The creator of BitMEX, Arthur Hayes, explains how he chooses the altcoins that he believes will perform best in the upcoming crypto cycle.
In his recent interview with Real Vision, Hayes stated that he searches the market for initiatives that seem to have sufficient adoption and credibility to last over time.
“I assume you have a predisposition toward survivors. Will a top 20 market cap asset that has experienced a 95% decline last through the following cycle? Two years from now, will it still exist? How much money did they succeed in? In case you get a yes, buy it.”
Assuming the worst, it will fall to zero. Potential gains of 10–20X their original size are possible. If the number goes from 100 to 1, then from 1 to 10, that’s 10x. Even if it hasn’t come close to where it was, I’m just going to play the rebound.
When crypto prices begin to recover at the beginning of the next cycle, you can bet that the assets that fell the most will increase the most due to the path dependency of returns.
His argument is that the vast majority of these factors do not play a role. Most of them will fail, but that doesn’t seem to bother you. As a matter of fact, the whole thing boils down to a numbers game.
BTC is on Capulatalion Phase:
Hayes asserts that it is impossible to determine for sure whether the market has fallen as low as it can.
In his opinion, the market is nearly bottoming out, therefore the main question now is how long prices will stay at the lows.
I feel like we’re slicing off the bottom here. How much Bitcoin should we keep, $17,000 or $18,000? One can’t say for sure. If it does break, do we expect it to drop much farther than that? The answer is “probably not”.
Clouds of Bankruptcy:
His whole thinking is – Who’s really making physical sales? If there is a traditional credit crunch, every other asset class will also experience it, the analyst claims. Asia 1998 might apply. Mexico in 1994 might have been the case. Argentina was a possibility. Everything is similar. Identical actions caused the tide to turn, everyone to go bankrupt, and you had forced selling.
Then you consider those who have filed for bankruptcy. The biggest, most prestigious hedge funds and startup leaders have all spoken forward and admitted they were having some financial issues.
Hope for Minors? The miners are the only ones left, in my opinion, who could sell in size. Then you start to wonder: what would have happened if they had to sell in size in the middle of June, when prices were much lower than they are now and everyone was applying for loans but no one was approved. Now that things have somewhat settled, who is ruined and who isn’t?
He concluded:
Since we are back at the same level, in his opinion, a coterie that didn’t need to liquidate a month and a half or two months ago now needs to do so based on the current market conditions. And he absolutely doesn’t see that intensity, which makes him think that you are merely cutting at the bottom. You might leave soon, and it might stay for a while. That doesn’t necessarily imply that you’ll rise soon.
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