Bull Trap, or Bull Market? with Vance Spencer

Bankless Nation, we have a special bonus episode for you too today. We've got Van Spencer on. We're gonna talk about uh a question that I think has been in our minds, has been in the community's mind. Where are we right now? Is this a bull trap or a bull market? I can't tell. And there's debate on both sides. The bulls and the bears are hashing it out. Not sure if we've hit the bottom yet and are on the road to recovery, or if we've got more bottoms to hit ahead. So, David, what are we talking about today?

Yeah, so uh Ryan, I think we're gonna try and answer your question. Are we ever gonna get three ETH three digit ETH back? Uh I mean the bankless listeners will know that I am just not I don't think that's in the cards.

I don't buy it. But uh just there's some we're at an interesting inflection point in the market. Bitcoin is down 66% from the top, but up 50% from the bottom. Ether also down 66 from the top, but up 75% from the bottom. Solana down 90% currently, but is still up 200% from the bottom. Meanwhile, the L2 ecosystem is hot. OP token is at all-time highs. RPL is high as in high in ETH terms. Aptos, somehow a $16 billion valuation. So where the hell are we in the market? Are we in a bear market? Is this a bull trap? Uh is macro gonna send us a recession and this is the last time to lock in profits before we all die. I don't know. Uh, but I want to ask some of these questions to advance and just overall get an audit of the market. And so that's what we're talking about today.

Yeah, Vance Spencer. I I think it's somebody who has got a good sense of this. That's why he was the number one person who came in to mind when we were asking this question of like, uh, where are we in the market? So guys, before we get to uh Vance though, gotta share some All right, David, um what should we be looking for in this episode? You you teed us up with a lot of questions

Yeah.

in the intro here. Uh is any human being able to actually answer those questions? Are we asking too much of

Of Vance, yeah. Yes, and I hope and I think that he knows that. And so uh no no human can read the market. We don't know if we're going down up, down, left, or right uh in the well, we're definitely not going to the left. We're definitely going to the right because that's how charts work. Um but I think listeners should really kind of pay attention to like, all right, how much risk is on the table in 2023? How much exposure do I want to have? And like just think about uh positioning as we go into 2023. Uh, I think I'm a big fan of uh at the very least, 2023 will be volatile um over the year. Uh and so think about just how how much risk do you feel like taking on this year?

Good for planning purposes. Uh this episode is coming right at you. Um before we get into it, first we're gonna tell you about the sponsors that will help you go bankless, including

Bankless Nation, Vance Spencer is the co-founder of Framework Ventures, a VC firm that got his claim to fame by sticking around during the 2018 to 2020 bear market and going all in on DeFi before we even had the name DeFi, taking risks and finding gems while everyone else fled the industry. Vance, this is your fourth appearance on Bankless because, in being addition to a VC chat, you are also adept at measuring the markets, understanding metas, which is what we are looking to do here today. Vance, welcome back to Bankless.

Thanks for having me. Good to see you guys.

Cheers, always always a good time, my man. And and like we've been teasing in the intro and and just now, we're really just kind of l looking to get a lay of the land. Like what is the meta right now? Uh like because like I said, it we're kind of in this weird middle ground of being down bad but up big from the bottom. So at just the highest of levels, when you look at the global read of the market, what how are you feeling right now? Like what's your vibe?

Feeling good. Uh pretty, pretty good vibe. I I think we're just ranging. You know, I I don't think we need to

like overly classify if it's an echo bubble or a bear market rally or if

this is the start of a bull new bull run.

We're just kind of ranging between one and two thousand on ETH and you know, sixteen thousand and and about twenty five.

Like the psychological level of of where three arrows got liquidated and when FTX shut down, I think that's kind of the uh

The emotional high water mark of kind of like, you know, you need to clear that and put that behind you before you can really go anywhere. But

we feel pretty good. We're we're kind of doing what we've always done, which is, you know, number one, stay alive. Number two,

take advantage of opportunities in a market like that. And number three, you know, not get too worried about it because it's going to take a little bit, and that's okay.

all right, so let's talk about this ranging idea, right? Um I do think we're probably ranging, but let's define what that means. So by ranging, do you mean we've already seen the bottoms? Do you think we go back down to the basement that we were in with triple digit ETH? God knows, what was Bitcoin? Under 15k, uh Goblin Town, or have we seen the worst?

