Market Lab Report / Dr. K's Crypto-Corner
by Dr. Chris Kacher
The Metaversal Evolution Will Not Be Centralized™
Some of you may recognize these lyrics:
And these children that you spit on
As they try to change their worlds
Are immune to your consultations
They’re quite aware of what they’re goin’ through- David Bowie “Changes”
The newer generations are far more likely to agree with Bowie's lyrics. Already a number of under 25s have become nearly overnight millionaires by trading NFTs and crypto, getting in at near zero entry prices then seeing the price soar into the 5- 6- and 7- figure levels such as in the case of the cryptopunks NFTs which were offered for free in 2017. Vitalik Buterin was just 18 years old when he created Ethereum. Recent accounts of young teens trading their crypto accounts into the millions in the UK underscore this point.
Crypto addresses most all markets as it is about removing gatekeepers while providing a more efficient, egalitarian digital economy. Crypto infuses value into the web’s vast networks of information, people, goods, and services. Massive cost reductions and soaring efficiencies are the result. Digital is eating the world.
Learn-to-Earn (L2E) Spawned from Play-to-Earn (P2E)
Ultimately, crypto will create new economies and jobs via gaming such as play-to-earn (P2E) which is just the beginning thus is the reason I put what I consider some of the best crypto companies for gaming on the crypto list which have been soaring including SAND, TLM, ENJ, MANA, ILV, and UFO.
Indeed, there has been a decoupling of these companies from bitcoin which has been trading choppy and sideways as the metrics suggested, at least over the next couple of weeks, before it potentially regains its footing as also suggested by its metrics and retests old highs. But history has shown that bitcoin can stall while specific groups soar. Of course, if bitcoin has a sharper correction, most coins do get pulled down with it. I then monitor the coins which resist the downturn and are off to the races once bitcoin stabilizes. This is no different than many prior examples. We can even go back to October 1998 when the NASDAQ Composite had a fast crash in a couple of months, losing about 1/3 of its value, due to the Asian contagion. The strongest names such as AMZN, YHOO, and EBAY which had recently had its IPO fell the least and/or recovered the quickest thus offered low risk/high reward entry points just a few days off the NASDAQ Composite low in late Oct 1998.
But at any rate, the next iteration from P2E will be what I call L2E "learn to earn" as in one earns by learning and will result in uncensorable social organizations. NFTs are the platform that will facilitate L2E thus will revolutionize education. Already, NFT tokens are being created for specific courses. One buys the NFT token as the cost of tuition. Then as one possibility, if one performs sufficiently well on the final exam on a timed basis and set by a curve, they then recoup part or all of the cost of the original NFT token. Additional tokens can be awarded to top performers on a sliding scale, or awarded if a student then teaches what he has learned to others by conducting peer learning workshops or running interest-based clubs. Everything is recorded on-chain, so it's easy for your peers (or anyone) to verify that you did those things.
Another project Genopets is pioneering what’s called “move-to-earn” gaming. Just as with Pokemon Go which required the player to move in meatspace to capture pokemon, Genopets monitors how active you are in the real world. It integrates P2E economics so you can earn crypto in the game. Your activity is captured through a wearable device like a Fitbit or Oura which earns you QI, the in-game currency. You can then use QI to buy food and clothes for your Genopet. With your permission, your health data is anonymized and sent to medical researchers to aid in their research.
The future of crypto will oscillate between the metaverse (digital worlds) and IRL (in real life) with a blurring border. Given enough time, nation-states will become decentralized communal states. Marketing will shift a big portion of ad spend from IRL brands to the metaverse. Real estate will be tokenized and include IRL and digital real estate. This is why MANA has skyrocketed and is up 5x over the last month. Entertainment will include gaming (P2E, L2E, etc), sports events, concerts, art (traditional and NFTs), and media (shows, music, movies, television, etc).
The cryptospace brings endless open source possibilities along with digital scarcity. Ethereum et al address a $400 trillion market. Ethereum has already flipped Bitcoin if you look at the number of users, use cases, devs, transactions, and applications built on its blockchain. But Bitcoin's liquid, lightning, taproot, and other evolutions should be carefully watched as Bitcoin's network effect still towers over the rest of crypto. Nevertheless, a One Coin world is unlikely though a predominant blockchain world could come about much as TCP/IP became the backbone of the internet. Meanwhile, other crypto technologies will emerge and build on whichever blockchain or blockchains provide the best utility, security, and cost. Watch this space.
The cryptospace brings endless open source possibilities along with digital scarcity. Ethereum et al address a $400 trillion market. Ethereum has already flipped Bitcoin if you look at the number of users, use cases, devs, transactions, and applications built on its blockchain. But Bitcoin's liquid, lightning, taproot, and other evolutions should be carefully watched as Bitcoin's network effect still towers over the rest of crypto. Nevertheless, a One Coin world is unlikely though a predominant blockchain world could come about much as TCP/IP became the backbone of the internet. Meanwhile, other crypto technologies will emerge and build on whichever blockchain or blockchains provide the best utility, security, and cost. Watch this space.
Stock Markets
Issues with spiking inflation has pressured the Fed to issue warnings about tapering its balance sheet along with potential rate hikes. The futures market has boosted the odds of having three rate hikes for next year. This has caused the dollar to spike higher. All of this pressures stocks and bitcoin. The Market Direction Model went to a cash signal near the top the other day, enabling at least one member a 6-figure profit in TECL rather than seeing it evaporate as TECL being a 3x was hit hard off its peak. Going forward, the Fed has little choice but to keep printing at full speed if the last 13 years are any guide. But in the meantime, the major averages are no stranger to 20% corrections. We could certainly see such a correction in the coming weeks though QE can also make the markets drift higher on fumes for longer than most expect.
Still, if COVID with winter upon us enables governments to create further lockdowns and quarantines, the economy will suffer further. The economic malaise together with spiking inflation may create stagflationary concerns so a prolonged correction would ensue if the Fed didn't do its normal song and dance and give the market what it wants in the form of more QE, delayed rate hikes, and the like as any deep correction of -20% or more begins to unfold. History over past cycles going back hundreds of years shows M2 does not diminish. Future crises will spawn as a consequence of the politicization and mishandling C19. Governments never let a good crisis go to waste.