🚨EMERGENCY BEAR MARKET EPISODE: What to do if you're scared

Livestreamed Tuesday June 14th @ 10am EST Ryan and David cover some of the current news in the market, and discuss bear market emotions. If you need a shoulder to lean on, we gotchu fam. ------ 📣 METAMASK | The Easiest Buy in Crypto https://bankless.cc/buy ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ROCKET POOL | DECENTRALIZED ETH STAKING https://bankless.cc/RocketPool 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ MAKER DAO | THE DAI STABLECOIN https://bankless.cc/MakerDAO 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave ------ Topics Covered: 0:00 Intro 3:50 How David Feels About the Bear 7:15 How Ryan Feels About the Bear 12:15 1st Time Cyclers 20:39 Veteran Cyclers 23:23 What Happened with Prices 30:50 Where's the Bottom? 37:40 What's Driving the Bear Market? 51:32 The Bull Case for Recovery 1:01:56 Conviction, When & How Much to Buy 1:05:04 Concluding Advice 1:10:53 Closing & Disclaimers ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:16David Hoffman?

  Hang on, Ryan. Hang on, hang on. Sorry. Hold on. Sound issues.

• 0:22David Hoffman?

  Sound issues. Say something?

• 0:24Ryan Sean Adams?

  Hey, what's up?

• 0:25David Hoffman?

  There we go. Now start over.

• 0:27Ryan Sean Adams?

  Awesome. Hey, Bankless Nation. This is an emergency session of the Bankless Nation. We are recording here. We're doing a livestream because we feel like we've been through something over the past week or so. I don't think I've been hit this hard in the mouth by a bear market since like, maybe forever, but this is starting to feel reminiscent of 2018. So we wanted to give you guys the bear market survival guide. You know, haters will call this copium, David, but I think we've got some things to say. We want to go through what happened to prices recently in crypto, why it's happening, at least at a high level, what's going to happen next, and how you should play it, how David and I are playing it. David, what do we want to cover here, man?

• 1:13David Hoffman?

  Yeah, yeah, that's, we definitely want to talk about, of course, because even when people are down bad, sometimes that means the opportunities are the highest. But also, at the same time, to some degree, I think other people are just not, there's one part of the conversation, which is what opportunities are there, and then the other part of the conversation is like, some people just need like a shoulder to lean on. Some people just need to cope. And so...

• 1:39Ryan Sean Adams?

  Is that what you need, David? How are you feeling, man?

• 1:41David Hoffman?

  I always kind of appreciate the fact that markets are aggregates of human emotions. A lot of humans calculate things with their guts, with their emotions. And so when the markets are down bad, that means the people are down bad. And so there's a lot of that out there. And so we're going to try and balance out, just like, some people just need to like, go through the process of pain to get through to the other side. We're going to talk about all of those things. Thankfully, I'm the... The the son of what I think is a very talented psychologist. And so hopefully I can I can bring some mom energy into this into this live stream. But there's also the conversation that I want to get to of comparing this market cycle to last market cycle. Because, you know, same, same, but different. Why different?

• 2:27David Hoffman?

  Because it's that different that is the difference that is people, I think, are getting. You know, it's the difference of between this cycle and last cycle that really causes a lot of people, a lot of like, just like emotions, right? It's like, why did this happen? And of course, there's also just a macro conversation. Ryan and I are not macro experts, but I do think that we do know where to look. And so over the next like weeks and months, where I think we're going to talk to a lot of macro experts and get their perspective, because this, no one knows anything, like, no one knows everything. But if you talk to a lot of macro experts, we can start to paint a picture. And so I think that's

• 3:02Ryan Sean Adams?

  Well, and this isn't this isn't just crypto, right? This is inflation, this is war, this is pandemic, this is, you know, monetary, this is central bank stuff. And so I think the the analysis of this bear market requires a bit more than maybe the previous bear markets have. Ultimately, though, we want to get to a place where we're talking about how to how to rebuild, how to pick yourself up and keep moving forward, how to keep journeying west. You know, people forget, David, but Bankless was born in a bear market. I know we've said this before, but it kind of feels like home, at least for us. Not that we're excited or giddy about it, but at some level, this is a time to to reflect and develop conviction and to rebuild for the next leg up. But just a just a vibe check on you, man.

• 3:47Ryan Sean Adams?

  Like, how are you feeling this bear market? So I think that you you knew it was a bear market. I don't know, you tell me, though, David, do you think we'd come down this far and this fast? Like, and how are you feeling about this?

• 4:00David Hoffman?

  Oh, I wouldn't say that I knew it was a bear market. I think that my mind has accepted that it's a bear market in the last like three days.

• 4:07Ryan Sean Adams?

  Really?

