Veteran crypto investor Arthur Cheong predicts that deep drawdowns and multi-year bear markets might be a thing of the past for digital assets. According to the CEO of DeFiance Capital, crypto is potentially entering a phase where it behaves more like the stock market, showing signs of maturing.
Cheong shared his perspective with his 169,400 followers on X, suggesting that the crypto market could be transitioning into a period of complex secular growth similar to the post-2008 Great Financial Crisis era experienced by the S&P 500.
“Nuanced take: entirely possible the crypto market is maturing and we don’t see complex wild swings with 70-80% drawdown every two years but instead a complex secular growth like what the S&P 500 went through post-2008 GFC (Great Financial Crisis).
Excluding the Covid-19 crash in 2020, the US stock market either range bound or gradually ground up where every bear calling for a major crash proven wrong but returns also increasingly concentrate on the big cap and mega caps while value and small caps remain unloved for a long time.”
Cheong speculates that if his theory proves correct, future bull markets may not lift all altcoins as they have in the past. He suggests that most altcoins may not experience the same massive rallies seen in previous cycles.
“Similar things playing out would mean most alts are uninvestable but some winners will deliver ground-shattering returns and hopefully we get an Nvidia-like outcome every few years while most alts are gonna disappoint.”
In addition, Cheong notes that altcoins will need to find their own paths to success, as the market is path-dependent and outcomes are not predetermined.
“Also, you can’t ignore the fact that the market is path-dependent, there is no such thing as preordained. If mass adoption happens like Telegram onboards half of their userbase to TON, how much do you think TON will be worth?”
Despite these considerations, Cheong is optimistic about the future of the crypto market, believing that conditions are set to improve. He also asserts that both Bitcoin (BTC) and Ethereum (ETH) are undervalued, as they are the only two digital assets without regulatory uncertainties.
“I think the market still hasn’t priced in the fact that BTC and ETH are the only two cryptos that have no uncertainty over their regulatory status and attract TradFi demand.”
Last week, Consensys announced that the SEC had concluded its Ethereum 2.0 investigation, providing further clarity on the regulatory status of the second-largest cryptocurrency by market cap.
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