Imo, crypto now going through something vaguely like post-2000 tech crash. We proved modest product market fit in several areas, but A. Products and infrastructure need to be much better to truly cross chasm to mainstream. B. And adoption is ~5 years behind where some hoped. /1

2/ in bull markets we all “overlook” problems in both crypto and equities. Uber or Coinbase’s revenue growth is viewed unskeptically. Why wouldn’t it just continue growing? “Too good to be true” yields are just “free money”, not indicative of soon to default counterparties.

3/ solana’s downtime viewed as just growing pains. Ethereum’s scaling delays and post-merge slashing concerns just minor challenges on the maturation path. Bitcoin’s security model and future programmability upgrades - we’re optimistic we’ll figure it out over time. In bear,

4/ all of this stuff feels very different. People hold *billions* of dollars of this stuff, does abstract optimism cut it? Are current valuations reasonable in light of current fundamentals? Will existing market leaders still be relevant in 5 years? 10 years?

5/ imo, we haven’t learned anything new about crypto fundamentally in the last 6 months. Obvious ponzis are unraveling. Money losing business models are no longer getting bailed out or recapitalized, so…they’re going out of business.

6/ this is a wash out of overoptimism, leverage, and naïveté. Imo, we haven’t yet overshot to the downside. I don’t have precise valuations to mark that, but imo, I don’t see anything that’s screaming value in a fundamental sense today outside of a few minor cases.

7/ imo, these are probably decent entries for the next bull run, but risky ones. In most alts, risky because those alts may not survive a sustained bear market or even if they do, may survive like litecoin, EOS, and ripple did out of 2017 cycle - in a kind of zombie form.

8/ All of cryptocurrency still remains risky and early stage to me. Like Nasdaq in 2000, we can be confident we’ve hit an early level of maturity - of proven product market fit (to some degree), of working infrastructure, of real value.

9/ but it’s still so early, that most market leaders likely to be replaced by newer/better versions. There will probably be some exceptions. The rare Amazons, but likely the exception.

10/ what’s a smart way to approach crypto markets as an investor today? Imo, similar to tech investing after 2000. A mix of basic “value investing” in existing projects and a keen eye for newer projects and themes that will lead next bull cycle.

11/ what about bitcoin? Bitcoin is “separate” only because it’s the only crypto asset not competing on tech or product. It’s competing primarily on security/stability. So I’ve always thought that if bitcoin fails, it probably won’t be because it’s replaced by something better,

12/ but rather because it fails for idiosyncratic reasons. Maybe Nakamoto PoW ends up being fatally flawed, etc. BTC is the only asset I’m currently thinking about as a stand alone portfolio allocation on a 3+ year timeframe. Imo, 50/50 that BTC fails within 20 yrs,

13/ but those are far better odds than any other crypto asset. Other cryptocurrencies may offer higher expected value, but lots of risk, so they’re sensibly a smallish part of a broader portfolio. Basically I think of BTC as Amazon, everything else as VC style bets.

14/ in case this seems like a bearish thread, it’s not for me. I was writing similar things 9 months ago when valuations were 3x-25x higher. Imo, market now a lot closer to “fair.” This is a better time to be buying than any time since Feb of 2021.

15/ I’m far more bullish on the 2-year look ahead returns for anything in crypto than I was 9 months ago. But have to be careful what we buy if we’re trying to buy and hold long-term value.