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The Crypto Cycle will peak in...

The Crypto Cycle will peak in...

🎣 w3.catch-of-the-week cw49

Vicktoria Klich
December 06, 2024

Once upon a time, there was a man named Michael Saylor who chirped to a little bird: “Buy Bitcoin.”

And with that, a sincere GMGM and welcome to the 🎣 w3.catch-of-the-week, the newsletter that takes away your fomo and sheds light on hard facts.

🥳 First of all, congratulations to all “lucky ones”

Bitcoiners are sooo lucky
— Lina Seiche (@LinaSeiche)
2:51 AM • Dec 5, 2024

I think we have managed not only to get the mass media to report on Bitcoin again, but also to convince the skeptics of the opposite.

Keep dreaming. Bitcoin is never going to hit $100,000!
— Peter Schiff (@PeterSchiff)
1:54 PM • Nov 8, 2019

But enough of the celebratory mood, let's get started with the most exciting topics of the week 🏄‍♀️.

🔮 When will the crypto cycle reach its peak?
⚠️ Ethereum needs to be fixed
🤨 Is DeFi actually decentralized?!
📊 State of Digital Assets DACH region

Community Survey: Where are we in this cycle?

89% of crypto investors are bullish for Q1 2025 - but what's behind this overwhelming optimism?

X (Twitter) is full of noise, this is the current state of X:

Here is the assessment of w3.wave fund manager Julius Nagel:

In a recent crypto market study (conducted on 27/11/24) by Julius Community (aka the listeners of the “Alles Coin, Nichts Muss”-podcast), clear patterns emerged in investor sentiment and strategy.

72% of respondents expect the cycle top in the first half of 2025, with Q1 2025 being the most anticipated timeframe (45%).

🤓 Only 3-4% believe we've already reached the top for Bitcoin and Ethereum.

Price Targets 🎯

Bitcoin: 80% expect BTC between $120k-150k
Ethereum: 58% predict ETH between $5k-8k this cycle
Solana: Nearly half (48%) see SOL reaching $400-500

Julius' opinion: He is also optimistic and believes that Eth will start to rise again compared to Bitcoin. He also emphasizes that in April 2025, the FTX unlocks of $Sol tokens could cause selling pressure.

Last cycle, #ETH also lagged and did not put in a new All-Time-High until January of the post-halving year.
This is fairly normal behavior for #ETH.
#ETH / #BTC should go up in 2025
— Benjamin Cowen (@intocryptoverse)
7:00 AM • Dec 5, 2024

When do I start taking profits? 💰

42% said they would start realizing crypto profits at a Bitcoin price of $120k. 80% plan to carry out the sale in 2 to 5 tranches.

Exit Strategy 🛑

27% of participants plan to convert >75% of their portfolio to stables/fiat, while 44% aim for a moderate approach, keeping 25-75% in crypto. A conservative 25% will maintain most of their positions (<25% cash-out).

👉🏽 While Julius leans towards a HODL strategy for his Bitcoin position, he intends to take profits on selected altcoin positions.

What to do with profits? 🤑

The majority (66%) plans to keep less than half of their realized profits in crypto for the long term, with 42% specifically targeting <25% for reinvestment.

👉🏽 Julius plans to rotate the realized profits into Bitcoin at a time when “it feels right”.

Which sector will outperform? 📈

The community sees significant potential in:

Solana ecosystem (35%)
Large cap memecoins like Doge, Pepe, Wif etc. (18%)
Bitcoin (12%)

👉🏽 Julius expects memecoins to maintain their momentum and outperform the broader market.

The community sentiment for the next few months can be summarized as follows:

Near-term optimism is strong, with 89% showing positive sentiment for Q1 2025
Mid-term outlook remains confident but more measured: 72% positive for H1 2025
Long-term perspective shows increasing caution: 48% positive for the full year

— Flood (@ThinkingUSD)
5:02 AM • Dec 5, 2024

The survey was discussed as part of the “Alles Coin Nichts Muss” podcast (co-hosted with Florian Adomeit). Check it out here.

How to fix Ethereum

Ethereum is facing criticism, it's time to:

The time has come...
to UNF*CK ETHEREUM.
— Omni Network (@OmniFDN)
3:08 PM • Dec 3, 2024

What are Ethereum's problems?

The scaling problem: Ethereum is facing a significant challenge: the network can currently only process about 15 transactions per second.

This limitation is causing network congestion, high gas fees, and slower transaction times.

The rollup fragmentation

With the introduction of various rollup solutions (such as Arbitrum, Optimism), a new problem has emerged: the fragmentation of the Ethereum ecosystem.

Users and their capital are increasingly scattered across isolated ecosystems, reducing the global network effect.

Omni's approach to a unified system

Omni connects all rollups to form a cohesive, interoperable network.
Developers can create applications that work across all rollups without modifying smart contracts.

If you want to dive into the technical details, feel free to do so here.

Let me explain what improvements this will bring in practice:

Unified liquidity pools across different rollups
Simplified user flow without complicated bridges
Universal gas system for seamless transactions across all networks

Wen Launch? 👀

On December 4, 2024, Omni Network launched its private mainnet, which is the last important step before the public launch.

🔮 End Goal: Omni's ultimate goal is to make every action on every chain executable in less than a second.

How decentralized is DeFi actually?

The Cambridge Centre for Alternative Finance discovered that DeFi (decentralized finance) governance is far more centralized than previously thought.

Their new analysis of the $127 billion DeFi ecosystem reveals that power is concentrated in very few hands.

Concentration of Power

The research shows extremely high levels of inequality in DAO governance:

The top 10 DAOs have Gini coefficients between 0.97 and 0.99
- Measures the inequality of token distribution: Values between 0 (perfect equality) and 1 (maximum inequality)
For comparison, South Africa, the world's most unequal country, has a Gini coefficient of 0.63

In the case of Aave, just 121 wallets control 73% of all AAVE tokens

Token Distribution Issues

While DAOs were meant to provide fair and decentralized governance, the reality is different:

Initial token distributions through airdrops appear wide at first
Within weeks, most tokens end up concentrated in a few large wallets (”whales” 🐳)

👉🏽 The problem: they have almost full control over governance votes.

Growth and Development

Despite governance concerns, DeFi has shown significant growth:

In 2018, 90% of DeFi value was in just two protocols
By 2024, this same 90% is spread across more than 140 protocols

This is also reflected in the growing number of DeFi users, which exceeded 20 million for the first time in September 2024.

How widespread are Bitcoin, blockchain and cryptocurrencies in the DACH region?

Our friends at KPMG and BTC Echo invite you to take part in the latest study (in German), which is intended to validate previous insights into digital assets.

The study is being conducted for the third time and reached more than 2,500 people last time. Let's break the record and get everyone to take part.