Dogecoin, DeFi, Musk And The Bitcoin Vertical — What Now?
You don’t have to micro-dose to see the benefits of coins that fulfill the crypto-anarchic vision of the founders of bitcoin. Decentralization is going to be a big part of the future because blockchain and cryptography have combined to create a powerful paradigm that can’t be uninvented.
Like an obscenity, once you see it, you can’t unsee it or forget it. Happily, with crypto, it’s a wildly positive experience.
Why dogecoin? In December 2020 in the article Bitcoin 2021: What Next? I said a rising tide of bitcoin would lift coins like dogecoin along with it and that has certainly come to pass.
But why especially dogecoin? The answer is simple and will be key for the whole crypto space. It’s all about the brand.
Dogecoin has a great brand. Dogecoin is quintessentially crypto and of the spicy Reddit crowd that spawned it and upended the shadier end of Wall Street by taking on the arrogant market abusers that think it’s okay to be 120% short of a company’s stock.
Marketing people will go on and on about brand, but in this new intangible world of ephemeral goods brand is even more important than it is in the world of physical things. The brand will be crucial in the success of cryptocurrencies, Defi projects, NFT, and any other crypto project that comes by. The disembodied nature of crypto amplifies the effect of the brand to a whole new intensity.
Bitcoin’s brand is truly immense, out of proportion even for its recently inflated size. People care way more about bitcoin’s price today than the trillions of dollars being churned out by the central banks of the world that look set to bring calamity to the value of so many currencies that people rely on. Bitcoin, so recently just a minnow of a financial instrument, punches with the branding weight of the world’s biggest names.
Crypto captures the imagination like no other financial instrument in living memory and it is this branding power that will drive crypto into the future.
Crypto brands will not be limited to currencies like Bitcoin, Ethereum, Monero, and Dogecoin. The importance of DeFi projects will also be defined by brand and by the ability of those projects to keep their reputation intact across an ever-changing and extremely volatile risk surface. Projects like Uniswap, Aave, Compound, and Chainlink have already blocked out their place in the constellations of crypto and they will be hard to displace and their position will help them be the big layers of the future. The early names will be the titans of tomorrow.
It is highly likely we are seeing the end run of this cryptocurrency cycle and Elon Musk’s recent launch of bitcoin into the mid-$40,000s is more of a sign of the end of a boom than the beginning of a new one, at least to my jaundiced equity-trained eyes. However, the market listens to no one apart from heads of government and the occasional person that can land rockets backward from space onto floating barges. The limit of this market vertical is, as they always are, hard to predict.
Meanwhile, for all the fun of a 10%-20% move in bitcoin, the DeFi projects are moving 50%-200% as bitcoin spasms in its unpredictable throes between $30,000 and now a new top at between $44,000-$45,000.
DeFi, too, appears to have gone into an end run and with all the hope in the world, nothing can go up 200% in a few days and keep going. Mania can drive prices to unsustainable levels but as the Children’s Crusaders of the GameStop GME -14.7% short squeeze discovered, bad outcomes await the naïve long before arrival at the dreamed-of destination.
DeFi remains the place to trade if you believe bitcoin will keep going. It’s a leveraged play on bitcoin. DeFi is likely the last sector to peak, so if bitcoin does revert and then start to correct into the $20,000s, a DeFi trader will have time to disengage graciously.
That is how I am playing this pandemonium.
It is clear to me we are well into the crypto crescendo and the trick will be to take as much profit home as can be safely extracted because one thing is for sure, there is always a greater fool and they always show up at the end and they absolutely will want your crypto.
I’ll try and be sure to sell them mine. But for now, I’ll be holding on waiting for the soprano to come on stage.
Then it will be goodbye Defi, see you later.