Um, so the bottom was 888 in June for ETH. That's the main asset that I track. Um and

You know, to be honest, when it when when that weekend happened, that was like a weekend in June, I think. Um there was so much force selling that weekend. It was BlockFi, it was

Voyager, it was all the centralized lending dress, desk trying to clear their book and reduce counterparty risk, and all the loans were getting called in. So people were selling crypto to

to return loans to these guys.

You know, frankly, there's no credit left. And so that that's not really going to happen again. Um, we've blown up Terra, we've you know blown up or or they blew themselves up FTX.

Um, you know, there's Genesis, there's Gemini, there's DCG, there's those, but those really aren't you know as big in my mind. And so

I don't know if we go back to the bottom. A lot of it is just macro dependent. But

you know, it was interesting to see ETH bottom in in June, and then all the tech stocks bottom in kind of the fall. You know, we were the first in, and it and it looks like we might be the first out as well.

Yeah, that that definitely tracks with the overall vibe of crypto always just being ahead of the game and and moving faster and just being a faster canary in the coal mine. I think the the thing that's been the most interesting to me is just looking about how the market has reacted to news. Uh the news that Genesis indeed was going to go through bankruptcy, DCG's not in the hottest position. Uh yet the market uh pumped right after that news. As soon as the news that Genesis uh was going to go through bankruptcy, the market went up like a global like third twenty, thirty percent. Uh and so when the market like doesn't react badly to bad news, that starts to give me some sort of assurances that the worst is over. How how do you feel about that take?

Um,

you know, it it's uh

anything can happen, right? He thinks it's a mid take, dude.

David.

It's a mid take. He's trying to be polite here. I don't think it's a mid take. I think um

You know, again, we're just in this range. And like, you know, if we're if we're over 1400, it's the dawn of a new bull run. If we're under 1400, you know, the bottom might not be in.

There's really no assurances or guarantees that you can get at these levels, but

I don't look a lot at macro. I look at like a few basic indicators.

One is have interest rates peaked.

Um, and if you think about 2018, the 10 year peaked in November,

the stock market uh bottomed in January, February, and crypto kind of rebottomed then as well.

If you think a lot of this is driven by interest rates and liquidity, you know, we're over, or at least I think we're over that hill, which is really positive and supportive.

But the macro is is still kind of unknown. There's a lot of, you know, potential uh, you know,

black swan scenarios call it.

And so you really can't, you know, be too confident, but

it just depends on how long your time horizon is. If you've got five or 10 years, or or you know, in our case, up to 15.

Um

These prices we we like, we've been buying, you know, it this is kind of what we're built for.

Uh

it's hard to take a short term view on crypto. And and you know, you if you need guarantees about if the bottom is in

and you only have a six month time horizon,

I don't feel too badly for you if uh if it doesn't work out because you just need to have a longer term time perspective. It just is what it is. And you know, I've been through this like three or four times now, and um

you just gotta link the mirror.

Like totally agree. Could can we just say like look, if you're if you're only planning to be in crypto and holding your positions for six months,

get out.

And I I don't mean this in a mean way. It's just like, honestly, it's just like you're gonna lose money. It's kinda like just

Like, save yourself. I mean, I've seen so many people blow up, including last year, the biggest freaking hedge funds in crypto blow up with short-term time horizons and over-leverage. I think that's got to be a key message. So, what you're saying though, Vance, is that you think maybe interest rates have peaked, okay, but like you're uncertain of other macro events, and maybe again they haven't peaked. I'm I'm going back to, I know you were there, um, back to 2018, though. 2018 and 19, you know, the most painful part of that um bear market for me wasn't actually hitting the bottoms.

Um, although March 2020 was pretty damn painful. I was like, what's gonna happen? But uh usually wasn't hitting the bottoms. It was this just long, this ranging period, this whole apathy period of like.

Nothing's happening.

Uh, like nothing's getting built, you know. Well, like at that time it was kind of existential. Are there any other apps on Ethereum that can exist here besides IP uh ICOs? And like, you know, this is the beginnings of D5, but it was so tiny that it really didn't matter.

Are you worried about that kind of