• 4:07David Hoffman?

  Oh, yeah, yeah, yeah, yeah.

• 4:09Ryan Sean Adams?

  Like, you knew it was a bear market, but you didn't know it was a bear market capital B, like, pain time?

• 4:14David Hoffman?

  Correct, yes. Like, we were at like three, four, five months of drawdown. And this is all always about like, where's where's your reference point, right? And so from somebody that came out of the 2018 to 2020 bear, when you show me like $2,000 to $1,700 ETH price, I'm like, well, It's not that bad. And then, but then you take, you throw it down to below all time highs for the previous bear market, for the previous bull market. I'm like, okay, that's a bear market. That's what a bear market looks like. So now, now I have firmly capitulated in the fact that this is definitely a bear market. This is what a bear market looks like. I treated out a couple of days ago when Ether was going from 1700

• 4:53David Hoffman?

  down to like 1400 and even before it hit 1200 where like we've, we've talked about like with, when we ever had our, our bull case for ETH podcast with Anthony Cisano and Eric Connor and Cyrus and DC Investor, like we always talk about like the bear market, the bear market of old, the last time, the last time like prices went down, we always talked about like how it felt. And like that, this is the first time when Ether went from 1700 down to like 1200. This was the first time I was, I was like, okay, this is how it felt. This, this was how 2018 felt. Like you thought, you had a glimmer of hope, things like crypto prices would go down, they'd stabilize. And you're like, okay, was that it? You had this glimmer of hope and then it went down like another 20%.

• 5:34David Hoffman?

  And then that was on repeat. And so the, this last Sunday or like Saturday and Sunday after the CPI inflation numbers came in and crypto prices just got absolutely walloped after getting walloped, after getting walloped. I was like, okay, this, for the first time, this feels like, like the bear market that I'm familiar with. And so like, like how, how am I emotionally doing? I'm a little frustrated, I would say. I'm a little frustrated.

• 5:58Ryan Sean Adams?

  What are you frustrated about?

• 5:59David Hoffman?

  Um, it's just because like in hindsight, it makes a lot of sense. But I remember in the 2018 to 2020 bear thinking, like everyone was talking about, oh, the next crypto cycle, the next crypto cycle, the next crypto cycle is totally going to happen when the next cycle comes, when the next cycle comes. I'm like, well, if everyone's talking about the next cycle, then like, doesn't that mean that like if like market is, there's consensus on the next cycle, therefore it's not going to manifest the same way. But it totally did. Like Ether went from 400 to like 4,000 inside of 12 months. It was super fast. And then like I should have taken that into account and been like, okay, well, if it's, if we are indeed, and again, the next cycle. It's going to be a cycle, as in this cycle comes to an end. And so I didn't account for

• 6:43David Hoffman?

  the end of this cycle, Ryan. But also, at the same time, I'm like not in the game of selling ETH. So like, even though like I didn't account for it, I also wouldn't have like changed what I've done anyways. Like I've always said, like, I'll go up, I'll rise with ETH and I'll go down with ETH. So at the end of the day, I'm going down with ETH, my man.

• 7:02Ryan Sean Adams?

  Recalibrating, adjusting. Everyone has conviction, as Mike Tyson says, until they get punched in the mouth. And this definitely feels like we've been punched in the mouth and are bleeding a little bit here.

• 7:11David Hoffman?

  Yeah. How are you doing, my man?

• 7:14Ryan Sean Adams?

  You know what, David? I gotta be honest. I'm feeling pretty zen about things. Like, I'm feeling pretty stoic about things. And I gotta say, this is not the way I felt in 2018. But I don't think it's because the circumstances have changed and because it's that much different than 2018, though it is different than 2018. It's just because I've seen this play before. Like, I feel like everything that's happened, including the reply guys telling us that crypto is never going to go up again, and this time it's different, including all of the FUD around ETH and crypto and NFTs and everything else, including all of the like the fear, it's the exact same comments

• 7:59Ryan Sean Adams?

  on on repeat. And this like in 2018, I was actually unsure of my my thesis and the underlying crypto investment. So I spent 2018 and 2019 and part of 2020 trying to figure that out, like, oh shit, like, was I wrong? Did I really mess this up? And then I came out of that market with with conviction. And in 2021 and 2022, that conviction has just built up even more. And so I am at the stage where I feel unfazed by crypto prices at all, because I have such a high level of conviction. So this is kind of like, it's annoying a little bit. It's kind of like a, you know, a fly buzzing

• 8:41Ryan Sean Adams?

