The Crypto Market Five Years Ago Was Actually Healthier Than It Is Now
Jeff Dorman, CIO of Arca, argues that the crypto market was healthier five years ago than it is today. Despite stronger infrastructure and regulation, the current investment environment is the "worst ever." He criticizes industry leaders for unsuccessfully trying to position crypto as a "macro trading tool," which has led to extreme correlation among all token types, erasing performance dispersion.
Dorman highlights the recent underperformance of Bitcoin compared to gold and silver, noting the irony that macro investors, whom the industry courted, are now choosing traditional commodities instead. He calls for a shift in focus toward "quasi-equity" tokens that represent cash-flow-generating tech businesses in areas like DePIN, CeFi, and DeFi, which are more akin to traditional securities and could appeal to a broader institutional base.
The article contrasts the high dispersion and varied performance across sectors like Gaming, DeFi, and L1s in 2020-2021 with today's market, where all assets move in lockstep regardless of fundamentals. Dorman advocates for a return to valuing tokens based on their underlying economic models and cash flows, rather than treating all cryptocurrencies as a single, monolithic asset class. He concludes that recognizing tokens as a wrapper for diverse assets—similar to how ETFs are understood—is crucial for the market's maturation.
marsbit01/28 09:55