The co-founder and chief investment officer of digital asset investment firm BlockTower Capital says conditions appear ripe for crypto to continue moving higher in the medium term.
Ari Paul says on media platform
The director of BlockTower Capital highlights that crypto is currently showing no signs of increased hype and speculation, indicating that the markets are positioned for a bullish continuation.
“On the crypto ‘idiosyncratic’ side, we see very low leverage levels, neutral sentiment and healthy market positioning.
I think the pattern matching of the exchange-traded fund (ETF) approval to previous events like the 2017 futures listing are poor analogues; all of these similar events occurred much later in the bull cycle, in the context of much greater bullish leverage and hype. In my opinion, we are in a medium-term bull trend, with prices likely to be higher in six months.”
Looking at the fundamental economics of crypto, Paul say The demand from institutional investors and new users is more than sufficient to swallow up the supply on the markets.
“We are currently in a market dynamic of slow institutional adoption and onboarding new users. There are also daily outflows from mining, exchange rates, hacks, etc.
All the ‘overhangs’ I know of for BTC and ETH are quite light (such as Celsius ETH holdings being liquidated). I think demand is very likely to continue to overwhelm the market with similar dynamics to the last twelve months. Something like Solana is arguably more difficult given the amount of FTX estate that needs to be liquidated.”
According to Paul, crypto is currently as a sequel to a bull market cycle typically observed in stocks and bonds because he thinks insiders and institutions are loading up on digital assets before the big wave.
“I would say bull cycles follow a common pattern that starts with buying by insiders, then by institutional investors, then by retail. I think we’re in an early-middle institutional stage, based on the funding flows and the adoption statistics. The fourth inning of a nine-inning bull cycle. So unless we get a ‘shock,’ I expect we’ll get through the next five innings of a bull cycle.”
Paul too say that crypto doesn’t necessarily need a new catalyst to continue moving higher, which says the prevailing uptrend is enough to fuel more rallies.
“From a technical analysis perspective, we are in a medium-term bull trend, so no catalysts are needed if I correctly assess the current dynamics.
A bit like gravity in Einstein’s formulation: without force, the natural path is for objects to follow a curved spacetime. If you are in an up or down trend in the markets and there are no catalysts, your best bet is that the trend will continue for at least the next incremental time unit.”
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