Chris Burniske Profile picture
Sep 10, 2018 18 tweets 7 min read Twitter logo Read on Twitter
1/ Get ready for a predictable #crypto pattern: in the coming months, we will see an increasing number of #Bitcoin maximalists tormenting “altcoin investors” for straying from the mother ship.
2/ The maximalist drum will get louder as we go deeper into the bear market, with #bitcoin falling less than most other coins, and its dominance index growing.…
3/ #Bitcoin is the benchmark after all, the market beta of crypto, with most everything oscillating at a higher amplitude than $BTC.
4/ That means when $BTC falls, most everything else falls more.
5/ Despite maximalists’ increasing comfort in deriding other cryptoassets, note that #bitcoin isn’t out of the woods yet, as we are left to wonder if $6,000 is the new $200.
6/ Regardless, as this bear market turns to consolidation it will consolidate around #bitcoin. $BTC then, will also likely kick off the next bull market (be careful of false starts).
7/ Note that some of #bitcoin's biggest bull markets have come the year after the coinbase reward halving.

November 2012 = 1st halving, 2013 a monster year.
July 2016 = 2nd halving, 2017 a monster year.
Summer 2020 = 3rd halving, 2021 a ???
8/ Initially, if #bitcoin really rips, it will suck the air (and liquidity) out of the room. It is, after all, the trading pair of choice for the entire crypto ecosystem.
9/ Therefore, if no one wants to sell #bitcoin because they see its momentum, then other #cryptoassets could fall on a relative basis at the early stages of the next bull market.
10/ As #bitcoin consolidates after a first leg up, traders will take profits into other cryptos, and so the small-to-mid cap #cryptoassets will rally.
11/ Then, the #cryptoasset investors that strayed from $BTC (at least the ones that stood their ground, likely by investing w/ real conviction in the team and the network's defensibility), will have their time in the sun.
12/ There will be some spectacular wins in the sans-#bitcoin space, and even some maximalists will turn a wayward eye (and maybe even some assets) to the riches being created by "altcoins."
13/ This oscillation will continue many times over, as traders go back and forth between #bitcoin (and potentially the large caps at that point), and the other smaller #cryptoassets.
14/ The thing that could throw this oscillation off the predictable pattern from years past is the increasing use of stablecoins + fiat integration, not to mention the new tax code which makes clear that crypto to crypto trading is taxable in the US.
15/ If traders can take profits into more stable assets, they might not rebalance from #bitcoin into the smaller #cryptos as much, instead choosing stablecoins or fiat. With the new tax code, more taxes = less incentive to trade.
16/ All of that said, by the *end* of the next bull market, I believe we will see #bitcoin’s dominance index lower than its low in the 2017 bull market (~32%). Long term downtrend.
17/ And remember:

Bear market = $BTC dominance index rising
Bull market = $BTC dominance index falling.
18/ Last note, as this thread is predictably invoking plenty of maximalist trolling: all of the above is compatible with being bullish on #Bitcoin over the long term, which I am. But my bullishness is not dogmatically focused on a single asset.

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More from @cburniske

Oct 7, 2018
1/ A PoS industry is rapidly emerging that will someday rival PoW in profits and wealth creation.
2/ That's billions in profit and tens of billions in wealth creation for PoS providers (at current PoW levels), with at least an order of magnitude of headroom.
3/ This is despite PoW & PoS having a shared destiny as commodity industries with thin margins.

PoW will converge on the cost of electricity and PoS on the cost of crypto-capital (?).
Read 13 tweets
Oct 6, 2018
1/ While new crypto value capture mechanisms can rise to prominence in bull markets, they are tested, hardened and de-risked by bear markets.
2/ Only those that survive multiple crypto bear markets establish themselves as reliable “value capture mechanisms.”
3/ Store of value (SoV) = only crypto value capture mechanism that's significantly de-risked, but that doesn’t mean SoV is the only one that will ever work.
Read 15 tweets
Sep 23, 2018
1/ Many tokens currently face stagnant cryptoeconomies, as supply was never spent or earned, but instead brought into existence via balance sheet swaps.
2/ “Balance sheet swaps”= investors in ICOs swapping assets with the issuer, giving birth to a native token without it ever having to go into *circulation.*
3/ Most ICO investors then held the token on their balance sheets, as they never planned to be on the supply-side or demand-side of the network.
Read 8 tweets
Sep 22, 2018
1/ @alexhevans recently dug into the numbers behind forks of #Bitcoin, #Ethereum, #Monero & #Zcash.

Main conclusion: Value can’t be forked away as easily as people like to think.…
2/ Secondary conclusion: Despite parent #cryptonetworks retaining users, devs & value, the child forks trade at (puzzling) relative valuation premiums.
3/ To follow are graphs and conclusions from @alexhevans that are relevant to specific actors or ratios (if you're not a fan of long form writing 😉)
Read 11 tweets
Sep 16, 2018
1/ When studying non-fungible #cryptoassets, I'm seeing two types discussed: "functionals" and "investment instruments."
2/ "Functionals" are non-fungibles that are meant to be used, a means to access services like ticketing, voting, payment, and more. Best existing examples?
3/ "Investment instrument" non-fungibles are held for their store of value characteristics, be they solely digital things, or derivations of meatspace assets (real estate, art, cars, etc).
Read 5 tweets
Sep 7, 2018
1/ Per the analysis below, #bitcoin’s velocity thus far in 2018 has been ~3, about half that of 2016 and 2017.
2/ While a drop in velocity may seem problematic, it’s actually what you’d expect from a *reserve currency.*
3/ With a reserve currency, as confidence falls market wide more people will hold onto the reserve asset (in this case, #bitcoin), dropping its velocity.
Read 5 tweets

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