What will drive the next cryptocurrency rally? According to Travis Kling this is “financial nihilism”.
Investment managers at Ikigai Asset Management recently went viral with an argument in which Kling consistently claims that investors no longer care about cryptocurrency's lack of use cases.
The comments have been viewed more than 400,000 times.
“BTC essentially benefits from free access to ATH”
Kling did not provide a price target for Bitcoin BTC/USD 's all-time high ($75,000 to $180,000) or a timeline (between now and the first half of 2025). But he saw the stars align like never before:
His take: “Cryptocurrencies just need to do some “work” to get BTC above $60.
...just like Ethereum
Kling says the same is true for Ethereum ETH/USD : “It has a lag of 3 to 12 months.” The SEC will be forced to approve a spot ETF for Ethereum for the same reasons it approved a spot ETF for Bitcoin. Approved.
Kling believes it is “highly unlikely” that there will be an Ethereum ETF within a year;
Key to his basic thesis: “We have never experienced a situation like this before.”
Enter financial nihilism: “Why not invest $500 in a memecoin with 50x probability?”
Kling took the cautious approach of many market participants: “55 to 100%?” What is meant by ant pump?
With larger assets hitting all-time highs, investors are looking for riskier, small-cap assets to take advantage of upward mobility opportunities. “The median home price divided by the median income is simply not sustainable,” he said.
The resulting mentality is: “$500 is not enough to make a difference.”
“This is the spirit of America's younger generation,” says Kling, and it's not hard to see what he means:
Anticipating memes and narratives is a key skill in the world of cryptocurrencies, industry experts say.
Marketing gimmicks attempt to bring memecoins to the masses.
Meme stocks – like GameStop – are being replaced by memecoins – like GameStop.
This zeitgeist is “a big driver of shit,” Kling said. In support of his thesis he cites the revenues from the online gaming sector:
Americans don't trust cryptocurrencies, but: “Let's do S-tcoining”
Kling cited a survey showing that 75% of American adults have heard of cryptocurrencies. They are not sure of its safety and reliability. And about four in 10 cryptocurrency-savvy adults, or about 39%, say they don't trust it at all.
But that hasn't stopped them from entering the market: "Don't be fooled, prices go up," says Kling.
The decline of Bitcoin's dominance, i.e. Bitcoin's share of the total cryptocurrency market capitalization, is proof of this, Kling said. Its 52% in 2023 is 19% lower than the 71% achieved during the last bear market in 2019. The difference is due to memecoins like “Full Vaporware” and Bonk BONK/USD .
This “lack of appearance” has two consequences:
- Relative valuation is key : market participants buy ETH because it is cheap compared to BTC, Solana SOL/USD because it is cheap compared to ETH, etc.
- Airdropped altcoins are also king : examples like the $JUP airdrop, where people literally printed millions of dollars for investors and the protocol intercepted the airdrop for its own reasons.
Since the SEC will likely lose the case against Coinbase, this means “pushing S-tcoining forward,” according to Kling.
Could this theory be wrong? That's how:
Kling saw three reasons why his thesis might be wrong:
- Fed Pivot: An unexpected rise in inflation or any other reason for the Fed not to cut interest rates would be a very bad crypto Ponzi device.
- Binance Performance “Extremely Poor”: Given that Binance is “ground zero for vaporware mining,” stricter enforcement of altcoin trading regulations “would significantly impact the boundaries of the vaporware Ponzi market.”
- Democrats win presidential election : While this won't be the case in 2024, an "overall victory" could mean "two more years of chaos for US regulators."
Conclusion: “High prices, low expectations”
The thread ends with a warning that altcoin prices will rise in the next 12-18 months, with no hope of real use cases driving this trend. A “crazy setup,” but not that crazy in the grand scheme of cryptocurrency.
Now read: US stocks are in the red again as rally peters out
Image: Pixabay, edited with Canva