Summary:
- Tom Loverro has recommended crypto investors have enough cash to get through the next 30 to 36 months.
- According to his analysis, the crypto markets could go lower in 2022 and be flat in 2023.
- He warns that previous Bitcoin and crypto cycles are not a determinant of the future of the markets.
Former Coinbase Board member Tom Loverro has recommended that crypto investors ‘have enough cash for the next 30 to 36 months.’ Mr. Loverro shared his insights through a Twitter thread, which can be found below, that started with him explaining that Crypto Winter is here.
Crypto winter is here ❄️. I was on the @Coinbase board until 2021 and led its Series D for @IVP. I’ve lived crypto cycles since 2013. Here are my predictions on how and when this crypto winter will end, and how to emerge stronger. 🧵👇/1
— Tom Loverro (@tomloverro) June 28, 2022
2022 Crypto Will Go Lower. 2023 Will Be Mostly Flat.
He forecasted that for the remainder of 2022, the crypto markets would most likely go lower, with next year being primarily flat. According to his analysis, the crypto macro environment should improve in the second half of 2023.
Many VCs and Crypto Investors Expect a Quick Rebound.
Mr. Loverro further pointed out that the crypto drawdown this time might differ from the Coronavirus crash of March 2020. He cautioned that VCs and crypto investors expect a quick rebound due to this fact.
However, the ongoing interest rate hikes by the US Federal reserves might skew the time it takes to find a Bitcoin and crypto bottom. He explained:
Many VC & crypto investors suffer from recency bias, expecting a quick rebound b/c that’s what happened after the 2020 Covid black swan. This bear market isn’t a black swan; it’s the result of rising interest rates. So these investors will suffer until rates stabilize.
Going from crypto peak to floor has historically taken ~12 months. I expect that pattern to play out again, give or take. btc’s peak was Nov 2021.
A Bitcoin and Crypto Bottom Will Take Many Months, Will Rebound When Retail Discovers Novel Apps and Use Cases.
He believes it might take many months to find a Bitcoin and Crypto bottom. He also forecasted that a bottom would occur when retail users discover novel apps and use cases. He added:
Human psychology will influence this timeline. Crypto price movement is still driven by retail investors seeking novelty and momentum. Those investors are seeing neither right now…
Crypto will rebound when retail discovers novel apps & use cases, esp those enabled by innovations at the protocol & dev infra layers (txn costs, easier to build).
Crypto will come back bigger than ever
It is with the above context that the former Coinbase board member has recommended that crypto investors have enough cash to get through the next 30 to 36 months. He also suggested ‘sufficient faith to survive the winter without wavering or chasing new and non-crypto directions.’
He signed off on a note of optimism, stating that ‘Crypto will come back bigger than ever.’