I don't know what I'm talking about... but then again, neither do you

We're pleasantly surprised at the overwhelmingly positive reception to our Crypto Theses for 2020, but that's why I also wanted to send a note today tempering expectations, and writing about, well, how wrong some of my prior predictions are. Or more importantly, why they were wrong, and why regular reevaluations of your own crypto theses are critical given the pace of innovation in the industry.

Here was my literal #1 prediction for 2018:

"2017–2019 will be THE big crypto bubble. Things could get nuttier from here…far nuttier than in the dotcom era. The retail investor base is 10x larger, with 24/7 access to the FOMO and get rich quickism. And we’ve got CNBC to help with the pump! Unbelievably, the institutions will be the last money in this time, with the futures market and custody solutions just coming online, and the mythical ETFs perhaps not too far behind. This has been properly hyped, I think. I could see a Q1-Q2 stampede."

Here was my top "insight" for 2019:

"On Lightning Network, it’s our theme of the year. We could see network growth get crazy and hit $100mm (50X 2018). It will continue to get easier to spin up nodes with out of the box solutions (e.g. Casa), and there will be numerous technical improvements (e.g. dual-funded channels), and perhaps major exchange buy-in."

Woof and woof.

That’s been one common critique I’ve seen to yesterday’s post: “Well you made some dipsh*t predictions last year and the year before. These will also be wrong.”

And there’s merit to that critique! If I had a better crystal ball, I’d be retired by now.

But then again, you would be, too!

Many of this year’s theses and trends will look silly in hindsight, as well. Which is why I don’t recommend taking any of the individual snippets at face value. Instead, I hope you're able to use this research as part of a mosaic approach to your own study of the emerging crypto market. Because the elements of my predictions that are most likely to be wrong are the result of timing mismatches, and strategic/macro shifts that happen between this year’s post and next’s.

Fortunately, you'll see shifts in our thinking intra-year as we'll update our thinking over time, as circumstances change.

For instance, in the original post, my top thesis was macro and momentum driven. I was expecting a “utility token” crash that would lead to a flight to safety as people cashed out shitcoins for bitcoin (this was directionally correct), and I thought that sort of pop would also coincide with runaway interest from macro momentum investors who would begin buying into the “uncorrelated asset” narrative as institutional tools came to market. I also underestimated the impact that insider and tax selling would have on crypto prices in Q1. (The latter issue was an avoidable miscalculation on my part.)

The thing is, though, if you read my thoughts from March or April or May or June on the market, you saw that I had updated my thoughts as new information came to light. The momentum trade was killed. The bitcoin ETF was rejected. The institutional tools weren't quite ready for prime time. Etc.

Last year, it was lightning that got me so excited. Well, it turns out people like to hoard, not spend digital gold. And the lightning implementations were rolled out more slowly and carefully than expected. And wouldn't you know it, stablecoins like Dai TOOK OFF. It was much more attractive, it turns out, to play with payment channels on dollar-pegged synthetic assets on Ethereum than it was to zap around digital gold and incur a tax liability with every coffee purchase.

In both cases, I'd say I was directionally correct about key trends, but literally incorrect (by a mile) on the specifics. I'd be shocked if 2020 were any different.

So check back here for updates, and call me out when I write something stupid.

Cheers,

TBI

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