A Crypto Holiday Special: Past, Present and Future with Tony Spilotro

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2022 is coming to an end and our staff at Bitcoinist have decided to launch this Crypto Holiday Special to provide perspective on the crypto industry. We will speak with several guests to understand this year’s highs and lows for crypto.

Related Reading: A Crypto Holiday Special: Past, Present and Future with Blofin

In the spirit of Charles Dickens’ classic A Christmas Carol, take a good look at crypto from different angles, examine its possible trajectory for 2023, and find common ground between these different visions of an industry that could support the future of finance.

Spilotro: As a nascent technology, crypto hasn’t been so sensitive to the rate cycle in the past. But as it has become a bigger part of the financial system, it now follows the rules of the system more than the community would like.

We end this series with a house guest, our Editorial Director, Tony Spilotro. Dedicated to spreading knowledge and tools for anyone willing to listen, Tony keeps an eye on the market by promoting critical thinking, going against the grain and developing a methodical approach to trading.

Spilotro: I am convinced that the mainstream media are terribly wrong. In fact, the magazine cover indicator is one of the most proven ways to spot stock market highs and lows.

Tony is a proponent of the Elliot Wave Theory, which perfectly describes the trajectory of Bitcoin and crypto prices since the early 2010s. The market is about to take a critical path, but in which direction? Here is what he told us:

Q: What is the most significant difference for the crypto market today compared to Christmas 2021? Beyond the price of Bitcoin, Ethereum and the like, what has changed between that moment of euphoria and today’s perpetual fear? Has there been a decline in adoption and liquidity? Are the fundamentals still valid?

A: The biggest difference today compared to then is in macroeconomic conditions and money flows. The Fed tightening had its effect, taking the bull by the horns so to speak. Ned Davis Research had a rule, Don’t Fight the Fed and it has proven true over the past year. As a nascent technology, crypto has not been so sensitive to the rate cycle in the past. But as it has become a bigger part of the financial system, it now follows the rules of the system more than the community would like. The industry has been hit hard by the domino effect over the past few months, accentuated by the collapse of LUNA and the fiasco of FTX. But Bitcoin and some other cryptocurrencies look fundamentally sound. Given the difficulty of many stocks, the resilience of such a speculative asset class is remarkable. My belief in Bitcoin is unshaken, but like everything, will continue to have its ups and downs of investor enthusiasm.

Q: What are the dominant narratives driving this change in market conditions? And what should the narrative be today? What do most people overlook? We saw a major crypto exchange explode, a hedge fund considered untouchable, and an ecosystem that promised a financial utopia. Is crypto still the future of finance, or should the community pursue a new vision?

A: For me, time guides stories. The market will find a narrative when the time comes. The last story was Bitcoin as an inflation hedge and it performed horribly during the highest inflation in years. Stories are very often wrong, but we all fall for them again and again. The next tale will likely be too euphoric and lead to its eventual destruction as the tide of feelings turns. I return once again to a few points. Crypto is a nascent technology where we have barely scratched the surface of what is possible. Even the Internet is at the beginning of its conception compared to the road network or the railways. Crypto is a newborn in comparison. Just like the internet before it, when people don’t fully understand it, it’s easier to fall victim to larger market sentiment and narratives. The Internet bubble is a prime example. Just like all the other times Bitcoin has been claimed dead, it does nothing more than rattle the disbelievers and suck in those who are willing to believe. Sadly, I don’t think there is a financial utopia coming, but rather Bitcoin is becoming our best bet by retaining ownership rights to value. I think it becomes the digital version of money in the mattress.

Q: If you have to pick one, what do you think was a big moment for crypto in 2022? And will the industry feel its consequences throughout 2023? Where do you see the industry next Christmas? Will he survive this winter? Mainstream once again declares the death of the industry. Will they finally succeed?

A: The most significant moment for crypto in 2022 had to be the FTX situation, although arguably this would never have happened without the LUNA crash that preceded it. I think the industry is feeling the impact of the fallout strongly for the next few years and beyond. Sweeping regulation is expected to take place, eliminating many shitcoins from existence. Rules will be put in place so that no company can raise capital in the form of FTT tokens. Some innovations will choke, especially around DeFi and Ethereum. Scarcity and stronger network usage fundamentals will decouple from the rest of crypto. I am convinced that the mainstream media are horribly wrong. In fact, the magazine cover indicator is one of the most proven ways to spot stock market highs and lows. When the mainstream media starts to talk about it extensively, an extreme feeling is usually present.

Q: What was the best metric to watch in 2022, and what metrics are you tracking for 2023? We know that you based much of your analysis on the Elliot Wave theory; what can market participants expect next year based on this theory?

A: The best indicator for 2022 was the weekly Ichimoku cloud. The moment BTCUSD fell from the Ichimoku cloud, the lights went out for the bulls and a deep decline ensued. Admittedly, this happened after Bitcoin lost value, it was confirmation that the bull run was over for some time. I should have given this more weight, especially after seeing how Bitcoin fared after losing cloud in March 2020. Elliott Wave Theory fits the price patterns the crowd doesn’t often look for, like zig-zags or flats with extreme prices, and, most importantly, extreme feelings.

I’m a big maverick in general, and go by the nickname Tony The Bull, so I’m leaning globally bullish on BTC. If the crowd is bearish, I feel safer being bullish and vice versa. That said, I’m bullish on BTC for one last rally. I’ve been building the last 1-2 years of positions in anticipation of what I think will be a shocking 5 wave for Bitcoin and the total crypto market cap.

The price of BTC is moving sideways on the daily chart. Source: BTCUSDT Tradingview

Just when everyone is getting bullish again and we’ve reached ridiculous new heights, I’m going to temporarily retire Tony The Bull and turn to the biggest bear in crypto, because that’s what I think is the grand finale. since a while.

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