Why Did Bitcoin Collapse and What Could Happen Next?

It's very hard for prices to rise Fundamentals look strong but liquidity Has been soft everything um that drives Prices is really around macro and Liquidity Bitcoin took a nose dive Below $54,000 on July 5th hitting a 4mon low And sparking a ton of crypto Liquidations ether also suffered Dropping below $3,000 for the first time Since miday Market sentiment has sunk to Its lowest level since January 2023 the Recent dip was driven by a potential Selloff as Mount gax prepared to repay Significant amount to creditors and the German government has been selling BTC Since June however these factors are Exacerbating an already bearish Trend to Un cover what's driving this downturn And what lies ahead my colleague Giovani Spoke with Jamie CS real vision's Chief Crypto analyst stay tuned to find out Whether this is the end of the bull Market or an opportunity to buy the dip Before we begin remember that this video Represents just a single point of view It's meant for educational purposes and You should do your own research and not Take it as Financial advice What I wanted to discuss with you is the Current state of the crypto markets Where we stand now in the crypto cycle Really everything um that drives prices Is really around macro and liquidity so If we don't have those things in place

It's very hard for prices to rise and so Really at the start of April at least in The macro indicators that I use Liquidity indicators as part of my Framework they all started to decline And started to um I guess um point to a Very bearish regime um my view is that This is really just an intermediate Pullback in some of those liquidity um Indicators things like the dollar being A little bit stronger over the last Three four months is speaks to that um And also the fact that you've still got QT going on in the United States which As part of the global central bank Balance sheet composition is very very High but that um pace of the QT is Actually is starting to slow um so the Federal Reserve has actually cut um QT The the the amount of QT each month so We're starting to see this sort of Deceleration of the liquidity Contraction and I think that actually Points to sort of a liquidity upswing And that should come really in the Second half of the year as part at least In the framework that I'm using and the Framework that's um used by um you know Ral pal here at real vision So at the moment you know the the Fundamentals look strong but liquidity Has been soft um but liquidity should Actually improve as we start going into The second half of the year and we're

Already started to see some of the Central banks some of the peripheral Central banks start to cut in a recent Tweet you pointed out that according to Certain metrics we are in one of the Most bearish moments in the recent History of crypto maybe you could expand On that and Explain what metrics you used to come to This Conclusion yeah so I mean what I was Referring to in that tweet was the uh The difference or the Divergence between Alt coins and large cap coins or small Caps versus large caps and so you get These moments in time through the cycles Where large caps are outperforming and Then vice versa where smaller caps are Outperforming and typically what you see Is small caps outperforming in the sort Of the most bullish part of the bullish Cycle so when liquidity is really Starting to expand and you start to see Increased risk- taking and people moving Out the risk curves into you know some Of the more speculative assets within The asset class and that usually occurs Within the sort of second half of the of The cycle now what I was referring to in That tweet was if you look at it on a Normalized basis you get these extremes Where small caps underperform large caps And the important distinction here is to Understand whether it's occurring in a

Bare cycle or in a bull cycle and so you Get signals in both of those instances But there's really only one time to take The signal as being bullish for altcoins Or bullish for small caps and that's if You believe that we're in a bullish Cycle we saw the the cycle low at the End of 2022 when all the liquidity Measures started to turn and that was Enough to provot a bottom in prices and We've rallied into 2023 really without a Great deal of liquidity support interest Rates are still relatively High central Banks are still relatively tight but the Sh you know the math doesn't stack up For um central banks to maintain that Level that degree of of of tightness in In monetary policy and liquidity Conditions through all the different Mechanisms so I think this ball Market Still has more to go and the pullback That we've seen has registered you know One of those extremes in that um in that Ratio between large caps and small caps So I'm sort of of the view that's Actually a pretty good signal that the Sentiment has got sufficiently bearish In altcoins and that um there's Definitely going to be some Opportunities to really outperform in Altcoins over the next 12 to 18 months That doesn't mean necessarily that you Just buy any old altcoin you have to Really do your research and and base it

