of new sectors.

Jerry - Synergis Capital: Ethereum will usher in a Shanghai upgrade in April this year, allowing pledged Ethereum to be unlocked. Although it may bring some uncertainty to the price of Ethereum in the short term, we believe that this upgrade will greatly increase the number of pledges on the Ethereum network in the future, and at the same time benefit the price of Ethereum, making the exchange rate of Ethereum/Bitcoin will also be promoted. This will further increase the network benefits of the Ethereum ecosystem and make it more difficult for other public chain ecosystems to develop. In terms of specific sectors, in view of the uncertainty of recent regulatory regulations, we are relatively cautious in investing in web2.5, especially in web3 enterprise-level services and the permissioned DeFi track. As a relatively active creator economy VC in the industry, we continue to accurately incubate and invest in leading teams in all parts of the entire value chain. In view of the return of Liquidity, DeFi will also be a track we will focus on, especially in terms of decentralized Stablecoin and option trading innovations.

5. In the short term, are you more bullish on BTC or ETH? What are the reasons?

BMAN - ABCDE Capital: I am optimistic about BTC in the short term. The crisis of bank bankruptcy has not yet been resolved, and funds will enter BTC in the short term.

Jason - Folius Ventures: Both are optimistic, but the narrative is different. Both are good, I personally don't want to choose.

Pima - Continue Capital: Shouldn't be thinking about this.

Bill - Cypher Capital: I am personally bullish on BTC in the short term, because this is a capital migration to "backed by math, instead of backed by centralized protocol" under the global macro narrative. Cypher's layout in the cryptocurrency market is long-term, and we are not so concerned about short-term market fluctuations. Both the BTC and ETH ecosystems have innovative and active ecosystems, and Cypher will actively deploy in both.

Jerry - Synergis Capital: Bitcoin has proven its special status and attributes in the blockchain world, but we should not underestimate Ethereum's deflationary token economic model and its ecosystem including secondary public chains powerful network effects. The second-level public chain ecology helps Ethereum solve the expansion problem. At present, the most innovative projects are still built on the EVM. If traditional enterprises want to enter the blockchain, they will also give priority to Ethereum L2. In contrast, Bitcoin lacks many application scenarios that Ethereum has, and this gap may become more and more obvious in the future.

6. The Arbitrum AirDrop has ignited the development of its ecology again. Do you think the popularity of the Arbitrum ecology can last for a long time?

BMAN - ABCDE Capital: The Layer 2 war has just begun and will continue until ZK's Layer 2 project is launched.

Jason - Folius Ventures: Very healthy. It should be one of the second floors with the most chances. I think we can look more at the benefits that Axiom + EigenLayer brings to the Ethereum ecosystem.

Pima - Continue Capital: Yes.

Bill - Cypher Capital: After Arbitrum announced the AirDrop standard and snapshot time, we did not see a significant drop in the active data on its chain, which shows that users are sticky to its ecology. We look forward to seeing the further development of the Arbitrum ecosystem.

Jerry - Synergis Capital: Since Arbitrum was launched, the decentralized financial services DeFi and gaming fields within the ecosystem have shown steady organic growth, even when its token AirDrop expectations are uncertain. Arbitrum currently has the support of many partners, and its own protocol is constantly innovating, especially Stylus, which will have the opportunity to introduce a large number of developers who used Rust on Solana to the Arbitrum ecosystem, so we continue to be optimistic about the prospects of Arbitrum.

7. In addition to Arbitrum, Lens, zkSync, StarkNet and other projects all have AirDrop expectations. Which ecosystem will you interact with in the second half?

BMAN - ABCDE Capital: Layer 2 ecology will be experienced.

Jason - Folius Ventures: It will take time for the ZK track to land. Personally think Scroll will be a dark horse. In addition, you can also take a look at SUI in terms of App.

Pima - Continue Capital: I have little interaction, but I can tell you about projects worth interacting with: zkSync, StarkNet, Sui, LayerZero.

Bill - Cypher Capital: As an institutional investor, we pay more attention to long-term investment.

Jerry - Synergis Capital: We are optimistic about protocols that have made innovative progress in DeFi and web3 games. As for AirDrop expectations, we will pay more attention to public chains that have received a large amount of first-line capital injection in the primary market, such as emerging protocols such as Celestia, Sui and Scroll.

8. Recently, with the emergence of Ordinals, "BTC ecology" has suddenly become a hot word. Traditional old projects such as Stacks, and new directions such as issuing Token and NFT have all received attention from outside the BTC OG community. But according to our observation, although the enthusiasm is still there, it is very complicated and primitive to hype Token or NFT on BTC . In your opinion, is the "BTC ecology" a flash in the pan, or is it a new trend that will last for a long time?

BMAN - ABCDE Capital: The BTC and PoW camps have always had long-standing and loyal communities, and they believe and look forward to the emergence of an innovative ecology around BTC .

Jason - Folius Ventures: The Stacks ecosystem will take time. Not suitable for short frying. The real starting point needs to wait for their EVM to go online, which will coincide with the halving of BTC in 24 years. It should be the most flexible narrative in the entire market.

Pima - Continue Capital: At the end of 21, the Taproot upgrade is the main reason for all this. It may fail in the long run in 4 years, but it is a proposition that is difficult to falsify in the short term. There is a "poor expectation" in the market, but it is the source of profit. focus on.

Bill - Cypher Capital: Any innovation is not so mature in terms of UI/UX in the early stage. Cypher has always held a positive attitude towards technological innovation. Cypher participated in the auction of TwelveFold and was lucky enough to get an Ordinals. We welcome entrepreneurs who have ideas and projects in the BTC ecosystem to discuss with us at any time.

Jerry - Synergis Capital: Bitcoin has the largest holder group and the most loyal community base. From the past data experience of the sustainable development of the lightning network ecology, the probability of the BTC BTC will not be short-lived. There is a systematic layout, but it is believed that there is a clear lag behind the Ethereum ecosystem in terms of smart contract technology and deployment.

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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