A tale of two crypto markets

If the cryptocurrency market of 2021 could be summarized in one word, that word would be “stupid.” A non-exhaustive list of defining moments from 2021 to illustrate my point:

• JPEG images of rocks sold for more than $1,000,000.

• An Iranian-born crypto entrepreneur paid $2.9 million for an NFT of Jack Dorsey’s first tweet (at least the money went to charity).

• Shiba Inu token, which was a derivative of Dogecoin, which, itself, was a satirical cryptocurrency, had a $30 billion market cap — a valuation greater than Delta Air Lines at the time.

• Thousands and thousands of Filipinos spent their working hours collecting “Smooth Love Potion” in a metaverse game called Axie Infinity, which was basically Pokémon without the fun.

This market collapsed a year later. The original purchaser of Dorsey’s NFT attempted to sell it for $48 million but only attracted a $280 bid, North Korean hackers stole more than $600 million from Axie Infinity’s creators, and, of course, FTX collapsed.

However, after spending the last week in Austin, Texas for CoinDesk’s Consensus conference, I think an interesting divide is forming in the world of crypto. On one hand, there is still plenty of insanity. On Thursday alone, for example:

• The conference held a 13-match MMA tournament where Fyre Festival’s Billy McFarland, who still owes more than $30 million in restitution and back taxes, defeated crypto YouTuber Justin “JChains” Custardo in a second round TKO.

• There was a memecoin meetup organized by “Floki,” a memecoin named after Elon Musk’s pet Shiba Inu, to discuss “why memecoins are outperforming many blockchain projects, why some meme projects fail where others succeed, history, trends, and future of the meme space and the next generation of utility focused meme coins.”

• Robert F. Kennedy Jr. gave a keynote speech where he said that blockchain technology and AI would be the key to fixing the United States’ national debt crisis, without mentioning how exactly blockchain or AI would impact our debt.

• Venture capitalists noted that NFTs for scientific research were a compelling investment opportunity.

• A truck advertising a Costco hot dog-themed memecoin drove around the Austin Convention center playing deep fake videos of Dave Portnoy proclaiming his love for Costco hot dogs.

• A dominatrix walked someone in a Jamie Dimon costume on a leash (and a group of protestors, in Jamie Dimon masks, added conference attendees to a Telegram group to promote the stunt).

• An RFK Jr. RV parked outside the Austin Convention Center, playing RFK-themed reggaeton, pop, and country songs.

On the other hand, however, some sectors of crypto felt… mature? Of note: 

• While the memecoin meetup was happening at one end of the conference center, representatives from BlackRock, BNY Mellon, Fidelity, Bitwise, and Bloomberg held a panel on the main stage to discuss how leading asset management firms were integrating bitcoin and ethereum ETFs.

• Throughout the week, several Congressmen, led by House Majority Whip Tom Emmer, spoke about the state of pivotal crypto legislation in Washington DC. 

• Directors from the IRS also explained how the agency was handling taxation of digital assets, 

• Representatives from the CFTC and SEC discussed legal frameworks surrounding the crypto industry, and 

• Visa’s Head of Crypto talked about how his company was experimenting with stablecoins.

Sure, some attendees were arguing over which Solana memecoins would go “to the moon,” but others were discussing the optimal retirement allocation for a bitcoin ETF. With bitcoin celebrating its sweet 16 this year and ETF approvals making crypto more appealing to traditional asset managers, it feels like some sections of the crypto market are starting to grow up, while others are just as chaotic as ever.

In 2024, crypto is no longer homogenous. The market is “A Tale of Two Cryptos”, with institutions gaining more influence in “blue chip” assets, while newer trends are still the wild, wild West.