Is crypto still early in the cycle?

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If there’s one question I’m starting to hear it’s this: Have we topped?

I jokingly responded to Bitwise’s Ryan Rasmussen that I didn’t want TRUMP to be the top, and I stand by that. I’m admittedly, perhaps wishfully, hoping that we don’t top till later this year. 

It sounds like Empire’s Jason Yanowitz was on the same page but the “funky” price actions led to a theory for him. Strategy, the firm formerly known as MicroStrategy, has propped up the price of bitcoin. 

Without the $20 billion-plus spending spree that Michael Saylor’s company went on throughout the end of last year into this year, we’d have bitcoin at a far lower price. 

Here’s the catch: Yanowitz thinks that puts us earlier in the cycle. And his theory’s backed up by Dan Matuszewski of CMS Holdings.

As Yanowitz explained in the Round Up this morning, we haven’t seen enough venture capital yet, it’s “very PvP.”

“I don’t know why this is different this time around or if I’m just off on where we are in the cycle but my guess is the overhang of 2021 is still with us. Liquid basically doesn’t exist and therefore can’t materially drive flows or collect inflows and venture remains the big yardstick for alts,” Matuszewski wrote.

Santiago Santos noted that we need to see “more flows coming in,” and that we haven’t see that yet outside of a “selective” few. 

Are we there yet might be the next question we start asking as we debate the top. No matter where we are in the cycle, though, we should acknowledge that we’re in the early days of this new administration and one can only imagine that some of their actions will act as a catalyst moving forward.

And now you know.

Speaking of the regulatory environment, I listened to the Operation Chokepoint 2.0 hearing held on Capitol Hill yesterday. 

None of it, admittedly, was as interesting as the court transcript generously shared by Coinbase’s Paul Grewal, but if there was one takeaway by all parties involved, I’d say that everyone seemed ready to move on. 

I, too, hope we can move forward and get some answers on what happened and why. In case you need a refresher: Operation Chokepoint 2.0 was carried out by regulators, including the FDIC, to debank or prevent crypto companies from being able to bank with traditional institutions. 

Admittedly, I was skeptical initially on how much of this was intentional versus just the fault of vague or nonexistent regulations but there’s enough hard proof now, including in the aforementioned court transcripts, to show that there was intention. 

If you want the TLDR but still want to get some of the spiciest bits from the transcript, I’d recommend checking out Scott Johnsson’s thread below.

Grewal was a witness in the hearing alongside WSPN USA CEO Austin Campbell and Better Markets Banking Policy Director Shayna Olesiuk.

Campbell, at one point, told lawmakers that regulators decided to debank crypto firms just because of some bad actors (cough cough FTX amongst others). And Grewal argued that the targeting of digital asset firms “discourages” banks from even trying to bank companies in the space. 

“What we saw in the documents that were produced yesterday, case after case, when the bank stepped forward and raised their hands and asked for permission to offer basic services, they were either ignored or they were given detailed examination and re-examination and re-examination until they simply gave up,” Grewal said.

While we’re in friendlier waters, I think it’s fair to say that we need to see some changes — beyond the changing of the guard at the FDIC — before we can fully say we’re past Operation Chokepoint 2.0.

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