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Messari Daily Brief Feb. 17, 2021: BTC is an altcoin shield

Feb 17, 2021 ⋅  2 min read

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The crypto markets have obviously been hot, but what we’ve seen in DeFi, Layer1 protocol tokens, and NFTs year-to-date has been *nuts*.

It seems like there’s two schools of thought at this point. On the one hand, there’s a belief that a correction in the long-tail is imminent. If for no other reason than many of these assets have 3-5x’d (or more) in the past six weeks. On the other, there’s the sense that we might be in a mini-period of consolidation while the markets take a breath. Sideways, but not down. August 2017, not Jan 2018.

My sense is that if BTC/ETH keep rallying, other assets will perform similarly: it's much more difficult to beat the blue chips than it was six weeks ago. If BTC/ETH falter or the stonk markets correct sharply, then look out beloowwwwww. That leads to the same conclusion: it may be safer to be in BTC/ETH (and the super long-tail of speculative assets if you’re adventurous), than it is to ride (or FOMO into) the recent DeFi/Layer1 winners.

Capped upside, big downside for the billion dollar also-ran networks, unless you think BTC dominance will drop below 60% or ETH Layer1 dominance will dip below 60% or DeFi’s miraculous ascent will continue unabated. It's a good time to HODL, hit the books, and plan for the next phase. If boom times continue, you’re ready. If a correction hits, you can go hunting vs. spraying/praying.

I’m watching BTC as a shield for the rest of the crypto markets, and looking at relative valuations otherwise. (Layer 2 cheap vs. Layer 1. CEX tokens cheap vs. DEX. Etc.)

Headlines that matter:

  • INTEL: Cosmos, Kava, Bancor, Zilliqa, Solana, UMA, FLOW, Mina, ETH (+ 20 updates)
  • Bitwise launches DeFi fund for accredited investors (The Block)
  • Blockchain.com raises $120 million from top macro investors (CoinDesk)
  • JPM thinks volatility will hamper BTC above $50k in spite of all evidence (CoinDesk)
  • Saylor’s MacroStrategy may do another $900 million, actually (MicroStrategy)
  • Most corporates still aren’t planning to buy bitcoin (CoinDesk)
  • Mina Foundation launches with A+ new board (Mina)
  • Lightning Terminal, a UI for Lightning Pool Liquidity (Lightning)
  • At $80 billion valuation, Coinbase would be a top 15 global bank
  • Daily SUN: We’re doubling our engineering headcount. Jobs here. $5,000 bounty for referrals.

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Prior to founding Messari, Ryan was an entrepreneur-in-residence at ConsenSys, and on the founding teams of Digital Currency Group, where he managed the firm’s seed investing activity, and CoinDesk, where he led the company’s restructuring & annual Consensus conferences. He has been an investor & prolific writer in the crypto industry since 2013.

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About the author

Prior to founding Messari, Ryan was an entrepreneur-in-residence at ConsenSys, and on the founding teams of Digital Currency Group, where he managed the firm’s seed investing activity, and CoinDesk, where he led the company’s restructuring & annual Consensus conferences. He has been an investor & prolific writer in the crypto industry since 2013.

Mentioned in this report