On some some sort of you know Fundamental basis rather than just the Narrative we didn't see a cut in Interest rates in the US this year even Though many analysts were have been Expecting it for for months H we didn't See that and some politicians in the US Apparently are even saying that we might Not we might not see a cut even even a Single cut this year how much of the Performance of crypto depends on that Factor yeah look I mean i' I've given up Trying to forecast what central banks Are going to do in the short term longer Term there has to be easing um as I said Like the math just doesn't stack up the Level of interest payments on the US Debt is getting to um such a you know Such a level that it's becoming very Very problematic so I think you know in The next couple of months who knows it Is a little bit tricky for the FED right Now to aggressively cut because you know We're leading into election they want to Be seeing seen as being non political um And not favoring one politician or other I don't think we will see the same kinds Of liquidity Provisions going forward as We've seen in the past I think the FED Is going to get creative you know it's Going to be QE by some different name And I also think that um you know it's Not just the Federal Reserve it's the Pboc these are really the two um major

Central banks that really determine um At the margins what happens in Risk Assets ultimately you know we've seen a Rally in Risk assets with just really Only a Slowdown in tightening um so you Know it's not it's not completely Dependent like prices are not dependent On interest rate Cuts you said that now It's a very low point so it's a good Opportunity for people to select uh a Few quality uh altcoin projects in a Recent tweet you said that based on Chain metrix you are particularly Bullish on S to G and near so could you Give us uh the reason behind the your Bullishness for this specific Altcoins yeah so I mean near and salana Have been um two projects we've written About quite a bit at um real vision and The reason why we're bullish on these Are um simply because of the the Momentum behind the acquisition of new Users and also their ability to convert Those new users into feed Revenue when You look at also how they rank relative To other blockchains based on the sort Of the user to network value or the Market cap divided by the number of Users the market cap divided by number Of fees um they rank sort of in the top Quartile of all the projects based on That so they're they're they're growing At a they're growing at a relatively Fast rate yet they're not overly

Expensive relative to some of the other Projects which are essentially not Growing but have but command very large Market caps so you know there's ways to Play this theme if you're a little bit More risk verse you can look at actually Putting on a pair versus some of those Um you know some of those other projects That are simply just not experiencing um Network growth and you know blockchains Like any network they they either expand Or they die so really it's it's um you Know it's a matter of continually trying To create network effects um so you know It's much better to be in those assets That are growing and growing the fastest As long as you're not overpaying for Those assets and the whole concept of um You know blockchain fundamentals or Blockchain valuation um techniques and Metrics is really it's a new art form um It's you could say it's a bit of a Science but really it's an art form Because we don't have a lot of history To sort of back test and test these Things but there is you know some logic In in valuing these networks based on The number of users and based on the Revenue that they generate right and What about uh ton yeah Ton's interesting It's it's definitely got the aspects of A fast growing Network it's not Necessarily cheap though um in terms of The you know the what it's valued in

Terms of its fully diluted market cap But the you know the the the interesting Angle with ton is that it's tapping into An existing um captured audience of of Telegram users is one of the largest Social media platforms globally And you know they're seeing really Explosive growth now that they've sort Of come to Market um and started to Really um you know tap into that Network And we we can also see how useful Telegram is to Growing other blockchains Nia has um successfully grown its daily Active use account by offering a wallet Integration into telegram so telegram Itself is going to fuel web 3 it's going To fuel blockchain adoption um ton is The best position because it's sort of Like the native um blockchain to that Ecosystem but telegram users will be Able to you know tap across the entire Web 3 space so it's you know pretty Exciting if you had to sum up the Criteria the main criteria that our Listeners that our viewers should look At when they are evaluating quality Altcoins for the next uh um altcoin Season you would say that the main Metric to look at is the uh pace of um Growth in terms of Network effect yeah I Sort of I I think about it in a couple Of ways number one um activity momentum Right or user momentum fee momentum um So that rate of change is um quite

Useful then I look at how expensive it Is based on those metrics relative to Other to other blockchains and then Thirdly we didn't mention this um and It's really important uh especially this Year because of what's been happening With some of the token launches you have To really look at a tokens market value Circulating market cap versus its fully Diluted market cap because where you've Got projects that have got you know 70 80% of their supply still to be vested Over the next three to five years that Constant pressure that constant vesting Process puts pressure on the token price So it's very hard for these projects to Outgrow that sell that supply pressure But they can do it it's not to say that They can't it's just harder so that's The other I would say the third pillar Of evaluation strategy thanks lot for Coming on our show thanks Jon [Music] [Music]