  around my head. I just kind of swat it. But at the same time, it's also refreshing. And I sort of feel a little bit like, do you know Eric Voorhees? Whenever you talk to Eric Voorhees, Bitcoin OG, got in like, you know, 2012 or 2013, whenever you talk to that guy about bear markets, he's just always so zen. And it's, you know why? It's because he's been through this. He's seen it. He's been through Mt. Gox. He's been, like, nothing can faze him at this point. And this time around, I feel a bit more like that. Like, I have the conviction, and I am not concerned at all. And now, hopefully, what we can do in this episode a little bit is offer some perspective, maybe offer some

• 9:22Ryan Sean Adams?

  lessons learned, because the first cycle was not like that at all for me, David. And I grew a lot in 2017, 2018, 2019. And I think some of those lessons might be helpful for folks here today. So, guys, we're gonna get into all of that. That's gonna be the bulk of the podcast. Welcome to the bear market. Before we get in, this is somewhat ironic, David, but our friends at MetaMask wanted us to let you know that they have this cool buy button. If you dare. If you dare. If you dare. It's a great way to buy ETH and buy Bitcoin, of course. You know, you're catching falling knives at this point. If you're about to get liquidated and you need gas money now, you can use the buy

• 10:05Ryan Sean Adams?

  button in MetaMask to get emergency gas money into whatever wallet you need. Guys, we're gonna get into all of that and more, of course. But before we do, we want to thank the sponsors that made this episode possible.

• 10:17David Hoffman?

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• 11:02David Hoffman?

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• 11:43David Hoffman?

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• 12:25David Hoffman?

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• 12:42Ryan Sean Adams?

  Hey guys, we are back with our bear market episode. We've capitulated, of course, both of us, David and I, we are officially in the bear market. It is known. It is known. David, let's start here, maybe with some emotional regulation, because there's two types of viewers that I think are listeners who are listening to this right now. There's people who have never been this before, it's their first time, all right, like this guy up here. And then there's people who have been here before, 2018 holders, last bear market holders, even veterans previous. And I think those two... Two classes of individuals, those two cohorts are experiencing the bear market in very different ways. Let's, let's talk about the first cohort, those that are on the first cycle.

• 13:27Ryan Sean Adams?

  If you recall kind of your first cycle and you know, how you experienced the bear market. What are these people thinking right now? What are listeners who've never been through this thinking?

• 13:37David Hoffman?

  Yeah, so there, there's the mentality of it's all over and it's never coming back. And I've been in crypto for the last six to 12 months, 12 months if you're lucky, six months if you're unlucky. And am I really ready to stick it out for an unknown amount of time? Like, how much of my life do I want to get dedicate to this thing? I was here to, because numbers were going up, but numbers aren't going up anymore and numbers are down only, so why am I here? And also, where is the light at the end of the tunnel? I don't see it. That's probably the perspective of a lot of new holders, especially ones that like, part of the conviction of older holders is they've had the time to understand fundamentals.

• 14:20David Hoffman?

  And fundamentals is where you get your conviction from, right? And so like having conviction is where you can take just beating after beating after beating because you have conviction. And so it's harder to have conviction when you came in just like six months ago. Cause like, again, it's, everyone's more comfortable when they invest in what they know. And so the new, the first cycler's are getting tested at the moment. So they're real scared, they're real scared.

• 14:40Ryan Sean Adams?

  It's like an emotional ride, more than anything, right? I mean, you, you see the numbers kind of evaporate and uh, do you know, from your, from all your psych classes and your psych training, David, like the five stages of grief? You know, I think that's what happens to you in a crypto market. And I recall all the lingering questions I had in the last, you know, crypto bear markets, like what, was I wrong? What if this never recovers? What if this time it's actually different? I know in previous cycles crypto has recovered, but what if it, what if it doesn't this time? And I literally believe I went through the five stages of grief, right? Like first it was denial, uh, it's not, it's just a dip, this is just a temporary thing. I feel like last weekend kind of smashed that idea. Um, this is, this happened so fast.

• 15:25Ryan Sean Adams?

  And so drastically, it's it's hard for people to say this is just a dip. And then in the stages of grief, there's anger, right? So you start to get mad at, oh, it's the whales playing their whales game, their whale games. And liquidating people are like, F Do Kwan, he's the reason for this. Or now more recently, like Celsius, F Celsius. And then it's like bargaining, okay? So you get through the anger stage and you're bargaining. You're like, okay, well, what if it's not so bad? What if like, you know, what if this

• 15:52David Hoffman?

  Bear market is like relief rally coming, right?

• 15:55Ryan Sean Adams?

  Yeah, there's a relief rally. There's always some piece of hope around the corner. Maybe this new legislation is good for crypto. And then you're like, oh, this is going to be way longer than I thought. And you get into that depression phase of things where it's like, oh, my God, what have I done? I've made a huge mistake. I'll never financially recover. And then you get into the acceptance phase. And that's the stage that is actually most beneficial for you during the bear run. If you can, if you can get through all of those other four stages and get to acceptance, like that's the stage at which you'll start to level up and start learning. Because then you go, okay, what have I actually learned from this experience? And how do I rebuild, right?

