The Crypto HODL “Meme” Is Complicating Markets
Chris Burniske, a partner at Placeholder Ventures, an investment group focused on decentralizing wealth, data, and power, recently took to his well-followed Twitter page to convey his thoughts on the cryptocurrency market, specifically through the lens of the Bitcoin “HODL” meme.
As you are likely aware, since “HODL” made an appearance on BitcoinTalk as a misspelling of “hold,” the word has skyrocketed to legendary status in the cryptosphere, with it quickly becoming the rallying cry for this industry’s diehards worldwide. And while “HODL” has produced some nice results, with early purchasers of BTC raking in the dough, so to speak, Burniske claims that it is actually harming this nascent market.
More specifically, he noted that until there is market completeness, a concept that states that bets on “future states of the world” should be frictionless, “hodlers will make crypto asset price stickier than anticipated.” The former ARK Invest analyst noted that as it stands, cryptocurrencies have a “strong long bias” — friction. He specifically drew attention to the shorting scene, noting that save for BTC, effectively every other crypto market produces friction via shorting. As such, he wrote that:
Friction around shorting is the biggest contributor to lack of market-completeness in
#crypto, but this is a temporary condition.
He added that right now, the lack of market completeness, coupled with this industry’s strong hands, has produced an environment rife with price stickiness, accentuated by volatility and other shortcomings of budding, early-stage sectors. Burniske even added that he expects that cryptocurrencies will “remain in an irrational state for a long time,” meaning that even useless, mundane, and copy-cat digital assets won’t fall to zero.
You may be left asking — what does this all mean?
Well, as the pro-blockchain venture capitalist noted that if market completeness “isn’t remedied” before the next, impending bull run, “2017’s bubble will look quaint.” In fact, Burniske went on to note that manipulation may be rife, as certain cryptocurrencies will begin to undergo “insane price spikes” that can only be described as parabolic. Long story short, the Placeholder partner is afraid that crypto’s current irrationality may create a harmful market environment in the near future.
Bitcoin Gravy Train Has Got Brakes
Burniske, known for his long takes on Twitter, released a number of other social media threads in recent weeks, which accentuated pertinent industry trends.
Two weeks back, the Placeholder representative took to his Twitter feed, which sports a following of over 113,000, to claim that the mainstream consciousness “has almost entirely forgotten about Bitcoin again” — touching on the public’s sudden aversion to this budding industry.
While optimists would beg to differ, Burniske’s comment undoubtedly holds credence. Last year, the words “blockchain” and “crypto” occupied the computer monitors of every consumer across Earth. Mainstream media outlets, like CNN and especially CNBC, covered the topic incessantly. And crypto-related articles occupied the Bloomberg Terminals of thousands of Wall Street hotshots. Yet, as Burniske went on to explain, this isn’t all doom and gloom though.
Cryptoassets’ author noted that there are now hundreds of thousands, if not millions of new “decision makers” that gained knowledge of the crypto industry. Moreover, the diehards, developers, investors, and forward-thinking innovators still invest capital (both human and financial) in cryptocurrencies and related ventures. The Placeholder partner, formerly of ARK Invest’s crypto arm, wrote:
“And the technologists & financial folks that feed off the bleeding edge continue to pay attention, invest, or build, just as happened in 2015.”
In another thread, the former ARK Invest executive noted that he expects for prominent projects to ship product in 2019, just like how Ethereum launched in 2015. This interestingly lines up with comments from Kyle Samani, Fred Wilson, and Travis Scher.
Image Courtesy of Marco Verch Via Flickr
