It’s Time for Crypto 2.0

Dear Subscriber,

You may not believe me, but I didn’t start my financial journey in crypto.

It’s true!

My trading career began in traditional finance (TradFi). And when I first came to crypto, I was shocked by how much I had to unlearn.

But it was this background in TradFi that has been instrumental in helping me see the current changes in the crypto market for what they really are.

The Institutions Are Coming!

It started as far back as 2016, which is when I officially entered the crypto space as a trader.

At the time — and consistently since — a key narrative attracting new investors was: The institutions are coming.

The belief was that, someday, big Wall Street banks, pension funds and sovereign wealth funds would pour billions into crypto. And when they did, this tidal wave of capital would propel the market to unimaginable heights.

That narrative turned out to be largely true.

Back then, Bitcoin (BTC, “A-”) was trading near $800, and its market cap was barely $10 billion.

Fast forward 8.5 years, and its market cap exceeds $2 trillion.

And most of this incredible upside has come on the back of bigger and bigger players from traditional finance coming into crypto.

In fact, much of the current bull market can be attributed to the world’s largest asset manager throwing its weight behind Bitcoin: BlackRock’s iShares Bitcoin Trust (IBIT) has become one of its most successful ETFs ever launched.

So yes, the promise of institutional adoption — Wall Street entering a market once dominated by cypherpunks and financial mavericks — has indeed been fulfilled.

But unlike what most people believe, there are drawbacks to this boon.

Look, the institutional narrative got people so excited because they believed “the real bull market” would only start once the likes of BlackRock and JPMorgan got involved.

But the inverse is actually true.

Sure, those institutional investors have sent Bitcoin to new all-time highs that only crypto enthusiasts believed possible eight years ago. But the reality is that as Bitcoin got bigger, it became harder and harder for average people to hop on the rocket ride.

Retail investors like us just can’t make the same returns as we could back then. The easy money was made by intrepid souls willing to take a chance on Bitcoin before it went mainstream.

Today’s Bitcoin Is Very Different

In TradFi markets, if an asset rallies 200% in a few weeks, a crash is usually imminent.

But in crypto? A 200% rally often signaled another 200% gain was coming. And then another.

Back in 2017, runaway moves like these were the norm. And each surge often led to even bigger ones.

That seemed crazy to me. In Tradfi, I was trained to believe that when prices go up that fast, collapse is just around the corner.

But crypto defied those expectations again and again.

For example, the two following charts show what happened with Ethereum (ETH, “A-”) in the early days:

Ethereum Rockets 3,428% in 2015-2016

When Ethereum shot up like this — between October 2015 and March 2016 — my Wall Street-trained brain would have called that the top.

But after a mild 50% correction, and some consolidation …

ETH Surged a Face-Melting 6,487% in 2016-2017

Ethereum’s epic bull finally ran out of gas near $1,400 in 2018 — up from about 40 cents just 24 months prior. That kind of thing wasn’t supposed to happen. And yet it did — over and over.

That is, until the institutions came.

They turned the Wild West crypto market into something precision-engineered and highly structured.

And as a result, volatility collapsed. At least, by crypto’s early standards.

To see what I mean, consider this: We’re now about 960 days into the current bull market — and Bitcoin is “only” up about 680% from the bear market low.

Compare that to:

What’s killing Bitcoin’s upside volatility?

You can thank BlackRock and friends. Because when Wall Street’s big feet come stomping into a market, they lower the risk. And with lower risk comes lower returns. It’s just how the game works.

However, some crypto diehards are still in denial.

They write essays claiming Wall Street is just getting started. That Bitcoin will rocket from $45,000 (its price when the first ETF appeared) to $500,000 in a single cycle.

Because ETFs mark the moment the “real” institutional money started to come pouring in.

But here’s the problem with that …

It’s not how Wall Street thinks!

Like myself in the old days, they see a 20% rally over a few weeks … and hit the sell button. Or hedge with put options.

Which means somewhere, a market maker is shorting swaps to offset the risk.

It’s the exact opposite of crypto’s notorious “diamond hands” who HODL through thick and thin.

The result?

After flirting with $120,000 over the weekend, Bitcoin began to sell off the moment the Wall Street pros returned to their desks on Monday.

(Back in 2016, Bitcoin would’ve kept rallying to new highs without missing a beat.)

In early 2024, I even said Bitcoin would likely struggle to cross $80,000 anytime soon.

Why?

Because, at that price, early ETF buyers would be sitting on a 100% profit after just two months. And no seasoned (TradFi) pro walks away from that kind of gain without cashing in. At least partially.

Sure enough, Bitcoin topped out just above $70,000 (in March 2024). And then fell into a protracted multi-month consolidation.

The truth the current market is dominated by sophisticated players, not the retail crowd of the early days.

That means Bitcoin — and crypto more broadly — is fast becoming a trader’s paradise.

That doesn’t mean all our gains are in the rearview mirror. We just need to be smarter about our strategy.

For buy-and-hold investors, things are going to be more challenging.

Wall Street is not going FOMO into Bitcoin. It won’t chase it from $100,000 to $500,000 by year’s end. Not even to $300,000.

In fact, you’ll likely never see a move like that again.

My forecast stands: Bitcoin will top out around $150,000 this cycle. If momentum is very strong, maybe $200,000.

And yes — in case you’re wondering — I still believe Bitcoin is heading to $500,000 and beyond.

But it won’t happen overnight. Or even in a few months. It’s going to play out slowly. Just the way Wall Street likes it.

The opportunity is still massive. But mainly for those who know how to navigate crypto cycles.

That’s where my Crypto Timing Model comes in. It has accurately called every bull and bear market in crypto since 2012. And I’ve recently upgraded it to make its tracking even more precise.

To learn how it can help your crypto trading, click here.

Best,

Juan Villaverde