Host: David Hoffman, Bankless

Guest: Ledger, Crypto KOL

Original translation: Peyton, 7UPDAO analyst

Has the bull run begun? If not, what does this mean for future prices?

David Hoffman invited Ledger to discuss some charts and describe his views on the future market.

The Bankless channel is a media platform focused on cryptocurrency and decentralized finance (DeFi). Founded by David Hoffman and Ryan Sean Adams, it provides news, educational content and analysis on cryptocurrency, blockchain technology, and decentralized finance. The Bankless channel has attracted attention for its in-depth market insights, practical investment strategies, and analysis of industry trends, aiming to help users understand and participate in the decentralized financial ecosystem.

Ledger

Ledger Status is an individual active on social media, especially on the X (formerly Twitter) platform. His content focuses on the latest developments in the cryptocurrency market, industry news, and market analysis.

Ledger Status has attracted attention for his deep understanding of the cryptocurrency market and timely market updates. The content he shares includes market trends, technical analysis, and predictions for future trends, usually in the form of comments, articles, or videos. These contents are of high reference value for investors and enthusiasts who want to follow the dynamics of the cryptocurrency market. As of the time of writing, he has 233.5K Twitter followers.

He founded Ledger Status, a website for crypto and blockchain enthusiasts in September 2017, which contains a series of basic resources, technical analysis, and wonderful stories about the crypto industry. It aims to serve those who are interested in crypto and blockchain technology. The goal is to provide basic and technical analysis for various crypto assets and the organizations behind them, as well as any ideas about the industry.

Four charts (four indicators)

David Hoffman:

He introduced his discussion with Ledger and showed four charts: Bitcoin Dominance, ETH/BTC ratio, ETH/Solana ratio, and Solana/USD price. He believes these charts reflect the current state of the market and are intended to get Ledger's interpretation.

He mentioned the recent increase in market volatility due to the unfreezing of Japanese Yen trading and suggested that this is a good time to evaluate the broader crypto market.

Ledger:

Bitcoin Dominance: Ledger acknowledged Bitcoin's strong dominance and believes that the current market stage is more like the early stages of a longer market cycle rather than the end of the cycle. He compared it to the stage in 2019, noting that the recent volatility may just be an experimental stage or the beginning of a new cycle.

Market Sentiment: He observed that despite some rapid ups and downs in cryptocurrencies, there is no widespread public excitement about buying cryptocurrencies or stocks, reflecting a more stable market rather than a frenzy.

Solana’s Position: Ledger highlighted Solana’s remarkable progress, with resilience and development activity despite challenges. He described Solana as having entered the “top league,” similar to Ethereum’s position in the previous cycle, and highlighted Solana’s strong network effects and community engagement.

ETH/Solana Ratio: He noted that Solana has performed better relative to Ethereum and other assets. However, he also mentioned that neither Solana nor Ethereum have reached all-time highs, and Ethereum’s relative underperformance may be due to a lack of new entrants.

Market Dynamics: Ledger is optimistic about Bitcoin, Ethereum, and Solana, viewing changes in their relative value as opportunities rather than negatives. He emphasized that these dynamics provide opportunities to identify value, making current market conditions favorable for analysis and potential trading.

Market Sentiment Check

David Hoffman:

Bitcoin Market Dominance: Observed that Bitcoin dominance has been rising for a year, while ETH/BTC ratio has been falling for two years.

Solana Trends: Noticed Solana’s uptrend has been going on for almost a year and attributed it to the oversell during the FTX crash and the subsequent rally driven by the meme coin trend.

Market Cycle Perspective: He believes that the current period does not reflect a traditional market cycle, but rather an isolated phase of cryptocurrency activity. He believes that traditional market cycles involve new retail participants and major trends like NFTs or ICOs, but these are currently lacking.

Current Market State: It feels like we are currently in a state of stagnation, waiting for new participants to define the next cycle, while Bitcoin's market share is rising and Solana's relative performance is also outstanding.

Ledger:

Solana's Rise: Agreed with this view, adding that Solana's rise is driven by meme coin trends, which may be similar to Ethereum's DeFi rise. He also mentioned Solana's ability to capture niches like decentralized physical infrastructure networks or quasi-real assets.

