Veteran crypto investor Arthur Cheong believes that deep drawdowns and multi-year bear markets may be a thing of the past for digital assets.
The DeFiance Capital CEO tells his 169,400 followers on the social media platform X that crypto may be witnessing a coming-of-age cycle – or a period when digital assets begin to behave like the stock market.
“Nuanced take: entirely possible the crypto market is maturing and we don’t see complex wild swings with 70-80% drawdown every two years but instead a complex secular growth like what the S&P 500 went through post-2008 GFC (Great Financial Crisis).
Excluding the Covid-19 crash in 2020, the US stock market either range bound or gradually ground up where every bear calling for a major crash proven wrong but returns also increasingly concentrate on the big cap and mega caps while value and small caps remain unloved for a long time.”
Cheong says that if his thesis plays out, future bull markets will no longer serve as a tide that lifts all boats, suggesting that most altcoins will not witness massive rallies similar to what was seen in the previous cycles.
“Similar things playing out would mean most alts are uninvestable but some winners will deliver ground-shattering returns and hopefully we get an Nvidia-like outcome every few years while most alts are gonna disappoint.”
The seasoned crypto investor also notes that altcoins will have to carve out their own paths if they want to succeed.
“Also, you can’t ignore the fact that the market is path-dependent, there is no such thing as preordained. If mass adoption happens like Telegram onboards half of their userbase to TON, how much do you think TON will be worth?”
But for now, Cheong thinks that market conditions are about to improve for crypto. He also believes that both Bitcoin (BTC) and Ethereum (ETH) are undervalued considering that they are the only two digital assets with no regulatory overhang.
“I think the market still hasn’t priced in the fact that BTC and ETH are the only two cryptos that have no uncertainty over their regulatory status and attract TradFi demand.”
Last week, blockchain development company Consensys announced the U.S. Securities and Exchange Commission (SEC) concluded its Ethereum 2.0 investigation, which sought to determine if the second-largest cryptocurrency by market cap is a security.
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