• 16:37Ryan Sean Adams?

  That's, that's when you can start learning, writing, trying new things, figuring out where to allocate your portfolio for the next bull market. I tweeted this earlier today. I felt smart during the bull market because I did. You feel like a genius at first, but I became smart during the bear market. And that's really what happens. And the reason it's such an emotional roller coaster is there are a whole bunch of people who came into 2022 feeling like a genius, like feeling like they were on top of the world, feeling like they were a badass crypto investor. And now this market is just punching them in the mouth and showing them that, well, things can go down too. And when they go down, they can go down drastically.

• 17:21Ryan Sean Adams?

  Any, any other thoughts for the first time, a cycler here, David?

• 17:25David Hoffman?

  Yeah, the thing, the thing that I've been feeling recently is like the, what is unprecedented at the moment is like these interest rates, right? And so this is one of the differences between last Cycle and this cycle is last cycle crypto went down regardless of like macro conditions and this cycle is different because it is going down because of macro conditions. Maybe it was going to go down anyways, but it was also like being accelerated with how fast it's going to go down because of interest rates, right? And so like that in my mind has caused me to have feelings of, oh, maybe this never recovers. And I don't like never, like never, never, but like, maybe this takes like an unprecedented amount of time for to recover, because how can crypto go up when there's when interest rates are going up and up and up,

• 18:07David Hoffman?

  right? Risk on assets don't do well in high interest rate environments. Oopsies. Sorry.

• 18:13Ryan Sean Adams?

  Do you know what's

• 18:14David Hoffman?

  Yeah, sorry, I accidentally. Do you want to stop sharing real quick if you don't mind?

• 18:17Ryan Sean Adams?

  I was gonna say, you know what's funny about that, David, is because like, as scary as that is, I feel like that's less scary than the narrative around last cycle. So last cycle in 2018, there was this narrative that crypto was useless. Ethereum didn't have any product market fit. Like, it was just a big ICO token scam. And this time, no one is disputing that crypto has some product market fit. Now it's like, oh, the macro environment will continue to crush crypto, which is a really big sea change here. And I think less scary in some ways than the previous cycle. What are your thoughts?

• 18:51David Hoffman?

  Yeah, out of 2018, I was like, oh, the ICO mania, that was is true. What the Bitcoiners were saying about the ICOs, that was correct. Like, there was nothing there. And I'm like, well, then I had to like, question myself, well, why am I here then? Because there was literally nothing else on Ethereum that was really there for a very long time post ICO mania to really get me excited. And that's just like, not true about today. Like, especially like, and this is one of the things I'm feeling, is that it felt, it felt so close. Like, victory felt so close for crypto. We had like, so much progress. Like, DeFi had such strong fundamentals. We have things that are actually like, replacing the problem of the Federal Reserve, like, like, whiplashing the market around with like, zero interest rates, like, no, raising rates,

• 19:33David Hoffman?

  and like, all of these people trying to tinker with the market. And we have solutions for all the broken, what I feel is the broken parts of the of the world economy. And like, it felt so close. But now in hindsight, I'm like, well, no, there's like, So much adoption away. So like there's the only way that we really get through this is time. Regardless of a bull market or a bear market, the prices don't matter. The only way that crypto wins is with time. And so you just have to like sit down in your convictions and get to that point of just like, I'm ready to wait out an infinite amount of time in order to see crypto because I know it will eventually happen regardless.

• 20:09Ryan Sean Adams?

  So what you just said, David, for the first timer, for the unicycler, that's the acceptance phase we're talking about. If you can cycle through the denial, the anger, the bargaining depression and get to acceptance where you're just like, hey, this is going to take some time, maybe take a while, take months, maybe take years. Then you can get to a place where you're much more rational and stoic about it. And then that is, that is how good investors invest is they remove the emotion from the situation. They become stoic. Now, the second audience that we mentioned are those veterans, of course, who are kind of looking at this. And the one thing I would encourage some of the veterans who are seeing kind of the panic and the FUD

• 20:49Ryan Sean Adams?

  and just the fear out there in the market is, hey, guys, like be patient with first cyclers. I mean, do you remember when this was you? It wasn't that long ago. You're feeling these same emotions. And I will say, I think you made this point, like even the veterans are kind of surprised by the speed of this drawdown. Is this kind of unprecedented from that perspective?

• 21:13David Hoffman?

