Happy New Year!
And Congrats... You're Still Here!
Before I dive into some content around markets, I’d just like to wish everyone a Happy and Healthy New Year!
And I’d like to both thank you and congratulate you for sticking around and still reading this newsletter.
Readership numbers have hardly dipped even with the market being down, which makes me believe people want to keep reading/learning.
This inspires me to keep sharing, so thank you!
My 2022 Thesis
My thesis for crypto markets in 2022 was “prepare to have less fun.”
I had no idea just how much less less fun we’d have, though.
I predicted that they markets would be volatile throughout the year and that there would be a strong anti-crypto narrative from the MSM, but that we’d rally before the year was out.
I was right about two out of three of these predictions. The first two happened, but we didn’t get a rally. Instead, we got what seemed like never-ending destruction — from the Terra(LUNA) ecosystem to Celsius to Three Arrows Capital to Voyager to BlockFi to FTX.
Quite a cleansing to say the least.
Such a cleansing will make the space stronger in the long term, though, it’s hard to stomach in the short term.
We’re not used to such cleansings, because we hardly get such them in traditional financial markets, as most bad actors in TradFi know that the Fed is there to backstop them if things get really bad.
In Bitcoin/crypto, there is no Fed. Bad actors/projects get weeded out. Again, good in the long term, rough in the short term.
Looking Forward
I have about as much desire to make predictions for the year ahead as I do to make a new’s years resolution. Zero for both.
I did touch on what I’d like to see in the year ahead in the video below, though.
(Yes, I’m wearing a hat indoors. It’s a really cool hat.)
I shared some thoughts and reflections on 2022 with some media outlets this week, so I’ll share some of my commentary below.
Here’s What I Shared with the Media This Week
The following is my commentary from the article “Crypto Price Check: Ringing Out ‘22, Looking to the New Year” (The Street)
Frank Corva, senior analyst for digital assets at Finder, said that "2022 was a year filled with tough lessons for those in the crypto space."
"The biggest and most sobering lesson that many investors in the space learned is the oft-cited crypto adage: not your keys, not your coins," he said.
"Due to the failures of numerous borrowing and lending centralized finance platforms like BlockFi, Celsius and Voyager as well as the implosion of FTX," Corva said, "crypto investors learned the hard way that when you don’t hold the private keys to your digital assets in your own hands, you no longer technically own said assets."
Another big lesson that many in the space learned, he said, is that crypto and leverage don’t mix.
"Crypto assets are extremely volatile, and, when you trade them with leverage, you’re really playing with fire," Corva said. "Not only did major crypto hedge funds like Three Arrows Capital go under due to its trading with excessive leverage, but many retail investors lost money, too, as more crypto derivative products came to market this year."
Moving into 2023, Corva said he believes that the crypto industry has to focus on product-market fit.
"Given that regulators are champing at the bit to rein in what has proven to be an industry that cannot govern itself," he said. "Developers in the space are going to need to ship products that have real use cases so as to better illustrate the value of this technology."
"Just having a lot of developer activity on a blockchain isn’t a good enough reason for people to invest in crypto coins and tokens in the long term," Corva said. "In 2023, I hope that developers consider the real world applications for what they develop. And I hope that UX and UI for decentralized apps (dApps) continue to improve."
The following is my commentary from the article “What’s Next for Crypto after the Chaos of 2022?” (Finance Magnates)
“I would imagine that most institutions believe that crypto is here to stay, and some may even be looking at this crash as a buying opportunity. Crypto is no longer a completely taboo or fringe asset class. Polygon just struck deals with Starbucks and Disney,” Frank Corva, a Senior Analyst for Digital Assets at Finder, told Finance Magnates.
[…]
For Frank Corva … it would not be surprising if a new handful of firms blow up in the next year. This might happen "before the dust in the crypto space totally settles," Corva said.
And I also wrote the following article for Nasdaq this week: “In Crypto, Some Trust Is Necessary — and Kraken Is Trustworthy”
The following is the intro to it:
A prominent saying in the Bitcoin space is “don’t trust, verify'“ — which means you shouldn’t trust the counterparty with whom you transact. Instead, with Bitcoin, you verify your transactions on the blockchain.
