Gm PRO members,
Normally, your subscription gets you 1 PRO Report/week. Well, this week we’ve decided to surprise you with more.
Because well, who doesn’t like more?
Enjoy the Top 5 charts I’m looking at right now 👀
…
Macro = Crypto
Crypto = Macro
We’ve learned this the hard way in 2022 with interest rates, inflation, and more impacting the broader crypto and web3 space.
That said, a storm is brewing and I believe it’s a storm heading in the right direction… finally!
Macro is turning quickly, for the better (for markets, not the economy).
Crypto fundamentals continue to improve.
And web3 infrastructure is maturing.
Could everything be lining up for a big 2023?
Here’s 5 charts I’ve been watching lately that tell a very, very interesting story.
Let’s just say… I’m getting pretty excited.
1. Global Liquidity (M2) Is Pumping 🚀
If you read my PRO report on valuing digital assets, you know that I don’t believe the cycles of crypto are led by the Bitcoin Halving Cycle - I see that as a coincidence.
Crypto cycles follow a similar path to tech equity cycles, which follow the business cycle (aka the liquidity cycle).
When money enters the system (from central banks printing money), assets moon. It’s how the economy has worked for decades now.
After a 1.5 year decrease in the rate of change in global liquidity, things have changed. Liquidity has turned and is heading north once again.
You may be wondering, however, how is this true if the FED is still raising rates?
The answer is: China 🇨🇳
China has begun printing money and stimulating its economy. And while everyone pays attention to the US economy and the FED, let’s not forget how massive the Chinese economy is.
China's business cycle also usually leads that of other countries, so if history repeats and my thesis on the correlation of crypto assets with global liquidity is correct, then things are looking good here.
Check out this PRO Report for more information on how I think about the cyclical and long term trends of crypto assets.
…a few days after writing this, this happened:
Looks like it’s not just China printing money anymore 🤷
2. Truflation In The USA Is Tanking 📉
Inflation is not sticky.
I strongly believe the “high inflation is here to stay” people are wrong.
Why?
Because high prices + high interest rates have absolutely crushed demand. This was the fastest monetary tightening in history.
Not to mention technology (especially AI) is extremely inflationary.
…oh, and a banking crisis is the most deflationary thing that can happen, so we have that too now 🤷
Growth has fallen off a cliff, and inflation has too. Some of the metrics are just lagging.
I use “Truflation” as my up-to-date inflation numbers, which takes into account over 10 million data points on a daily basis.
Inflation is a thing of the past, friends.
What does this mean for macro?
Low inflation + Increase In Global Money Supply + After everything that happened last week with the banking crisis, my bet is that interest rates head back to 0 in no time, too.
Macro is looking really good :)
3. Ethereum Has Broken The Ultra Sound Barrier 🔥🔥🔥
When Macro is in our favor, Bitcoin and Ethereum do really well.
The last time the FED paused interest rate hikes back in 2019, Ethereum did a 3x in just a few months… in the middle of a bear market!
This was well before Ethereum was burning $ETH and had transitioned to PoS, removing billions in miner selling pressure.
Look at how much $ETH we have been burning in the last couple months!
Activity on Ethereum is picking up at the same time the macro environment is turning in our favour.
See that cliff lower at the end? That’s what happens when the most important stablecoin in crypto depegs and almost takes down the entire DeFi ecosystem.
It ends in a net positive, because we burn more $ETH.
This is just the beginning, too.
As always, an increase in price = an increase in network activity. It’s a positive flywheel that results in good things for $ETH holders (and a good thing for the industry overall).
Sure, it means our bags go up… but the real reason this is important, is that the industry becomes well funded once again!
We can afford to innovate, and lobby in DC, and hire people and grow! Higher prices mean good things for the growth and development of the industry at large.
4. NFT Marketplace Winner Is BLURry 👓
NFT marketplaces took a back seat the last couple weeks due to the banking crisis.
But let's touch on it one more time…
Everyone is calling Blur the new king of NFT marketplaces.
I say: not so fast.
Weekly volumes are destroying Opensea since the beginning of February. However...
Blur is not winning over the users. Opensea remains king here.
What does this mean?
It means that Blur is the marketplace for rich people and professional traders, that’s about it.
They have managed to steal some users in the short-term who are farming the next airdrop from Blur, but, ultimately, those who are using NFTs for utility and not for speculation and trading, are sticking to Opensea.
That’s not to say Blur isn’t a great product, because it is. It’s just not the new King of NFT marketplaces. It’s simply a great product for a niche group of participants in the NFT space.
Regardless, as the NFT industry continues to be a shit show while it tries to figure out what it is and how it wants to mature, it’s all gravy because even if it's 100% wash trading and airdrop farming, it’s burning a shitton of $ETH.
Currently, Blur sits 2nd on the burn leaderboard in the last 30 days burning 6,715 $ETH 🔥🔥🔥
Innovation? Speculation? A banking crisis and depeg?
It doesn’t really matter what happens, it all comes back to increasing activity on-chain, which burns more $ETH and helps to grow the industry.
What a time to be alive!
5. L2s Are Locked And Loaded At All Time Highs 🔒
We can’t have another bullrun with $100 gas fees to swap tokens or mint an NFT.
We just can’t.
Every time price goes up, we onboard millions of new people. It’s time we onboard them into ecosystems that provide a great UX (cheap and fast transactions).
The good news is that Ethereum L2s are looking like they are finally ready.
They’ve been live for 1.5 years now and are starting to see some meaningful capital being deployed on their ecosystems.
The total value locked on L2s has surpassed all time highs in $ETH terms.
While the UX of the L2 ecosystem is not yet perfect, it all seems to be reaching an inflection point.
With Coinbase launching its new L2, it’s apparent that this space is only going to pick up that much faster.
Arbitrum just announced its launching its $ARB token on March 24th too, so things are really heating up!
The L2 ecosystem is exciting and the new home for dApps, developers and the millions of users who will enter the space in the coming years.
The World Is Changing Fast…
Crypto, Web3, Metaverse, Artificial Intelligence…
The 2020s have been wild for technology to say the least.
The financial world is changing fast and beginning to move on-chain.
The business world is changing and beginning to move on-chain.
The internet is changing and beginning to move on-chain.
Oh, and artificial intelligence is going to change LITERALLY everything.
The advancements in technology over the coming years will be the fastest in history, by a long shot!
For those in the know, there is so much opportunity, whether it be investing, building businesses, or simply making your life and business more productive.
Web3 Academy PRO is the place to stay on top of it all.
Thanks for riding the wave with me, friends 🏄♂️
We’ve got a lot more coming your way soon.
See you in the next one. 🫡
ABOUT THE AUTHOR
Kyle Reidhead
Founder of Web3 Academy and Impact3
Find him on Twitter
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