  Yeah, to start from the beginning, like there's, there's two reasons why first cyclers, the 2021, 2022 cyclers are feeling more pain than the veterans. One is because they bought the assets at a higher price. So like, it's obvious that they're feeling more pain. They bought Ether at $2,000 or higher. Whereas the veterans bought it at like in between 80 and $500. And so like, well, literally there is actually a difference in pain there because of with the initial like cost of buying these assets. And so like, that's a source of initial pain. And then the other reason why first like earlyers also feels more pain than the veterans is because the veterans have felt it before. And so like the veterans are more emotionally prepared to say, we have been here before.

• 21:57David Hoffman?

  And like, this is just how it goes, where the first cyclists are like, the sky is crashing. Like, the world is coming down. And so like, there's two reasons why like, veterans are who they are. And the noobs are who they are. And yet, at the same time, hashtag this time is, it's different because of the goddamn interest rates, Ryan. It's the interest rates that rugged us. And so like, in 2018, when crypto, when Ether went from $1,400 down to 80, Bitcoin went from $20,000 down to $3,000, there were no interest rates. Like, maybe there was like a little, but it went away so fast. And so like, even the veterans have gotten blindsided by the speed of the macro markets.

• 22:39David Hoffman?

  And so, like, that actually is like, if you want to blame anything, like, blame the Fed. Like, they printed a bunch of money, they sent us all to the moon, and then they rugged us by raising interest rates, which was, should be expected, in hindsight, it's obvious. But also like, yeah, I kind of feel like the Fed should take some blame here.

• 22:58Ryan Sean Adams?

  Yeah, I do too, although like, the, part of the acceptance phase, I think, is coming to terms with like, the only person you have to blame is yourself. All right, so like, it is very easy in maybe the bargaining phase, to just like, point at other people and start blaming them. But like, ultimately, a good investor sees through, like, the mechanisms of the system, and, you know, makes choices and could have seen some of this coming. But let's talk about the prices then, David. So what actually happened to prices? Maybe let's start with the S and P 500 and equities, because that's telling a tale for us. What have equities looked like over the past year or two?

• 23:38David Hoffman?

  Yeah, so we, the equities markets from the peak, which happened in January, literally at the start of the year, is down 22.5% over 161 days. So is that over, is that half of a year? Yeah, that's almost half of a year, which is pretty damn, pretty damn good for a decline.

• 23:59Ryan Sean Adams?

  Yeah, under 20% is definitely bear market territory for equities. We've just crossed it.

• 24:04David Hoffman?

  And the difference here is that it's down 22% over like half of a year versus the COVID crash, which was down something like 35%, but it recovered in half of a year. And so like the pain was sharp, but then everything bounced back. And actually, people made a lot of money on that bounce back. This doesn't feel like the same. This is like, you can actually count on the market going down now, like the trend. There's always that meme, the trend is your friend. Well, Ryan, the trend is down now and it has been that way. And so like, and you can see the same thing in the NASDAQ. So here's the NASDAQ coming in at negative 31%, down 31% over 217 days. And this 217 day number is gonna, it's also true for Ether. It's also true for Bitcoin.

• 24:48David Hoffman?

  So it looks like we're just, for some reason, correlated to the NASDAQ more than we are other markets, but yeah.

• 24:53Ryan Sean Adams?

  What's funny is if you look at these charts, see if you can spot where liquidity was injected by the Fed into the market. Oh, wow, here. And then let's see if you could spot where it was taken out, right? Around this, this phase. We're going to talk about some of the macro causes, but before we get there.

• 25:12David Hoffman?

  Before we go too far, go back to, go back to the NASDAQ. You can see like, you look at that, that trend from 2019 up to 2021, like that's a decent line. And then it just like shoots up into a parabola, right? And we're like, kind of like back onto that normal like line that we are. But also that line also had quantitative easing in it as well and 0% interest rates. And so zooming out, it might show a different story. All right. Here is, here's Ether. Topped at the market at basically $4,900. And then we're, when I took this screenshot, I just don't know what prices are. Prices are super volatile right now. We are at roughly $1,200, which is down 76% in 217 days.

• 25:52David Hoffman?

  So we have 217 days of down, which is pretty damn crazy. And these are weekly candles, Ryan. So every single bar represents one week of time. That is one, two, three, four, five, six, seven, eight, nine, 10, 11 weeks.

• 26:08David Hoffman?

  Red and that was only the second half of the downtrend. And so there was some green in the first half, but the last 12 weeks has been all red, which is a record, a record of by setting by three weeks. I think the most previous record of in a row weeks for Bitcoin at least was nine. We are up to 12 now. Yeah, so here's Bitcoin 67.9% down over again 217 days. So Ether down 75%, Bitcoin down 68%.

• 26:39Ryan Sean Adams?

  How about total crypto market cap? What are you looking like?

• 26:42David Hoffman?

