The year 2022 is drawing to a close and our staff at NewsBTC have decided to launch this Crypto Holiday Special to provide an insight into the crypto industry. We’ll be speaking to several guests to understand the ups and downs for crypto this year.
In the spirit of Charles Dickens classic “A Christmas Carol,” we’ll look at crypto from different angles, consider its possible evolution through 2023, and find common ground between these differing views of an industry that could support the future of finance.
Ben Lilly: “(…) for the basics… Nothing has changed. If anything, builders are building faster than ever. We all veterans know that right now is the most productive week you can have in crypto. It is a boon to those who can weather such declining times.”
And now, for a bonus round, we spoke to Ben Lilly, co-founder of Jarvis Labs, the on-chain analytics and token design company that tracks the crypto market. Lilly commented on the current state of the industry, why the bear market than time to build and why the emerging class has matured. This is what he told us:
Q: What is the most significant difference for the crypto market today compared to Christmas 2021? beyond the Bitcoin-Price Ethereum, and others, what has changed from that moment of euphoria to today’s perpetual fear? Has acceptance and liquidity declined? Are the basics still valid?
A: In December 2021, we debated whether the Federal Reserve would, given the simmering inflation rate hikes or not. What we have seen a year later is a strategic push, saying they will take two moves and three instead in a hawkish/bearish fashion. Not only has it hurt the markets, but it has also prevented the markets from finding a solid foundation to build on.
This mentality led to a fast hiking regime. The downdrafts were dollars as a currency to hold. And almost everything else fell against the dollar.
Many people like to call Bitcoin, Ethereum, and other assets “lost value”. This is a misnomer. We value things in US dollars, and compared to the dollar, these assets have depreciated significantly.
What many people are also beginning to realize is that most participants in crypto markets are and have been speculators. In my opinion, that is rather a pity. And something I’d like to better track with data.
The decline in speculators (and many market makers closing deals) has left a significant liquidity hole. We are aware of this. It is very difficult for market makers to function smoothly on some second tier exchanges as the books are quite dry. We understand this well when we started researching market making as our team has been running autonomous trading systems for half a decade. Now more than ever, clients are asking us to do market making, so our team has started ramping up these activities for 2023.
As for the basics… Nothing has changed. If anything, builders are building faster than ever. We all veterans know that right now is the most productive week you can have in crypto. It is a boon to those who can weather such declining times. I’m seeing some really impressive tech solutions coming to fruition right now. Our team is currently testing some of them and intends to expand our functionality over the coming months – something we’ve been exploring for years. For us, it’s proof that the fundamentals of the industry are just getting better.
Q: What are the dominant narratives driving this shift in market conditions? And what should the story be today? What do most people overlook? We saw a major crypto exchange explode, a hedge fund deemed untouchable, and an ecosystem that promised financial utopia. Is Crypto Still the Future of Finance or Should the Community Have a New Vision?
A: Operations that take place onchain are becoming more and more desirable than before. Our customers are pushing us in this direction, which shows us that the “don’t trust, verify” mentality is becoming more and more important. I love hearing that and I hope that we can move forward with everything we do to be fully onchain for years to come.
Let me put it this way, I never thought our team would look for zero-knowledge technology to run any part of our operations. Simply put, the vision is the same, only more concrete – a process that will continue over the years.
Q: If you have to choose one, what do you think was a significant moment for crypto in 2022? And will the industry feel the consequences by 2023? Where do you see the industry next Christmas? Will it survive this winter? The mainstream once again declares the death of the industry. Will they finally get it right?
A: The key moment was when GBTC slipped into negative NAV.
As the tide receded in 2022, we learned what was really happening in crypto’s waters, and we see that many explosions originated with the Grayscale Trust product.
Three Arrows Capital, Genesis, DCG, BlockFi, Voyager, and others were all associated with the trust, and since the value of the trust was greater than the value of all shares outstanding (negative NAV), market dynamics caused spot demand to wane April 2021.
The timing of this and what the Federal Reserve did with rate hikes was like a double-edged sword with both edges pointing in the same direction. Higher interest rates and lower spot demand from a toxic grayscale product caused the bear market sword to cut twice as hard.
As for 2023, I still think the worst is yet to come. I’m not necessarily referring to the price here. I’m talking about farms that don’t have enough money to survive the winter. Revenue is down, crypto newbies are down. While I think this is a good thing in some ways because it rids the industry of badly run companies, it will create some headline fears for the industry if companies close their doors.
In my view, it will not be the end of the industry. Those who have capital have plenty of runway. And even those that don’t have perennial runways are staffed with very passionate builders. By the end of 2023 we will see the market come back to life with lots of excitement. I don’t think it’s a full blown bull market will be… It’s going to be more about projects that introduce the things they’ve been diligently building all year. They give a bunch of crypto developers a year to build, the results are stunning.
Q: And of course we have to ask; Many claim that the FTX collapse is throwing the industry back into the 2018 bear market. Going back to the Initial Coin Offering (ICO) era, to the so-called “Wild Wild West” days of crypto, what do you think of this idea and where do you think the industry is now? More importantly, what role does Jarvis play in this context and where do you want to be in 2023 and beyond?
A: Crypto matures, as do all of us as we age. They ask anyone who’s had ups and downs if they’ve been restored to a younger version of themselves… Most will say they’re a lot smarter, and often the setbacks show us how we’re really realizing our potential. Crypto is the same.
We talked earlier about onchain solutions being more in demand than ever… Well, the industry has had a bad streak with centralized entities like FTX that only had the goal of making money and not contributing to space.
BTC price is moving sideways on the daily chart. Source: BTCUSDT trade view
The space will advance smarter. And we hope Jarvis Labs can help push that mindset forward. Our team has been busy in many industries. We have teams developing software solutions, new metrics, dashboards, token designs, algorithms and some other things that we will introduce soon. But if I had to stick to one role, it would be helping everyone keep crypto at a higher standard. we can be better let’s be better
Source: Crypto News Deutsch