LESSONS FROM THE LAST BEAR MARKET.
Or, how smaller investors can win in downturns:
Or, how smaller investors can win in downturns:
I was messing around on Excel today to see the best/worst performers of the last Bull-Bear-Bull cycle.
The data is taken from four dates:
• Dec 2017 (Market Top)
• June 2018 (180 days post market top)
• Nov 2021 (Market Top)
• May 2022 (180 days post market top)
The data is taken from four dates:
• Dec 2017 (Market Top)
• June 2018 (180 days post market top)
• Nov 2021 (Market Top)
• May 2022 (180 days post market top)
Throughout this, keep in mind:
• Past performance is no guarantee of future results
• It's impossible to predict the future
We also can view this data with the hindsight of knowing market tops/bottoms, which is impossible to know in the present moment.
Nonetheless:
• Past performance is no guarantee of future results
• It's impossible to predict the future
We also can view this data with the hindsight of knowing market tops/bottoms, which is impossible to know in the present moment.
Nonetheless:
Question 1:
What would've happened if you invested $100 in each of the top 200 cryptos at the very top of the cycle in 2017, then waited 180 days?
Drawdown would've been around 49.5%, with just 30 of the cryptos gaining value and a staggering 170 losing value.
What would've happened if you invested $100 in each of the top 200 cryptos at the very top of the cycle in 2017, then waited 180 days?
Drawdown would've been around 49.5%, with just 30 of the cryptos gaining value and a staggering 170 losing value.
The best performer over the pullback? WAXP, which 4x'd in the 180 days following the BTC ATH.
Those strong performers didn't really hold up any better over the long-term bear, though.
Most charts of coins that launched pre-top in 2017 look like this:
Those strong performers didn't really hold up any better over the long-term bear, though.
Most charts of coins that launched pre-top in 2017 look like this:
Question 2: How do alts perform in bear markets?
The second data set I looked at was from 180-days post peak (June 2018) to the 2021 peak)
An 'index' approach of the top 200 over this period would've returned a little under 3.5x, underperforming both ETH and BTC.
The second data set I looked at was from 180-days post peak (June 2018) to the 2021 peak)
An 'index' approach of the top 200 over this period would've returned a little under 3.5x, underperforming both ETH and BTC.
So, if you would've held a well-diversified portfolio basket of alts, you wouldn't have been 100% ruined.
Although you've still only got a 5% chance of outperforming BTC and ETH, and BTC and ETH.
Although you've still only got a 5% chance of outperforming BTC and ETH, and BTC and ETH.
Question 3: How have alts performed from the 2021 top to today?
Holding a top-200 broad index of alts from Nov 2021 to today would have yielded HORRIBLE results, returning about -75% over the 180 day time period.
The 180-day post top drawdown has been a lot worse this time.
Holding a top-200 broad index of alts from Nov 2021 to today would have yielded HORRIBLE results, returning about -75% over the 180 day time period.
The 180-day post top drawdown has been a lot worse this time.
Only one non-stablecoin in the top 200 at the market peak that has made money over the last 180 days, Bitfinex's Leo Token
Some coins have come into the top 200 and made money, but that's my #1 stat to prove its been gnarly out here.
Some coins have come into the top 200 and made money, but that's my #1 stat to prove its been gnarly out here.
The worst performers that have managed to stayed in the stop 200 over the last 180 days?
Woof.
To me this means that a lot of people are LARPing that they're making money, when I'd guess most people have lost a lot.
Woof.
To me this means that a lot of people are LARPing that they're making money, when I'd guess most people have lost a lot.
What are the top 15 performers from 2018 to the 2021 top?
The trend to me is that most are well-capitalized altcoins with:
• Enough runway to work through a bear market
• Strong incentive to ship ASAP
• Product
• Reasonable FDVs
The trend to me is that most are well-capitalized altcoins with:
• Enough runway to work through a bear market
• Strong incentive to ship ASAP
• Product
• Reasonable FDVs
dYdX at one point had an FDV of 26b, over 1/2 of Coinbase's market cap at the time (and now more than Coinbase's mkt cap)
That FDV just doesn't make any sense at all.
These FDV bombs can pump in bullish conditions but will nearly certainly get rekt in a bear market.
That FDV just doesn't make any sense at all.
These FDV bombs can pump in bullish conditions but will nearly certainly get rekt in a bear market.
Retail has been faced with a lose/lose situation with the following terms.
What's the solution?
• Airdrops get dumped
• Farm tokens get sold off
• FDV bombs get sold off during VCs unlocks
What's the solution?
• Airdrops get dumped
• Farm tokens get sold off
• FDV bombs get sold off during VCs unlocks
Honestly, ICO/Coin Launching platforms like Coinlist and Polkastarter have performed phenomenally well over the last few years.
Perhaps the ICO is an underrated model to bootstrap a community, and it's better to have stakeholders than airdrop farmers and 'mercenary' LPs.
Perhaps the ICO is an underrated model to bootstrap a community, and it's better to have stakeholders than airdrop farmers and 'mercenary' LPs.
People don't really talk about ICOs much anymore and don't view launchpads particularly fondly, but they killed it at picking winners in the early bull.
Other more sophisticated 'ICO' mechanisms (Dutch Auction for $SILO, bonding for $STG) have performed pretty well
Other more sophisticated 'ICO' mechanisms (Dutch Auction for $SILO, bonding for $STG) have performed pretty well
And maybe in the bear market we'll go back to models that require a committed user base for success.
Polychain Capital's founder Olaf Carlson-Wee has previously talked about how ICOs are an underrated fundraising mechanic, I think I agree.
Polychain Capital's founder Olaf Carlson-Wee has previously talked about how ICOs are an underrated fundraising mechanic, I think I agree.
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If you look at most of the tokens in the top 200 today, for the most part, they launched during the bear market.
To me, the 'bear market meta' is to become your own VC, keep a close eye on protocols with strong backing that launch to a strong community at a fair price.
To me, the 'bear market meta' is to become your own VC, keep a close eye on protocols with strong backing that launch to a strong community at a fair price.
The last cycle seems to follow this idea, in bear markets you're better off purchasing small caps and tokens launched in the bear.
In bull markets you're better off holding winners.
And when things are taking a nose dive you're better off holding BTC/ETH (or frankly just cash)
In bull markets you're better off holding winners.
And when things are taking a nose dive you're better off holding BTC/ETH (or frankly just cash)
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