  Yeah, total crypto market cap is also down 68%. So down from just above $3 trillion to just below $3 trillion. And the reason why, Ryan, why the crypto market cap is down equivalent to Bitcoin, which doesn't make any sense. It should be down way worse than Bitcoin because all the liquid coins of the world go down way worse. It actually got buffered by stable coins. So stable coins are included in that, that those numbers.

• 27:05Ryan Sean Adams?

  People are rotating into stable coins?

• 27:07David Hoffman?

  Right, yeah. So even, even though some stable coins have lost market cap, like Tether has seen outflows. USDC has actually seen marginal inflows. DAI has.

• 27:18Ryan Sean Adams?

  UST lost a little bit.

• 27:20David Hoffman?

  Yeah, UST down bad, of course. DAI is losing flows as well. But yeah, the total crypto market cap is, is down 69%.

• 27:30Ryan Sean Adams?

  At times like this, David, I always like to get the big picture perspective, like the fundamentals perspective and see where this market's going. Look at, look at the bear market screener here. And this is from Messari and they've got a good tool that allows you to see some key stats like all time highs. And so here's the two assets to focus on right now, Bitcoin and ETH here. And look at this, David, we've got Bitcoin price at the time that we are recording this, 22K. And Ethereum price, Ether price of $1,200. Market cap dominance is something to take a look at. So Bitcoin now 45% market cap dominance. You expect that to probably continue to rise a little bit during the bear market, maybe a lot.

• 28:15Ryan Sean Adams?

  Ether at 15%. We'll see what the merge does to those numbers. But when people are bearish, they flee to the safer assets, the ones with more longevity, which right now is Bitcoin. And And then you look at the the time from all time high for Bitcoin and ETH. So seven months for both Bitcoin down about 768% from all time high right now. Ether down 75% from all time high. And once again, the speed at which this is happening, this kind of second leg down is pretty staggering, especially for for Ether. The cycle low for Ether right now is about 1,090. So we're not too far off that cycle low. In fact, that happened 12 hours ago.

• 28:59Ryan Sean Adams?

  So we're continuing to hit new lows. Right. And the Bitcoin cycle low just happened 13 hours ago. Just over 20K was the cycle low here. The thing I really like to do is, of course, like there are lots of other assets that are much like down bad, much, much, much more so, including Cardano 84%, XRP 90%, Solana creeping up to 90%. Dogecoin 92%, such as what you'd kind of expect. But if you look at previous cycles here, so in 2013 and 2015, the only asset really worth considering was Bitcoin. That went down during that bear market 82%. All right.

• 29:43Ryan Sean Adams?

  So once again, we are, we are now down 68% for Bitcoin during the 2013 bear market. That went down 82%. There's still a ways to go if it repeats that 2013 bear market. In the 2018 bear market, Bitcoin went down 83%. All right. And Ether went down 94%. So Ether right now, down 75% from all time highs. And in the previous bear market, it went down 94%. All right.

• 30:18Ryan Sean Adams?

  I tweeted this out this morning just because I was interested in running the numbers. If we repeated the last cycle.

• 30:25Ryan Sean Adams?

  Then Ether would hit about $280 at max pain. That's if it went down 94% from its cycle high. And it just kind of did the exact same thing as the previous cycle. And Bitcoin would hit 11,400 at max pain, which would be 83%. Now, I am not saying we get there. In fact, I don't think we will get there, right? And it's important to remember that the cycles rhyme, but they don't repeat. So we'll go down, we're going down in the same way. But the question of where's the bottom? These numbers are good to keep in mind and something to track is how far are we down from all time high? What are your thoughts on this, David?

• 31:06David Hoffman?

  Yeah, Chris Bernisky had a pretty interesting tweet that I thought was a good perspective to share where he said during the next cycle, the coming cycle, which will eventually happen because they always do. Like Ether, and let's make up some numbers here. Bitcoin will be at like $100,000, $200,000. Ether will be at $20,000. From that perspective, when you look at the current price, the current price it is at will feel pretty bottoming, pretty damn close to the bottom. And it could still go down another 50% because those both will feel like pretty close to the bottom from the perspective of the future cycle, right? So like where Ether is now, is it at $1,000? Is it at $500?

• 31:49David Hoffman?

  But maybe Ether bounces between $500 and $1,000 for like a year. And then the two years, three years, I don't know. But then it's going to go up and do something crazy because that's how cycles work. And then at the peak of the next cycle, you're not going to tell the difference between $500 and $1,000. Like it's going to, from that vantage point, that difference is going to look so miniscule. But from the current, but from the current vantage point, like $500 is another 50% drawdown. And that could happen, like that's not necessarily off the table, like another 50% drawdown. That puts us at like $600. And so it always matters, it depends on your timeframe. Your exposure and how much you're willing to lose, but like there's a case where like crypto

• 32:34David Hoffman?

  just like goes it down another 50%, perhaps that's the bottom and then it goes up 50%, down 50%, up 50%, down 50% for a really long time before the next cycle starts. So that's kind of like the perspective I wanted to share with that.