Ethereum's Role: Pointed out that Ethereum is focused on durability and its role in major financial markets, hosting large lending platforms.

Ecosystem Differences: Highlighted that while Solana excels in speed and specific market niches, Ethereum is focused on reliability and large-scale financial applications. Both ecosystems are thriving but serve different purposes.

DeFi Resilience: Was impressed by the resilience of cross-chain DeFi despite challenges such as liquidations on Curve or attacks on platforms like Compound.

Market Cycle Perspective: Was skeptical of maximalist views and believes that we are in a consolidation phase rather than the end of a market cycle. He pointed to the lack of new major narratives or outside capital entering the market, suggesting that pessimism about the end of the cycle is misplaced.

Price Discovery

David Hoffman:

Bitcoin and Ethereum Price Levels: Observe that Bitcoin has only briefly surpassed its all-time high in 2021, reaching $72,000 in March and $71,000 in May, but has failed to sustain these highs. Ethereum has also failed to sustain above $3,000 and has struggled to reach its previous highs of $4,000, with its all-time high now appearing out of reach.

Solana Performance: Noting that Solana has also failed to reach its old all-time high, the lack of new users in the crypto space despite the ETF (Exchange Traded Fund) related news suggests that no significant new price discovery has occurred.

Ledger:

Market Cycle Assumption: Challenging the four-year cycle assumption based on halving, arguing that ETFs may have a greater impact on demand. Also noting that global markets and election-related uncertainty could impact crypto markets.

Consolidation Trend: Arguing that consolidation after reaching all-time highs is normal and advising patience. He believes that while Bitcoin consolidates, other areas of the market may gain growth, leading to a reallocation of funds into the broader market.

DXY and Crypto: Emphasizing that DXY (US Dollar Index) measures the strength of the US dollar, and its declines are generally positive for cryptocurrencies. Longer periods of consolidation are normal, and a weaker US dollar is generally associated with bull phases in cryptocurrencies.

Economic Context: Agreeing with David on the potential for a soft landing, noting that if inflation remains manageable and the economy balances without excessive money printing, this could be positive for assets such as Bitcoin and Ethereum.

Ethereum’s Position: Noted that Ethereum is weak relative to Bitcoin and would need significant progress or adoption to surpass it. He sees potential upside if Ethereum’s technology gains large-scale financial or government use.

David Hoffman:

Ethereum’s Future: Agreed that Ethereum would need real-world adoption and significant progress to regain and surpass previous highs.

ETH/BTC Ratio

David Hoffman:

ETH/BTC Ratio: Noted that the ETH/BTC ratio was close to parity with Bitcoin’s market cap. This suggests that Ethereum could potentially equal Bitcoin in market cap, reflecting the concept of “flippening.”

Ledger:

Flip Discussion: Recognizes that the term “flip,” referring to Ethereum surpassing Bitcoin’s market cap, was once an important discussion point, but is no longer common. While not expecting Ethereum to surpass Bitcoin, Ledger still sees potential for Ethereum to regain strength.

Target Range: Setting a more realistic target, expecting ETH to reach a range of 0.075 to 0.08 relative to Bitcoin, with the possibility of reaching 0.1, which would indicate that Ethereum is performing strongly, but not surpassing Bitcoin.

Performance vs. Moving Averages: Noting that the ETH/BTC ratio has been declining in recent years, Ethereum has underperformed Bitcoin and Solana in past cycles. Ethereum’s 200-week moving average, which has historically supported Bitcoin during bear markets, has provided less support for ETH. Ethereum is currently below this moving average, indicating relative weakness.

Future Outlook: Despite its current challenges, Ledger believes that Ethereum remains an investable asset with the potential to reach new all-time highs if Ethereum’s technology gains large-scale financial or governmental use. Noting that removing Grayscale ETH from the ecosystem could improve market dynamics.

ETF Impact: Arguing that ETFs could provide significant purchasing power to retirement accounts and large investment pools, favoring both Bitcoin and Ethereum. However, addressing existing challenges is critical to fully realizing these benefits.

