‘The smart money is in crypto’. This is a stance I’ve taken largely due to the premature existence of a bear market in this space before the equities space and (eventually) the rest of the economy. Since the turn of the year, we’ve seen cryptocurrency’s market cap, TVL and general token prices continue to decline. Web 3.0 experts are saying we’ve been in a bear market since the ATHs in Q4 2021, whilst the speculators, skeptics and spectators watch and gloat about headline-worthy implosions [read Luna] that have occurred in the space.
As a wannabe-futurist, web 3.0 enthusiast and curious qualitative predictor, I’ve made a number of predictions (like Arsenal not finishing 4th) to my normie pals which overtime have continue to prove somewhat accurate. This time however, I think what is being predicted is something that will profoundly affect almost everybody. It connects the dots on macro events taking place and supporting the idea that nothing is new under the sun. By simply watching cycles unfold, you can see why/how these things are likely to take place.
I’ve titled this essay ‘stack stables; hit the pavements - bearish battle’ for a reason. This essay isn’t financial advice, it isn’t a macroeconomic analysis, it’s simply a thematic expression of how I think the next decade will unfold. I’ll try to be as succinct as possible and provide transparent positioning on points expressed. I may be totally wrong nonetheless and you’ve just wasted time reading it all.
We can begin by stating the obvious. We have a deep, long, painful recession on the horizon. Although not yet confirmed, I believe that the compounded effects of events over the past 12 years leaves us in a state whereby not only is it inevitable, but the only thing more dangerous than a recession, is not having one.
Since the 2000 dot-com bubble and 2008 recession, we’ve seen a continued, elongated upward growth. Driven largely by the commodity and technology super-cycles across both the East and the West, we’ve seen unprecedented levels of unbalanced growth take place with record levels of liquidity in the market. IPOs galore, record employment and huge swaths of disposable income for the everyday consumer. It could be argued that with so much money around, the continued exponential growth of cryptocurrency and equity markets have been fuelled by this. We could all buy into the retailisation of investing (think Robinhood/Robo advisors and Coinbase/Crypto exchanges). We’ve all become drunk on cheap money!
Then came an end to the party! The turn of the decade brought with it the most unpredictable threat to civilisation since ‘terrorism’ - the pandemic! As it rapidly spread across the globe, the uncertainty of this kickstarted an unprecedented run of black swan events that I believe have changed our society forever.
To deal with the pandemic, governments effectively had to shut down the economy, causing businesses to react accordingly. This meant supply shocks as goods couldn’t move, resulting in governments playing politics by printing money to keep employees and employers alike happy. Actions which undoubtedly would have consequences in the name of record inflation. So, as the pandemic’s effects looks like it’s beginning to ease off, with normality returning, in comes Putin’s invasion of Ukraine (a country that yields one of the highest volumes of wheat in the world). This is significant because, on top of the pandemic-induced inflation, we’re now seeing an exacerbated inflation driven by forced-sanctions from energy-producing Russia alongside an increasing food insecurity caused by farmer-turned-soldiers. Let’s not forget about our friends in the East however, because now, they are all in lockdown, meaning their manufacturing productivity reduces further.
So, as we try to deal with pandemic inflation, in comes an energy crisis, a food crisis and a produce shortage. As these things have a delayed-effect, Individuals need to focus less on isolated aspects of this image and look at the full picture. The chaos is on the way, now more than ever, you want to stack your stables [read have liquidity instead of stocks, crypto etc]. Unfortunately, there are few safe havens for money with the level of insecurity and opacity in our society. Governments are speaking in riddles and euphemisms so everybody is playing a bluffing game.
THIS IS CRUCIAL!!
Amongst all the things that the pandemic period brought to society, one thing is for sure. People do not trust lying, cheating, stealing governments. I would suspect that government trust is at an all-time-low. Along with this, as many were stuck indoors, in lockdown, society became exponentially digital. People suddenly begun predominantly living, working, and playing online and it created a deeper investment in digital identities and communities. For many, discovering Bitcoin, Ethereum, and decentralised communities onboarded a sizeable amount of people into the cryptocurrency world. Some who profited and some who lost. What’s important here however, is the size of the exposure, the timing of the exposure, and consequently, the transfer skill resulting from the exposure.
This is worth noting because of a dual-thread being alluded to here:
Humans, in their tribalistic nature, are finding their tribes online and being more comfortable being digitally-dominant citizens
In a bear market, people build. With the impending deep recession, we’ll see the very best minds building in cryptocurrency, the products that will become the YouTubes and Facebooks of web 3.0.
I believe that being birthed out of this recession, we’re going to see societies becoming ever-more digital. During the pandemic, the great digitisation happened - where people spent time online doing everything from seeking therapy to seeking fortunes. This will shape the next decade.
As people become more convicted in the future of a decentralised world, where net-consumers can become net-investors, and the power can be with the people, more minds will migrate from other high-performing industries such as tech (web 2), banking, law, creative endeavours alike, all to collaborate to build the future they see fit. As the dot-com bubble gave us the likes of Google, Ebay, Amazon etc and consequently the likes of social media, so too will we see this recession create category-defining-enterprises.
This is the period where you want to be deep-learning and going outside getting fresh air. As we become more digital, there’s nothing more sane than hitting the pavements. This isn’t health advice, but over the next 18 months, if there’s one investment worth making, it’s in a disciplined exercise routine, because this period will be mentally, physically, spiritually and financially testing and only the strong will survive.
To sum this ramble up, it’s as simple as this:
We’ve had an extended period of cheap money
The music has stopped playing largely driven by an unforeseen pandemic, geopolitical qualms, questionable government politics leading to its decline
The outcome of this has led to deep distrust of institutions
Society largely reforming digital communities and digital-first identities
Trends which will deepen throughout the long, cold, recession winter
From it will be born a new frontier
Despite all the gloom, I think those who survive this long winter will be stronger for it. It will force consumers to be more thoughtful, proactive and enterprising and as institutions rise to have more control of society, communities will form and rise to combat this and create the new norm.