The Three Bear Cycle Club: Crypto OGs Talk About Their Hits, Misses & What They’re Doing in Winter
Markets tanking, liquidations all around, a space rife with hacks and VCs going bust – the general sentiment in the crypto space seems to be weakening as time goes on. But what do those from the Three Bear Cycle Club – crypto OGs who’ve been in the space for years – think about the current trends in the crypto market and how do they see space going forward?
While sentiments towards crypto are often mixed, we cannot deny its impact and influence on the financial industry and investing in the last few years. However, to chant #HODL from the mountaintop without considering the cases against crypto, would be participating in groupthink, which can be harmful to progress.
Here are some opinions we managed to collate from the good folks that agreed to have a chat with us. Enjoy!
Quitting Crypto for Good
The first OG Blockhead spoke to has reviewed over 500 crypto projects, including Voyager, Itam, Emblem, AMP, Bifrost and more. He’s dived deep into analytics, tokenomics, data and worked with countless VC firms to advise project founders. Having made a small fortune off of PancakeSwap at its peak (they did not tell us the exact number, but it was slightly less than US$50,000), you’d assume that this OG would have his hopes pinned on crypto and DeFi. But in recent years and after countless rugpulls and scams, this OG believes that crypto actually has no intrinsic value and the only reason it “has value” is because people place a value on it.
Currently, they are focusing on building and maintaining a portfolio with stocks and are building products within trad-fi.
You hear stories all the time about people getting hacked, cryptocurrency exchange platforms with higher fees, clients unable to cash out, and getting locked. This crypto OG has had his fun, but with all the problems in the crypto world, he just does not think it’s viable at this given moment.
Crypto was created to have the freedom to control your own currency but with that freedom comes a great cost. “Besides, at the present moment, there is limited utility for cryptocurrency-maybe in the future, sure but think of it this way- everyone who dabbles in cryptocurrency still transacts and converts back to fiat right?” he told Blockhead.
What prompted you to place money in crypto when no one else was doing so?
Back then, it was promising. With new technologies, you never really know. To me it was worth the risk at that time.
Do you still believe in cryptocurrency then?
Yes I ultimately hope that this future becomes a reality. It’s just too early and we are in an early phase that we are still heavily reliant on paper money.
So why quit?
The lack of regulation may go against the ethos of decentralisation, but it is not something we can run away from. That being said, the amount of irrational sentiment around crypto is, for the lack of a better word, stupid.
Any other reasons?
Plenty. A big one has to be token concentration. The top 100 holders in every single project held more than 90% of the tokens, resulting in the extreme concentration of those tokens. These top holders can very easily manipulate those tokens or a market. That is too much power.
The promise of decentralization, that things are fair and equal is completely out of sight. The difference now is that you’re giving authority and control to a smaller group of people. You’re not removing the central authority.
An ex-BTC Maxi Who’s Lost Faith in Bitcoin
Crypto OG 2 was an early adopter who bought and Bitcoin in 2014. A software engineer by trade, they’ve held 33 BTC at one point. According to them, Bitcoin was made to buck the establishment, fight the political norm, and subvert traditional modes of economic communication and exchange.
They feel that Bitcoin was intended to provide an alternative payment system that would operate free of central control but otherwise be used just like traditional currencies. But they’ve been disillusioned, saying that Bitcoin is not all it was made to be, and the fact that cryptocurrency is increasingly regulated and requires approval from governmental bodies seem to defeat the purpose of cryptocurrencies, causing them to lose faith in Bitcoin all together.
Currently, most of their holdings are in Ethereum. As for the amount, they’ve declined to answer.
What is the most controversial take we’ll hear from you?
I will not be trashing Bitcoin, the furthest I’ll go is that Bitcoin is now the MySpace of the cryptocurrency ecosystem and that new-age bitcoiners are going against everything bitcoin was created for.
What prompted you to place money in crypto when no one else was doing so?
I was in support of going against TradFi in general. It would only make sense to support the alternative. I think it’s crazy how Bitcoiners today are so desperately looking to have bitcoin accepted by the establishment. When I bought bitcoin, I didn’t care for wall street’s validation-now people only care about the price.
What about Bitcoin as an asset class?
The argument that Bitcoin is “digital gold” is ridiculous to me. if you read the Bitcoin white paper, it states that it is peer-to-peer digital cash. Cash is meant to be transacted not meant to be stored. While you can make money on currency speculation and trading, bitcoin was not meant to be an investment. Bitcoin is acting today more of a commodity than a medium of exchange which is not what I signed up for.
The digital gold argument was created as part of rebranding efforts because Bitcoin is slow and scarce. Just because something is scarce does not make it valuable. Also, there is no incentive to use bitcoin over fiat. You would sell your Bitcoin when it hit highs to convert it into fiat.
Any closing thoughts?
I believe in blockchain but not Bitcoin and I do think that there are other cryptocurrencies still worth checking out.
3. Survived three crashes, sold Bitcoin at 10k, still DCA-ing
Having purchased US$1,000 worth of Bitcoin in 2016, one would have 1.52 BTC at a price of US$656.17 per coin. In June of 2021, that investment would be worth close to US$59,000.
Crypto OG 3 was not that person.
But, they did make a substantial amount when they sold their US$5,000 investment of Bitcoin at US$10,000 in November 2017. Looking back, this crypto OG feels like taking profit should not be a regret, they believe that a steady DCA strategy should allow them to ride out the waves.
