Institutions have taken over.

We are now playing their game.

In the last three weeks, we've seen over $2.5B in net inflows into BTC ETFs, and yet prices have dropped from $71.4k on May 20 to $67.4k on June 12. This begs the question, why isn't BTC mooning?

We are stuck in an institutional Cash and Carry trade.

Many top ETF holders are hedge funds and institutional traders and it appears they are taking long positions in the spot market (buying BTC through ETFs) and short positions in the futures market to exploit price differences without taking on price risk.

As a result, while there's significant buying activity in the spot market via ETFs, any positive price action is offset by equivalent selling pressure in the futures market. We are stuck in a war of attrition with institutions.

This is inadvertently also suppressing prices for the entire crypto industry, despite the slew of positive news (ETH Spot ETF approval, positive CPI and PPI data, Gary Gensler ensures S-1 approval by end of summer).

The markets have been on a slow bleed. Majors like ETH, SOL, BNB, etc. are down 5~20% just this the week.

Meanwhile, on-chain has reached peak cringe.

Solana, and to a lesser degree Base, has become a cesspool of scams, rugs, and ponzis vehicled by pumpfun and memecoins.

From D-list rappers and retired fighters to OF models and pornstars, the wrong kinds of people have onboarded onto crypto with clear-as-day ponzi playbooks.

Step 1: Stealth launch token on pumpfun
Step 2: Buy up majority supply
Step 3: Promote their token to their audience
Step 4: Congrats you are exit liquidity

We all know how this story ends though. When there are no more bigger idiots and the 90IQ liquidity dries up, it all comes crashing down. It will be a bloodbath and crypto will be splashed with negative headlines after elections. Unless... maybe perhaps this time will be different.

Infinite money loop glitch has entered the chat.

The product and VC investment side is stuck in an infra feedback loop.

VCs are following an all too familiar playbook, investing in infrastructure and middleware projects, with new shiny buzzwords like 'Native-yield L2', 'Rollapps', 'RaaS', 'Appchain', 'L3', 'AI,' 'chain abstraction' among many others.

Welcome to the VC Playbook.

Invest in infra that claim to scale or abstract blockchain. Raise excessive funding and announce partnerships with other projects before launch. Launch a testnet and points/airdrop farming program to generate impressive metrics and farm users and bots. Release a token valued between $1 billion and $10 billion.

Each infrastructure project often responds to issues from previous solutions: L1s don’t scale, so rollups are created; rollups fragment liquidity, leading to bridges; too many bridges necessitate aggregators; multiple aggregators require intent layers; and complex intents prompt interpretation layers.

But who benefits from all this infrastructure if there are no users?

This feedback loop fails to address the core issue and doesn't introduce a new consumer problem to solve. Meanwhile founders and VCs will create new playbooks but ultimately play the same game, aiming for the same prizes.

This is the current state of crypto in June 2024.

Thank you for reading and have fun playing the crypto money game.