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"The whole problem with the world is that fools and fanatics are always so certain of themselves, and wiser people so full of doubts.”

- Bertrand Russell

Thursday All the Way Down Mailbag

Q: Will this be a short cycle? Or a supercycle?

It does feel like the ETF mania may have fired the starting gun on this new bull market prematurely — in that case, the race higher may be shorter than you’d typically expect.

Bitcoin has led the rally and that is typical of a new bull cycle — but we’ve hit the all-time highs before the halving and that is atypical (in an admittedly small sample size as we’ve only had three halvings so far).

Approaching the next halving at an all-time high makes it at least feel like we’re already closer to the end than to the start of the cycle, which has some people concerned.

Most concerning, though, is the current frenzy for memecoins, which is usually a sign that the End Times are nigh. 

(For the bull market, if not yet the world.)

If people are already so far out on the risk spectrum, how much further may this bull market have to go?

On the other hand, DOGE got to a market cap of $80 billion last cycle (which, surprisingly, was not the end of the world), so maybe we’re only just getting started on a supercycle — the two top contenders to become this cycle’s DOGE (BONK and WIF) are worth a comparatively modest $2 billion each (so far).

Or could this cycle be both short and super?

Qia Wong says “shorter cycle” and “supercycle” are the “same thing” because a “shorter more muted cycle = supercycle.”

I think that’s the most optimistic take.

If your investment portfolio is currently 100% memecoins (and I congratulate you, if so), “muted” is not what you’re now hoping for — you want the frenzy to get more frenzied.

That could easily happen: We are firmly in the phase of the market where it’s the “fools and fanatics” that make the most money.

But less frenetic highs followed by a series of higher lows would be the best thing for the industry, long-term.

(And for my sanity, too.)

Q: Will we ever see another $80 billion memecoin?

It’s hard to imagine. 

For one thing, Dogecoin’s first-mover advantage is unmatchable — there will never be another first memecoin. 

And for two thing, there is so much more competition now — there are thousands of coins all targeting the same, presumably limited pool of money that are willing to “invest” in memes.

But that pool of money might be a lot larger than people think. 

Anecdotally, it seems like the current frenzy for memecoins is being driven almost entirely by crypto-native money — I’m not sure the new, non-native money that you’d expect to see in a real bull market is even here yet.

It doesn’t even feel like many of the people from the previous cycle have returned as of yet — old-school memecoins like DOGE and SHIB only started to move about a week ago.

Yes, a lot of people got burned last time around. 

But gamblers always come back — it’s why casinos are the only industry that can routinely bankrupt their customers and yet never bankrupt themselves.

There are also plenty of all-new customers to attract. 

In China, for example, the dire state of the stock market reportedly has retail investors there increasingly interested in bitcoin, despite all the hurdles to access crypto from the mainland (there are workarounds, evidently). 

Note that this is a culture where “stone gambling" is a popular pastime and grandmas are notorious risk takers — so what happens when these risk takers discover memecoins? 

You may need Mandarin or Chinese to understand the next $80 billion meme.

Q: Why are bitcoin and memecoins going up at the same time?

Right — the boom/bust cycle is meant to be an orderly progression along the crypto risk curve: bitcoin > ethereum > altcoins > memecoins > crash.

In this cycle, however, memecoin buyers are refusing to wait their turn.

Why would bitcoin and memecoins simultaneously boom while everything in the messy middle lags?  

I think the answer may be related to Travis Kling's thesis for 2024 that crypto will rally despite the lack of pretense “That Any of This Shit Does Anything or Will Ever Do Anything."

Current price action suggests that lots of people agree — if you think that crypto will 1) make new all-time highs and 2) not produce anything useful, why bother with all the tokens (everything between bitcoin and dogecoin) that hope to do useful things? 

The market is largely passing those over and choosing instead to go with the purest distillation of crypto — just the memes.

I can see the logic in that — if nothing else, it’s less work than trying to figure out valuation, tokenomics, utility or use cases.

Crypto’s best use case remains Bitcoin, a meme that derives its value from being valuable but is no longer a memecoin.

Like gold, the Bitcoin meme has reached escape velocity, making bitcoin an “infinite regress” asset that has genuine value.

So to me, it seems perfectly reasonable to buy only the original meme (which continues to successfully propagate itself), and some of the new ones that hope to follow its example.

That’s what’s defined this cycle so far, and it wouldn’t surprise me if it continues to do so — right up until the bust, whenever that may be.

My thesis for 2024, then, is that this is an infinite-regress bull market: It’s memes all the way down.

― Byron Gilliam

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