In the last two years, Bitcoin has gone through three boom-and-bust cycles. As a “new asset”, such volatility is expected, especially on the journey of price discovery. This OG is still “super bullish” on Bitcoin and believes in it as an asset, saying that volatility is a crisis for short-term investors, but for people with a longer time frame of 10 years and more, Bitcoin is proving to be a low-risk store of value asset. According to Crypto OG 3, by buying now, they will be increasing profitability years down the line.
What prompted you to place money in crypto when no one else was doing so?
Because there is a finite supply of Bitcoin, it is a long-term and stable form of currency that cannot be subjected to dilution from inflation by political or government agencies- in that sense there was and is a form of stability.
What are your thoughts on greater regulation?
Whether it is a commodity, security, or currency regulation can clarify what exactly Bitcoin is and certain forms of regulation from the U.S. government would be beneficial to solidifying Bitcoin.
We cannot run away from regulation especially if the aim is mass adoption. Once there is greater clarity, institutional investors can follow clear and concise guidelines so that they can start to utilize the asset.
What are your moves in this bear market?
I’m just continuing to buy the dip
The One Who’s Now Building Web3
This crypto OG has worked in the tech space for 10 years and is now building crypto projects that are targetted at instituitionalizing crypto and building financial products. They are working with accelerator programs and have big-name investors behind their project.
Despite being deep into crypto winter, many have claimed to be “building web 3.0”. As shown by the resurgence of networking events, people are itching to meet new people and suss out new opportunities. From NFT.NYC, Blockchain Week and various global Ethereum conferences in the past half a year, you’d expect some good news. Despite building web3, they do not claim to have put in much money in blue chip coins or tokens. In fact, their total investment in crypto (excluding building of the business) is less than US$10,000.
What are your thoughts on a new project popping up every other week?
I’ve attended some events last week and the week before and saw a number of projects. It’s crazy how the quality of some projects leaves much to be desired. Even NFT NYC seemed like a cash grab with no projects with real utility.
I do believe that there are some projects that are solving real problems with blockchain technology, but it is a shame that there are still scams and hacks that could have been avoided, like the Nomad chain exploit.
Is there really utility?
There are still good projects building for public goods and such, and things are in development, especially on the institutional side. Only time can tell.
Hopefully, we won’t let a few bad players dull our shine and continue working towards the common goal.
The Long-Term Eth Maxi, Certified Degen
The final crypto OG we spoke to is your regular ETH maxi who started with a US$15,000 investment in 2020. During the NFT boom, they were easily making thousands of dollars per week just by flipping NFTs. On top of that, they also averaged out US$5,000-10,000 a month through liquidity pool arbitration during the DeFi craze in 2021. Now that they’ve taken out their principle and is just sticking around to see what happens. However, they said they are well-diversified and can afford for crypto to go to zero. As of now, this crypto OG is working on building up the e-sports space in Singapore and is dabbling in various NFT projects.
If you’re generally new to crypto, every responsible degen will inform you of the risks involved. People who are insanely hardcore won’t. Here are a few words from someone that is degen-ing responsibly.
Being a self-proclaimed Ethereum maximalist, this OG’s excitement comes mostly from Ethereum’s smart contracts or collections of code that run on the blockchain and execute agreements. Smart contracts can be used in virtually every aspect of modern life so there’s good reason to be bullish on Ethereum.
Why Ethereum?
“I think lots of people are bullish on Ethereum and it helps that the team is actively working on its areas of improvement”
The Merge, which involves Ethereum to pivot from a Proof of Work protocol to a Proof of Stake consensus protocol is well underway despite multiple delays. Nevertheless, Ethereum has a roadmap and is working steadily towards it.
When the Merge does happen, the Ethereum network is expected to be more energy efficient than before.
“When looking into new tech, investors always consider long-term scalability and Ethereum has long-term scalability through Layer 2 rollups. It can offload all its data bloat and computations off-chain.”
Many blockchains are currently monolithic, this means that they handle all the key functions, from transaction execution, network consensus, and data availability, from within a single system. The issue with this is that there will be massive congestion and data bloat unless they also offload to Layer 2 solutions.
What prompted you to place money in crypto when no one else was doing so?
I thought it was interesting and was very much into “magic internet money”. Also based on historical trajectories, I thought that it was time that technology moved in this direction. I put money in crypto because I was not afraid to lose money and the prospect of better returns was attractive.
Any thoughts on decentralized finance (DeFi) and gas fees?
Economic sustainability has been discussed a lot and other blockchains have enjoyed lower fees because they have unsustainable reward systems for their miners or stakers. When subsidies disappear, unless they have major governance changes, these networks are either going to see much higher fees, or their security is going to decrease drastically. So while Ethereum has higher fees, Ethereum is economically sustainable. Its amount of inflation is now mostly offset by the amount burned per transaction due to EIP-1559.
Whether you’re in or out, you cannot deny that change is upon us. These are just a few opinions that we have managed to (painstakingly) collect from the lovely individuals that were willing to speak to us. In this space, no one can really tell you what to do – whether or not that’s a good thing is completely up to you to decide. We’re just mediums of communication, so please do your own research and remember that opinions are not hard truths.
Stay vigilant and ape safe.
Note: Names have been changed/removed at the interviewees’ request.