• 32:47Ryan Sean Adams?

  Yeah, we could definitely see some chop. Guys, we have a lot more to discuss, including what's actually driving this bear market from a macro perspective and also want to get into like how to play it, how to think about it, how to survive. Maybe that's the theme and we're going to get to all of those things. David, you want to say one thing before we cut to sponsors and get back?

• 33:08David Hoffman?

  One thing, a part of like the whole like emotional regulation and like checking your own sanity and something that is definitely happening right now and is probably going to get worse as prices go down is that like mainstream media and crypto haters out there are going to fud the absolute crap out of everyone. Like where like people who were crypto natives, they had the advantage when prices go up and anti crypto people has the advantage when crypto prices go down. So like mainstream media and like shitting on crypto is going is in vogue right now and it's going to become even more in vogue regardless of how even some equities are down the same percentage or even worse than crypto. Like mainstream media is going to become cool to to knock on crypto. It's going to become

• 33:51David Hoffman?

  cool to like talk about how all you crypto people like you thought it was a new paradigm. You thought your crypto assets were like going to save you. Ha, ha, ha, ha, ha. Like the people that are going to take advantage of just the cancelling crypto is that's going to happen. You're going like your friends who never got into crypto are going to like send these links to you and they're going to be like, oh, look at this, look at all these like money that all the crypto bros are losing, ha, ha, ha, because they weren't, they never participated in the bull market. So like now the shoe's on the other foot. And so like be prepared for that is like the FUD is going to come for the crypto industry. And this is partly why I wanted to do this live stream, Ryan, is like the one thing that crypto, the crypto industry has is like that other markets don't is each other. Like

• 34:35David Hoffman?

  we are really good at coming together as a community, especially when things contract during bear markets. We all can fit inside of the same room. And so while we just get absolute crap thrown at us from the outside, I just want to like warn people that this like the mainstream media is going to come to FUD crypto. So grab a buddy and grab your conviction and stay with it because like there's a storm coming of just like anti crypto narrative. Cause that's what happens when price goes down and it's to be expected.

• 35:04Ryan Sean Adams?

  Guys, get ready for everyone to call crypto a scam because that's what they're starting to do and they're going to see, see, I told you so. That is part of what you have to resist during every crypto bear market.

• 35:17David Hoffman?

  But if you stick through the bear market, you get to tell them, I told you so during the next cycle. So like, let that be the light at the end of the tunnel.

• 35:25Ryan Sean Adams?

  Yes, if, if, if that's the thing that drives you, yes. Guys, we will be right back with some more thoughts, but before we do, we want to thank the sponsors that made this episode possible.

• 35:34David Hoffman?

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• 36:15David Hoffman?

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• 36:57David Hoffman?

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• 37:41David Hoffman?

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• 38:15Ryan Sean Adams?

  Hey, guys, we are back. So we talked about the crypto bear market, how people are feeling that, what the prices look like, how it compares to previous cycle. Now, David, let's just spend a bit more time. We've alluded to this a bit, but let's talk about what's really driving this bear market, right? So the last bear market was really kind of the loss of steam, the loss of energy in the crypto market, right? People like got sick of all of the useless tokens and the ICO raises and just ran out of steam. Ran its course. This is really...

• 38:48David Hoffman?

  No external factors, just internal energy, just like the battery got drained.

• 38:53Ryan Sean Adams?

  There really weren't any external factors. This is much different. In fact, some people were doubting that this was the bear market because we actually hadn't seen crazy highs for Bitcoin or ETH yet, right? Like, a 10x from the bottom for ETH? That's something, but like, it could have easily hit 10k, could have easily hit 15k. We could have gone to like 200, 300k with Bitcoin before it was all over. And so, let's talk about the reason that, you know, I guess maybe the bubble is getting pricked a little bit with crypto and the bear market, and it's all about macro. So, we've got a pandemic, we've got inflation, we've got recession, we've got war. All of these things are tied together in this unsustainable Fed and fiscal policy,

• 39:38Ryan Sean Adams?

  and also, of course, a war. And I think these are the bad times that are really affecting crypto as an asset class because the world still very much sees crypto as a risk on asset. What do you think?

• 39:49David Hoffman?