But this approach only works when you directly transact on the blockchain.
When it comes to crypto exchanges — the on- and off-ramps from and to fiat currencies — trust is important.
We have to trust that when we deposit our fiat from a bank to an exchange, the fiat is safe in the custody of the exchange until we make a crypto purchase.
We have to trust that the exchange will successfully facilitate the trade from fiat to a digital asset when we decide to make a purchase.
If we choose to leave our assets in the custody of an exchange — even for a brief time — we have to trust the exchange will safely custody the assets and remain solvent.
And we have to trust that the exchange will have our assets on hand when we choose to withdraw them from the exchange to another crypto wallet.
One such exchange that people have trusted to execute all these functions for over 10 years is Kraken.
A key difference between Kraken and an exchange like the now-defunct FTX is that Kraken was founded by a true believer in the crypto space — a crypto idealogue, Jesse Powell — and not like someone who’s only in the space for a cash grab, like Sam Bankman-Fried (SBF), FTX’s former CEO.
I’m a big fan of Kraken. I wish we could use it in New York. Maybe New York will stop being the worst for crypto in 2023. Probably not.
Best Bitcoin/crypto Podcasts of 2022
My two favorite Bitcoin/crypto podcasts this year were Unchained and What Bitcoin Did.
Laura Shin — host of Unchained — absolutely killed it on a number of levels. From the guests she brought on to the tough questions she posed, she’s cemented herself as an über pro reporter in this space. Hardly surprising, as she was the first MSM reporter to cover crypto full-time (for Forbes) starting back in 2015.
Here was one of my favorite episodes of Unchained from this year:
And if you like what Laura has to say, check out her book, The Cryptopians, which was published this year:
Also, big shout out to Peter McCormack at What Bitcoin Did. Peter has really matured as an interviewer, and many of the conversations on the podcast this year were incredibly enlightening.
Here was one of my favorite episodes from this year:
James Lavish (above) also started a newsletter this year that focuses how Bitcoin (and gold and silver) fit into the macroeconomic landscape as sovereign debt spirals out of control. You can read the newsletter here: The Informationist by James Lavish
It’s free to subscribe to.
And quick shout out to The Gentlemen of Crypto — one of the hosts of which is Isaiah Jackson, author of Bitcoin and Black America. These dudes gave me some gut laughs this year. These gentlemen bring some levity to the space to say the least.
Here’s their 2022 recap:
Some of My Favorite Crypto News Sites
In case you want to do some of your own research in the year ahead, here are some of the best crypto news sites out there.
CoinDesk - this is the big mama; best in the biz
CoinTelegraph - also a big one; real solid
Decrypt - read this more this year; into it
The Block - read this more this year; was bummed to find out SBF was bankrolling it, but got over it quickly; solid site
You might also want to check out this really cool guy’s author page at Finder. Sometimes, he writes some news for Finder and he’s a totally cool dude.
In Conclusion
To say it was a rough year not just in crypto markets, but in all markets would be an understatement.
While markets and money aren’t everything, it’s important that we understand them — especially in such tumultuous times.
Some of you may be down on your Bitcoin holdings, and to that, I’ll share the following quote from Peter McCormack:
“The first four years of investing in Bitcoin are hard.”
Anyone who’s been in the space for some time, can likely attest to how true this is. I know that I can.
But let’s zoom out for a second and look at the yearly chart for bitcoin (BTC) now that we just got our 2022 candle.
We’re still moving up and to the right. And never in Bitcoin’s 13 year history has it had two down years in a row.
(This isn’t to guarantee it won’t have a down year in 2023. I’m just pointing out a historical trend.)
So, if you’ve invested and you’re down, please know that I was once there, too. I didn’t get significantly into the green on my BTC holdings until my late in the third year I held the asset — and I did a lot of stuff wrong in my first few years investing in it (more on that in the next edition of the newsletter).
Let’s leave it here for now, though.
Once more, Happy New Year to everyone!
I’m deeply grateful for all of you and sending you all love.
Best,
Frank
Twitter: @frankcorva