David Hoffman:

Market Environment: Acknowledges that Ethereum faces mixed challenges and opportunities in the current market environment, echoing Ledger’s analysis.

Narrative Winds

David Hoffman:

ETH’s Struggle in Market Dynamics: Reflects on the recent challenges Ethereum has faced, particularly during the unwinding of the yen carry trade, which has led to significant selling pressure. He acknowledges a misconception that Jump Capital was involved, but emphasizes that it was someone with a lot of leverage who had to leave, similar to what happened when Three Arrows Capital was liquidated. He emphasizes that Ethereum, because it is often used as collateral, tends to be hit harder during chain liquidations, which has a significant impact on the ETH/BTC exchange rate. He notes that despite Ethereum’s rebound, the current market trend is not in favor of Ethereum, with Bitcoin (BTC) and Solana (SOL) showing stronger momentum.

Ledger:

Market Timing and Assessing Strength: Agreed that ETH could test the 200-week moving average again and discussed the difficulty of market timing, specifically ETH/BTC timing. He highlighted Bitcoin’s strength and Solana’s relative weakness, in part due to the decline in memecoins. He noted that many memecoins have lost money significantly, causing holders to disperse or capitulate, which has negatively impacted Solana.

Solana Potential and Risks: Sees Solana as having potential, especially if deeper projects make progress, but also sees the potential for further weakness. He mentioned that if Solana is unable to consolidate or rebound from lows, it could face challenges, especially until later this year when market conditions may improve. He suggested that strong market moves typically follow elections, and 2025 could bring price discovery for crypto assets.

Current Market Priorities: Recommends prioritizing Bitcoin over Solana and Ethereum, as Bitcoin appears to be the strongest of the three, although it is still range-bound below its 200-day moving average. He predicts that if Bitcoin falls to $40,000, it could pull Solana down to below $100 and Ethereum down to below $2,000, which could lead to liquidations of leverage and speculation, especially in meme coins.

Strategic Positioning: Recommends positioning yourself to take advantage of potential market declines by the end of this year. He stressed that it is crucial to be ready to seize opportunities that may arise as market dynamics change.

Relative Weakness

David Hoffman:

Discussed Solana’s relative weakness, Ethereum’s clear downtrend, and the worrying pattern of Bitcoin’s failure to break out. He noted that Bitcoin has been consolidating below its all-time high for a long time, which is worrying in the impatient crypto market. He mentioned that in the crypto space, if prices are not rising, there is a risk that prices may begin to fall, which would trigger fears of the end of the cycle and may lead to a sell-off.

Ledger:

Underperformance relative to stock markets:

Highlighted the dismal performance of the crypto market compared to the stock market, especially the divergence in performance between stocks and Bitcoin. He added that other assets such as gold have broken out and entered the price discovery phase and performed well in the past few months, which further highlights Bitcoin’s lagging position. He mentioned that, absent a recession, a reversion to the mean for 10-year Treasury yields would be bullish for crypto, and that a soft landing for the economy would be the desired outcome.

Interest Rate and Macroeconomic Impact: Discusses the pressure that rising interest rates will put on crypto markets, and the importance of a soft landing for the broad economy to avoid further crypto market underperformance. He noted that despite some weaknesses, the NASDAQ has been relatively strong over the past year compared to cryptocurrencies, which has exacerbated frustration among crypto investors.

David Hoffman:

ETFs’ Impact on Traditional Cycles: Agreed that ETFs may have disrupted the traditional four-year cycle, disappointing crypto traders and investors who were expecting a more explosive growth model. He noted that while ETFs offer a steady, reliable source of growth, they lack the adrenaline rush that many speculators expect, which dampens enthusiasm in the market.

Ledger:

Steady Growth vs. Fast Gains: Acknowledged the slower pace of growth due to ETFs, but stressed the importance of the need for these financial products, especially as younger generations are more open to crypto investing. He discussed the importance of long-term thinking, noting that millennials entering their peak earning years provide a strong tailwind for future crypto market growth. He advocated for a 10-year investment perspective, highlighting the potential for major crypto assets to achieve significant gains.

