Blockchain Expert Likens Crypto to Early 20th Century U.S. Stock Market
On 18 December 2023, Jamie Coutts, a freelance blockchain strategist and former crypto market analyst at Bloomberg Intelligence, shared insights on social media platform X about the current state of the cryptocurrency market. Drawing a historical parallel, the analyst compared today’s crypto market to the U.S. stock market of the early 1900s, highlighting the unique opportunities it presents.
Key Points from the Analyst’s Statement:
- Comparison with Early 1900s U.S. Stock Market: The analyst sees today’s crypto market as akin to the U.S. stock market in the early 1900s. This period was marked by the U.S. emerging as a global economic superpower, attracting significant capital inflows.
- Crypto Market’s Ascendancy and ETFs: The strategist predicts a similar trajectory for the crypto ecosystem, expecting it to ascend in prominence. The introduction of Exchange-Traded Funds (ETFs) is anticipated to trigger a substantial and prolonged capital inflow into the crypto market.
- Regulatory Environment and Market Dynamics: The pre-1933 and 1934 era of the U.S. stock market, characterized by loose regulations, market fragmentation, dominance by large investors, and information asymmetry, is likened to the current state of the crypto markets.
- Rise of Technical Analysis and Strategies: The early 20th-century stock market saw the emergence of renowned technical analysts like Dow, Elliot, and Wyckoff, along with trend and momentum strategies. The strategist suggests that the crypto market, being momentum-driven, is ideally suited for exploiting technical trend strategies.
- Market Inefficiencies and Alpha Extraction: The analyst believes that market inefficiencies in the crypto space could persist for several years, offering significant potential for extracting alpha. They foresee a surge in alternative weighting, factor-based, and market-timing strategies in the near future.
Last month, Coutts highlighted the differences in market capitalization and user engagement between two prominent blockchain platforms, Solana (SOL) and Cardano (ADA), in a post on social media platform X. He analyzed their standings in the crypto space, at a time when SOL ranked 7th with a market cap of $17.73 billion and ADA ranked 9th at $12.78 billion.
Coutts noted a significant disparity between their market caps and user activities. Despite Cardano’s market cap being 75% of Solana’s, it only boasts 16% of Solana’s daily user base. He mentioned that this gap suggests the potential for Solana’s market share to grow if it continues to outpace Cardano in user engagement. Coutts inferred that Solana might see more valuation growth than Cardano, considering their current user metrics.
Additionally, Coutts discussed the wider cryptocurrency market, focusing on Bitcoin’s performance. Despite Bitcoin’s 100% rally in 2023, he observed a strong trend of ‘firm hands’ in the market. These are investors who have purchased Bitcoin at least twice and haven’t sold. The count of such Bitcoin addresses has hit a record high of 844,000, holding over 3 million BTC, or 16% of the circulating supply. Coutts interpreted this as a sign of a robust HODLing sentiment, suggesting that long-term holders could push prices higher, particularly if a spot Bitcoin ETF gets SEC approval.
Coutts expanded on this with his “Bitcoin Residents vs. Tourists” chart, contrasting the supply of Bitcoin last active over a year ago against that last active less than a year ago. This analysis sheds light on Bitcoin’s holding patterns and the market forces that could affect its price, especially with potential new investments from ETF investors.
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