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Is 2022 a bear or a bull? Spartan Group partner tells you

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Gone are the days of pure bullishness and bearishness.

Original post by Jason Choi, Partner, Spartan Group

Original compilation: 0x137, Rhythm BlockBeats

This article is based on the opinions published by Jason Choi, a partner of Spartan Group, on his personal social media platform, which is compiled and translated by BlockBeats as follows:

I prefer to think about my decisions from the perspective of a VC (5-10 years) because it makes me feel more fulfilled and more interesting. When making long-term investment decisions, I usually only consider the time horizon of weeks or months, and today's content is mainly to discuss the latter.

In November last year, I did some thinking on the question of "what will the next bear market look like?" In short, I think it is an extreme plate rotation , and the rapid recovery of panic-sold sectors.

This phenomenon has continued from December last year until today: Compared with ETH, GameFi and Metaverse fell by 15-60%, while L1 generally rose , among which NEAR has created an increase of over 130%. At the same time, DeFi has also begun to show some recovery. Compared with ETH, SUSHI, CRV, and YFI all showed a 30-40% increase. During this period, Bitcoin has fallen by nearly 25%, which means that the industry as a whole has not created new wealth, and the industry's "Game of Musical Chairs" (The Game of Musical Chairs) has intensified. In the long run, I do believe that Bitcoin will become less important to the crypto market, but not now.

Someone may ask, are billions Won't the new financing lead to increased funding in the industry? In my experience, new capital focused on highly liquid cryptocurrencies tends to come and go quickly, and just because funds have the ability to be long BTC and ETH futures doesn't mean they have to. Most of the capital guaranteed to enter the market is deployed in venture funds, and most of the capital is used in private transactions, so in my opinion, the valuation of these transactions will continue to bubble, $50 million or even $100 million in seed rounds Financing will become the norm.

In short, private screen valuations will continue to increase, while the secondary market will continue to slump. This situation may continue until private VC returns converge with public market returns (risk premium), but VC’s “as long as I get in, I make money” game is unlikely to last for too long. This is a tricky time for VCs, entrepreneurs in the industry will take advantage of the VC money that "must be deployed", but because the current industry is too rich, many founders are opportunistic, making VC and Job seekers are at high risk.

Also, here are some other reasons why I lowered my risk in December:

1. People are getting 50-100% gains from unheard of low cap altcoins while BTC and ETH have been weak

2. Peers are very bullish on the market Be optimistic, and continue to find reasons for yourself to continue to increase positions

3. The private placement quota of large VCs will be unlocked in large quantities

Just from From the perspective of short-term trading, it is difficult for me to have confidence in most high-cap Tokens. The calls made by many KOLs on Twitter for these projects also look more like an attempt to leverage narratives in an increasingly "zero-sum game" industry. During this time, the market is less efficient than you might think, especially in small-cap sectors, and it can be very difficult to find quality investments, so many event-driven traders will get better returns than value investors. income.

Of course, not everything has turned pessimistic, and I'm not at all worried about the performance of the crypto market in the long run. And in the short term, if my assumption is correct, the market-wide sell-off should resume quickly. I really like a quote from Avi Felman: "The era of purely bullish and bearish is over."