Valuation and Belief: "I think Ethereum is undervalued at around $2,000, Solana is undervalued at around $100, and Bitcoin is undervalued at less than $100,000. For me, $250,000 to $500,000 Bitcoin, $10,000 Ethereum, and $500 Solana are all completely reasonable targets, and I don't think these are overly aggressive predictions." He strongly believes that the current Ethereum, Solana and Bitcoin prices are undervalued and have the potential for significant long-term appreciation. He advises investors to avoid being distracted by short-term fluctuations, focus on long-term investments that may bring 10x or greater opportunities in the future, and emphasize the importance of belief in holding spot positions.

David Hoffman:

Avoid long-term mistakes: Quoting Chris Burniske's views, he emphasized the importance of not being too aggressive or impatient. He warned against expecting unrealistic time frames to achieve significant gains, pointing out that long-term success requires patience and calmness.

Ledger:

Low leverage and long-term strategy: Advocates low leverage and focuses on holding major crypto assets, noting that most people have difficulty dealing with leverage and often end up losing money. He recommends investing a significant portion of net worth in crypto spot positions and buying gradually during consolidation periods or bear markets. He is pessimistic about quick profits through leverage and trading, and advises not to chase the hot coins of the day.

Identifying Market Shifts: Recalls past market cycles, noting that major shifts like the DeFi craze in 2020 or the NFT surge in 2021 were identified by people who were already in the market. He emphasizes the importance of long-term participation and patience in crypto investing to identify these market shifts as they occur in real time.

DeFi Summer Breakout

David Hoffman:

DeFi Summer Breakout: Recalls the excitement when Ethereum broke out from $330 to $425 and then quickly rose to $1,100. He emphasizes the strong consensus and unique sense of energy at the time, which has not been felt since.

Ledger:

DeFi Summer and Market Dynamics: Observed that when DeFi Summer occurred, Ethereum was mostly sideways. The initial breakout temporarily interrupted the DeFi summer, but it has continued as Bitcoin rallied and Ethereum remained stable. He noted that such breakouts are often accompanied by a market turn and a gradual buildup of strength that ultimately leads to strong price action.

Current Market Sentiment: Shared that he is not feeling the same market energy or momentum at the moment as he did then. He expects the market to continue this way and does not expect a major breakout to be imminent. He predicted that if the market were to see a decline before the election, it would not be surprising and would reflect broader macroeconomic factors.

Patience & Market Timing: Advised that patience and market timing are critical. Real momentum and significant market moves are felt instinctively by observing and understanding market dynamics. He acknowledged that while some minor trends such as meme coins have had movement, they have not had the transformative impact of major market moves.

Market Heat & Opportunities: Noted that major market opportunities emerge when markets heat up and begin to move aggressively. He expects that with patience, opportunities can be seized when such momentum emerges in the market.

Looking Ahead

David Hoffman:

Ledger and the Future of Content Creation: Curious if Ledger will return to podcasts or other content formats, while recognizing the shift in focus. Mentioned a common sentiment within his community about the need to find balance and hobbies outside of crypto.

Ledger:

Current Approach: Plans to continue participating in the market, but with a more cautious approach. Acknowledges the need to slow down and be more strategic. Despite cutting back on high-frequency trading, he remains interested in crypto.

Trading Style and Experience: Shares his trading experience, noting the transition from frequent trading to experiencing long-term capital appreciation. Describes his trading style as swinging between major ideas, and has recently reduced the number of trades, but has achieved significant gains.

Long-Term Gains: Reflects on the rarity of long-term capital appreciation from liquid cryptocurrencies, and values this experience. Says that while he traditionally prefers swing trading, he has recently found value in a more patient approach.

David Hoffman:

Market Dynamics: Noted the slowing pace of the cryptocurrency market, and how other factors such as ETFs and Fed policy have contributed to this change. See a shift from intense four-year cycles to a more sustainable market rhythm.

Ledger:

Embracing Change: Expressing acceptance of slower, more sustainable market dynamics.

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