- Joseph Edwards, ex-research head at Enigma Securities, is now head of financial strategy at Solrise.
- Edwards, who called BTC’s rise to $60K last year, expects the token to plunge to about $18k to $20k.
- He shares 4 high-quality altcoins with long-term visions to buy when the market bottoms out.
With more than $1 trillion of market value erased from cryptocurrencies since last November, even the most bullish crypto enthusiasts have to reckon with the reality that a
bear market
for digital assets is here.
Joseph Edwards, the head of financial strategy at crypto finance firm Solrise, has been preparing for the downward price trajectory for the better part of last year.
In September, he told Insider that bitcoin could see “a deeply negative Q4” amid macro and regulatory risks as well as technical pressures. As trading volumes tapered off aggressively, he predicted that the largest cryptocurrency was headed towards the $20,000 level.
Instead, bitcoin surged to an all-time high of nearly $69,000 on November 10, which was likely driven by the approval of the first futures-based bitcoin ETF in the US and the blockchain network’s Taproot upgrade.
Just over two months since its peak, bitcoin has almost halved. The token was changing hands at around $36,000 as of Monday afternoon in New York.
“It does seem to be the case that we are in a full-on bear market now,” Edwards, the former head of research at crypto brokerage Enigma Securities, said in an interview. “It’s a little later than we were expecting in terms of seeing these sorts of declines, but it’s just a natural flow of crypto.”
Bitcoin could bottom at somewhere between $18k and $20k
In his view, the market is heading into a period of protracted declines interspersed with short-term bounces. Indeed, crypto traders have pointed out that bitcoin’s daily Relative Strength Index indicator has reached an oversold level, which suggests a short-term bounce is imminent. Many also view $30,000 as the price bottom for bitcoin.
“I think that’s optimistic,” Edwards said of the $30,000 bottom call. “I think you’re more likely to see somewhere between $18,000 to $20,000 across the entire year.”
He explains that even if bitcoin were to have another 50% drawdown, it would still be above the peak of the 2017 price level. This illustrates the cyclical nature of the crypto market where each cycle brings new highs followed by the cleansing of excessive speculation.
“The important thing is that the crypto market is going to keep building, that the lows are going to be above the previous highs, and that’s likely to continue,” he said.
He adds that keeping track of the fundraising activities of crypto VCs is another way to assess whether prices have bottomed. Despite the wild swings of cryptocurrencies in the past few weeks, firms have been amassing or investing billions in dry powder. Crypto exchange FTX launched a $2 billion venture arm, Pantera Capital is raising more than $1 billion for a new venture fund, while Andreessen Horowitz plans to seek $4.5 billion for new crypto investments.
By giving early-stage companies the capital to build, venture capital investors are almost preparing them to weather the bear market. As a result, investors would do well to wait for these crypto funds to drop off a little before scooping up discounted assets, according to Edwards.
“We did see this in early 2019 as well,” he said. “When funding starts dropping off a little, as a retail investor or as a personal investor, that’s probably when you want to buy.”
4 high-quality altcoins to scoop up when the market bottoms out
Despite the increasingly popular narrative about the decoupling between bitcoin and certain altcoins, Edwards thinks that altcoins will fall in tandem with bitcoin especially in a bear market. This has been the case so far as almost all major altcoins have experienced sharper drawdowns than bitcoin over the past week.
But that actually bodes well for investors who are willing to scoop up beaten-down tokens once they bottom out.
The key is to focus on high-quality protocols with long-term visions, according to Edwards.
“You want to see something where the appeal of it is not just what’s on show now, but what could be built on top of it, what could be built around it, or what could be built with it,” he said.
The projects that fit into his criteria are solana (SOL), binance coin (BNB), uniswap (UNI), and chainlink (LINK), which have all suffered double-digit-percentage declines over the past week but still yet to bottom out, in his view.
“We’ve seen a massive decline in the last few days, we probably will see the short-term bounce here, but I think worse has to come before you start thinking about scooping stuff up,” he added.
Aside from price declines, solana suffered its second network issue of the month on Friday, leaving traders unable to transact on the blockchain as crypto prices were falling across the board, according to The Block.
Edwards, whose firm has built several decentralized finance products on the solana blockchain, attributed the mishaps to the growing pains of a network that is still in its early stages of growth.
He also suggests that investors stay away from meme coins, which he believes are unlikely to come back to their previous highs after the cycle turns.
“These assets are just speculation so I wouldn’t want to be anywhere near any of these meme coins,” he said.
