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What went wrong with crypto
1. 10/10 slaughter (will I get sued if I mention Binance?).
2. Digital Asset Treasuries (DATs) hangover.
3. Reversed flows from crime syndicates: major flows reversed after the DoJ indictment of the Cambodian Prince Group last October.
4. Quantum fears (real).
5. Enormous AI opportunities (opportunity cost):
- capital pivoting to AI
- talent pivoting to AI
- miners pivoting to AI
6. Perception of Bitcoin as American: few Chinese buyers, who had been behind the metals uptrend in large numbers.
7. The Swamp & Institutions taking over, overcrowding OGs and retail
- Pivot from Cypherpunk/Rebel tech to ETF tech.
- Crypto used to be for misfits & geniuses, now it's a line item in a 401k.
8. Trump association and political risks: what happens once Democrats are back?
9. Minimal innovation (since Hyperliquid).
10. Solana casino massacre (thank Pump Fun & the Memecoin Supercycle).
11. Oversupply of coins: there are 29.91 million cryptocurrencies tracked by CoinMarketCap.
12. Almost every coin in the top 200 is grossly overvalued and has had a broken chart for a while.
13. Never ending array of token launches that pump then dump to oblivion where only insiders profit.
14. Dead digital gold narrative.
15. Several categories of equities imploding (e.g. Software).
That killed momentum. With sellers dumping more aggressively than usual on every pump, and buyers not showing up to buy the dips as much any longer.
And then came the Warsh nomination (beating Hassett and Rieder), and the market suddenly became deeply aware that Warsh is a strong advocate of a small balance sheet: goodbye Queantitative Easing (QE) and Yield Curve Control (YCC) dreams, hello Quantitative Tightening (QT) fears.
That is what happened.
Please note this post is strictly descriptive, it tells you what happened, in the past. Prices have already crashed. Several metrics such as volume, liquidations, implied volatility and options skew indicate that a local bottom is likely in.
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