Summary:
Former Coinbase
Board member Tom Loverro has recommended that crypto investors ‘have enough cash for the next 30 to 36 months.’ Mr. Loverro shared his insights through a Twitter thread, which can be found below, that started with him explaining that Crypto Winter is here.He forecasted that for the remainder of 2022, the crypto markets would most likely go lower, with next year being primarily flat. According to his analysis, the crypto macro environment should improve in the second half of 2023.
Mr. Loverro further pointed out that the crypto drawdown this time might differ from the Coronavirus crash of March 2020. He cautioned that VCs and crypto investors expect a quick rebound due to this fact.
However, the ongoing interest rate hikes by the US Federal reserves might skew the time it takes to find a Bitcoin and crypto bottom. He explained:
Many VC & crypto investors suffer from recency bias, expecting a quick rebound b/c that’s what happened after the 2020 Covid black swan. This bear market isn’t a black swan; it’s the result of rising interest rates. So these investors will suffer until rates stabilize.
Going from crypto peak to floor has historically taken ~12 months. I expect that pattern to play out again, give or take. btc’s peak was Nov 2021.
He believes it might take many months to find a Bitcoin and Crypto bottom. He also forecasted that a bottom would occur when retail users discover novel apps and use cases. He added:
Human psychology will influence this timeline. Crypto price movement is still driven by retail investors seeking novelty and momentum. Those investors are seeing neither right now…
Crypto will rebound when retail discovers novel apps & use cases, esp those enabled by innovations at the protocol & dev infra layers (txn costs, easier to build).
It is with the above context that the former Coinbase board member has recommended that crypto investors have enough cash to get through the next 30 to 36 months. He also suggested ‘sufficient faith to survive the winter without wavering or chasing new and non-crypto directions.’
He signed off on a note of optimism, stating that ‘Crypto will come back bigger than ever.’