Spartan Group partners tell you that 2022 is a bear or a bull?

This article is based on the opinions published by Spartan Group partner Jason Choi on his personal social media platform. Rhythm BlockBeats compiled and translated it as follows:

I prefer to think about my decisions from the perspective of venture capital (5-10 years) because it makes me more fulfilling and more interesting. When making long-term investment decisions, I usually only consider a time frame of a few weeks or months, and today’s content mainly discusses the latter.

In November last year, I thought about the question of “what will the next bear market look like?” To put it simply, I think it is the extreme plate rotation and the rapid recovery of the panic-selling sector.

This phenomenon has continued from December last year to today: Compared with ETH, GameFi and Metaverse have fallen by 15-60%, while L1 has generally risen, and NEAR has created an increase of over 130%. At the same time, DeFi has also begun to show some recovery. Compared with ETH, SUSHI, CRV, and YFI have shown an increase of 30-40%. During this period, Bitcoin has fallen by nearly 25%, which means that the industry as a whole has not created new wealth, and the industry’s “The Game of Musical Chairs” (The Game of Musical Chairs) has intensified. In the long run, I do believe that Bitcoin’s importance to the crypto market will diminish, but not now.

Spartan Group partners tell you that 2022 is a bear or a bull?

Someone may ask, won’t the billions of new financings bring about the growth of funds in the industry? According to my experience, new capital that focuses on highly liquid cryptocurrencies tends to come and go quickly. Just because funds have the ability to do long BTC and ETH futures does not mean they have to do so. Most of the capital for guaranteed entry is deployed in venture funds, and most of the capital is used for private screen transactions. Therefore, in my opinion, the valuation of these transactions will continue to bubble up, with a seed round of financing of 5 to 100 million US dollars. Will become the norm.

In short, private screen valuations will continue to increase, while the secondary market will continue to languish. This situation may continue until the return of VC’s private screen and the return of the public market (risk premium) converge, but VC’s game of “As long as I enter the market, I can make money” cannot last too long. For VCs, this is a tricky period. Entrepreneurs in the industry will use VC funds that “must be deployed.” The risk for job seekers has become very high.

In addition, there are other reasons that prompted me to reduce my risk in December:

1. People get 50-100% gains from unheard of low market capitalization altcoins, while BTC and ETH have been performing weakly

2. The peers are very optimistic about the market, and continue to find reasons for their continued increase in positions

3. Private placement quotas for large VCs will soon be unlocked

From a purely short-term trading perspective, it is difficult for me to have confidence in most high-value tokens. Many KOLs’ shouts for these projects on Twitter also look more like attempts to instigate narratives in an increasingly “zero-sum game” industry. During this period of time, the efficiency of the market is lower than you think, especially in the small market value sector, it is very difficult to find high-quality investment, so many event-driven traders will get better than value investors income.

Of course, not everything has become pessimistic. In the long run, I am not worried about the performance of the crypto market at all. And in the short term, if my assumptions are correct, then market-wide selling should resume quickly. I really like what Avi Felman said: “The era of purely bullish and bearish has passed.”

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