By John Sarson
So far January has been a great month for crypto assets with most large-cap tokens up a respectable 35%+ for the month. Bitcoin is trading at $23,000 and Ethereum is trading just shy of $1,600.
The sharp recovery brings with it a positive shift in sentiment which we anticipate bringing additional sidelined investors back into the market. We are feeling confident in our market call from earlier this month that we have seen the bottom for crypto prices.
We have been encouraged to see the market shrug-off two negative events, the Genesis bankruptcy and the banking charter denial for Caitlin Long – events that would have moved markets lower in the past.
What We Are Watching In The Market
“Smart Contract Deployment” is one of the most useful metrics that we can use to determine network usage and growth rates. When a project, business, legal contract, community group, or decentralized application is launched on the Ethereum Network, “Smart Contracts” need to be deployed. There is a fee for deploying a smart contract. Fees range from $15 to $500 dollars depending on the complexity of the contract being deployed. Because of this expense, smart contracts tend to not get deployed indiscriminately.
This makes smart contracts deployment data a reliable barometer of actual organic user growth on a blockchain and a recent report on Ethereum gives us reasons to feel optimistic.
According to the report, Smart Contract Deployment on Ethereum saw a year over year growth rate of 293% in 2022, and a growth rate of 453% for the 3rd to the 4th quarter.
This data confirms what we have been seeing: that development and usage of crypto-based technology solutions is continuing to accelerate. At Sarson Funds, we estimate new Web3 communities are being launched at a rate of more than 500 per day worldwide.
Adding to the market’s generally positing tone, is a new set of bills proposed by AZ State Senator Wendy Rogers aims at making bitcoin legal tender in the state of Arizona and allowing tax free transactions as well as allowing state agencies to accept bitcoin.
When analyzing the past 14 months, we take heart in the fact that many of the things that moved cryptos down in price had little if anything to do with the technology, reliability, or utility they offer, or potentially could offer, to the world. In fact over the last year, with the growth of the Lightning Network, (a scaling solution built on top of Bitcoin which has made transactions faster, cheaper and ready for country-scale deployment) it could be argued that the utility has dramatically increased for Bitcoin since it last saw it’s now distant all-time-high price of $69,000.
At Sarson Funds, we think the next stop for bitcoin is $25,000 and while the market will need to catch its breath eventually, which might mean a temporary pullback to the $21,000K level for bitcoin, we expect to see bitcoin regain $40,000 in 2023 and achieve new all-time highs (above $69,000) in the next few years… maybe even as soon as next year. Don’t let the talking heads on CNBC convince you otherwise, the world remains fascinated with Bitcoin and the concept of alternative world reserve currencies generally. At Sarson Fuds we believe it’s quite possible that Bitcoin achieves this vision eventually and doing so would suggest massively high process for the world’s most popular digital asset.
Timing The Market
The market is recovering quickly, and we think investors should establish or re-establish long-term crypto positions at today’s prices. Our research shows that the last 2 days and first 7 days of the calendar month tend to be the strongest performance periods for Bitcoin and Ethereum. If you are currently on the sidelines and considering allocating to the market soon, we would suggest doing so early this week.
NFTs To the Moon
In closing on a lighter note, something we are keeping an eye on interesting price action in Trumps NFT collection, up another 25% last week and rising daily. The average NFT in the collection is now up more than 400% from its mint price just “45” days since launch… You can read about what trump is doing with NFTs in a previous article I wrote here.