We’ve been weathering this bear market for so long now, it almost feels like the bull run is a myth. Many newer Web3 enthusiasts have only just discovered the degen lifestyle, and they don’t know any better than this ‘storm’ that we are enduring now. If this is you, and you really hate this place, then you’re not alone.
It may be hard to believe, but it wasn’t always this way. I can think back to a time when dopamine, euphoria, and profits were abundant. Also, Discord and Twitter engagement were high, communities were flourishing and virtual friendships were being made. It almost sounds too good to be true to those who didn’t experience it, or who joined the space after late February 2022. If you don’t believe me, then you’re in the right place. Together, we will explore how good things were a year ago in Web3.
Just before we get to the good bit, let’s look at how we got here in the first place. If you’re not into economics, then you may not understand the correlation between the health of the macroeconomy and the cyclical nature of the bull and bear markets. In brief, these are the major macroeconomic events that led us to the bear market:
1) The Coronavirus Pandemic
2) The War In Ukraine
4) The Over Printing Of The Dollar
3) ‘Skyrocketing’ Inflation
4) The FED Being Hawkish And Hiking Interest Rates To Combat Inflation
Once these black swan events had triggered chaos and downwards cascaded across the markets, we began to see a downstream effect in the microenvironment. If you’re unaware of what I mean by this, then think back to the collapse of LUNA, the bankruptcy cases of Celcius and 3AC, and most recently the FTX saga. Now the doom and gloom are out of the way, let’s reminisce about the good times and compare them to the current market climate.
Crypto
Bitcoin
It couldn’t be more perfect timing to make the comparison between a year ago and now. As you can see by the chart below, BTC reached an all-time high of $69,000 around exactly 365 days ago. Since then, it’s all been downhill (literally). While there has been some overall volatility, presenting good long/short trades, the overall trajectory and sentiment have been trending downwards.
Back in June 2022, we hit a local bottom of $17,500, and many speculated that a bottom was in here. However, fast forward to the present day and the FTX catastrophe has taken us to a new local bottom of around $16,000. Is this a confirmed bottom? Unfortunately, I do not think so. We can only assume that there is more pain to come until the macro environment is looking healthier.
Ethereum
The same applies to Ethereum as Bitcoin. As you can see by the chart below, Ethereum also reached its all-time high of just over $4,800 in mid-November of 2021. Since then, it has followed the same path as Bitcoin, and the trajectory has trended downward overall. There have been many trading opportunities for those more experienced traders, but for the macro-investors who succumbed to FOMO near the top, their portfolios will certainly be in a very dark shade of red. Now, Ethereum sits at $1,243, meaning that it is down by around 75% from the all-time high.
NFTs
The Bored Ape Yacht Club
Unlike crypto, NFTs had not reached a peak at this time one year ago. Previously, there was a connotation which suggested that when crypto went bullish, NFTs were bearish. In November 2021, this certainly seemed to be the case. However, since then, this theory has gone out of the window as virtually everything is bearish now.
According to CoinGecko, the Bored Ape Yacht Club (BAYC) reached a floor price of around 50 ETH in November 2021, which sounds very low for the elite collection. Later on, in the year when the euphoric bull run peaked, the BAYC reached an all-time high of 180 ETH in May 2022 as shown in the chart below (Parasec). Since then, it has been a slow and continuous decline, down to its current floor price of just below 60 ETH. The good news is if you believe in the BAYC surviving this bear market and in the longevity of the project, then this may be an amazing buy range (NFA DYOR).
CryptoPunks
Alongside the BAYC, CryptoPunks is the only project that generally represents the performance of the NFT market, similar to how BTC and ETH roughly represent the crypto market. According to NFT Floor Price, the floor price for the CryptoPunk collection was around the 80 ETH range. Unlike the BAYC, CryptoPunks did not go on a parabolic run-up to the ‘moon’, but instead, performance has somewhat consolidated sideways. Now, the floor price is hovering just above the 65 ETH range as we can see in the chart below.
Other Considerations
November 2021 is a long time ago now in the NFT space. There will be many people who entered the space earlier this year (2022), and will never know what the market was like back then. Many of your favorite projects would not have even been launched yet. For example, popular ‘blue chips’ such as Azuki (December 1st, 2021) and Moonbirds (April 16th, 2022) did not exist a year ago.
Prior to the bear market, there were meta’s and narratives that dominated the space. When Azuki was launched, it was a catalyst that allowed many anime-based projects to enjoy success. Then, when Invisible Friends was launched, the spotlight shifted to animated walking characters.
For the real OGs, you’ll remember that a year ago, the meta was 10,000 supply collections with 3D art animal avatars. At this time, user volume was high and scammers took advantage of the influx of newcomers. This quickly made people associate the 3D art style with rug pulls, and people still tend to shy away from it. In the present day, given the lack of projects launching in the NFT space due to market conditions, there isn’t a clear narrative.
When Will Things Get Better?
I believe that the bottom signal and a catalyst for the reversal will be when the FED becomes more dovish, inflation is curbed and interest rate hikes end. Some people have assumed that the bottom is in, and it may be, but I believe that there is potential for more downside for risk-on assets due to certain factors around the globe. Inflation is still running rampant, and the FED continues to threaten with more interest rate hikes. I speculate that we still have another capitulation before we see a true confirmed bottom. We could be here for a while, so brace yourself for ‘winter’.
This space is influx and forever evolving. It is still in its infancy and the market is emerging. What is true today, may not be true tomorrow. What cannot be argued is that we’re all early to one of the biggest technological advancements of this generation, and I can’t wait to see how this all unfolds. Time may be tough now, but they always haven’t been. Things will get better in time, and if you’re here now, you’re going to make it!