  Certainly, yeah. And this is a part of my fear that crypto is never going to come back, which of course I do not think, but like, there's a kernel of that there. And the reason for that is because, well, crypto's never seen rising interest rates. Rising interest rates are a significant source of the bear market. And also, I'm really, really skeptical, Ryan, that the rising interest rates are actually going to work because so much of inflation is coming from rising food costs, which is on the back of rising oil costs, which is on the back of a war in Eastern Europe. And like, the Fed, the rising interest rates is not going to solve the war in Eastern Europe. And so, but this is definitely one of the reasons why, like, especially with spending.

• 40:33David Hoffman?

  Spending got through the roof because crypto assets were going through the roof, and also we send a bunch of stimulus checks afterwards. And so, there's one part of this conversation where inflation is the source of the rising interest rates, but it's also raising interest rates is not the actual solution for that. But, as you kind of alluded to, like, this is, crypto has never seen price action so dependent on the macro markets. And I think that is the big lesson that even the crypto veterans are learning in this present moment, is like, what does it mean for the Fed to raise interest rates and does it impact our markets? Turns out, even though crypto is like a completely parallel financial system, all financial systems are ultimately connected at the end of the day.

• 41:15Ryan Sean Adams?

  I very much get that concern because if this is a macro problem, like an economic problem that can't be solved very easily, right? You start to think about like the 1970s for inflation and how long did it take the US and the world to climb out of that, to get inflation reined in? I don't know, a good five years at least, maybe 10 years? You also start to think about kind of like the 1930s and you know, really into kind of the 1940s and you had jet debt to GDP ratios below actually what they are now. And you think of like COVID and the response to the pandemic being sort of like a wartime

• 41:57Ryan Sean Adams?

  level economic stimulus from a Fed and fiscal policy perspective. And it took the world a while to dig out of that trench. And so you sort of wonder, okay, if we've just sped run the 1920s, the roaring 20s, are we now in the 1930s? And that was a pretty rough era for the world. And you combine that with inflation of like the 1970s too. And it doesn't seem like there is a, even if crypto has incredible product market fit, even if crypto continues to build and continue to chug away, you have to ask yourself, how long will it take for these assets to get back in price? And I think that is the main bear case for this whole market and the reason why there

• 42:40Ryan Sean Adams?

  are a lot of people commenting, a lot of people talking about cryptos can continue to go down, it's never going to recover. If it does recover, it's going to take many, many years.

• 42:49David Hoffman?

  Yeah, that's definitely the sentiment that I've had where like I wasn't ready to call it a bear market at 1700, but now that we're down to like 1100, well, the more pain there is, the longer this thing is going to go on, which maybe to one half that scares the first cycler, but also that's a huge opportunity because if you are feeling pain... You want those numbers to like go down and stay down for a long time because that means you have the biggest opportunity to buy into those markets for the longest amount of time. So like that is something, once you can get past the pain and get calm again, you can start to realize like, yes, I get to stack ETH at like the best price possible, or your preferred crypto asset, whatever that is. On the other half of this conversation, there's the adage of, you know, don't fight the Fed.

• 43:34David Hoffman?

  And this worked really, really well when crypto prices were going up because the Fed kept on printing money. Whenever there was a market tumble, the Fed would just print more money. And so the don't fight the Fed was great for crypto assets, or all assets, like when there was money printing. But you can't, in hindsight, it makes sense now, but as soon as the Fed decided to pivot and be like, go from quantitative easing to quantitative tightening, going from 0% interest rates to 3% interest rates targets by the end of the year, you also need to not fight the Fed. And that means on the downside as much as the upside. You don't get to flip bullish just based off crypto fundamentals, just because that is part of the crypto narrative of like, you know, crypto is here to take over the world,

• 44:17David Hoffman?

  which it is, but again, it takes time, not asset prices. And so like now I'm in the mindset of this thing, these things aren't going to turn around until the Fed pivots. And what is, so really the question is, what is going to make the Fed pivot? Because as crypto gets adopted, it gets more and more integrated into the real world, not less. We don't, we don't completely decouple from the traditional financial market until crypto is significantly larger than it. And we have a long time until that's true. So like right now, I'd say like, and this is true for all markets. And this is also something that's unprecedented, is all markets, equities markets, crypto markets are all moving together. Like, they're all moving together because the Fed's raising interest rates.

• 45:00David Hoffman?

  And so, the question to ask yourself is what's going to make the Fed pivot again? So that it stops punching the market in the gut over and over and over again?

• 45:10Ryan Sean Adams?

  I think that is the big question. Like, my mental model for things is like, if liquidity is like gravity, Fed has the most mass, right? And so, it commands the most gravity. It is the sun in the center of our financial solar system. And all of the other central banks and planets and assets revolve around it. And at the mass, the level of liquidity that crypto is, it's just a tiny planet. I don't know, like, we might be Pluto, dude.

• 45:38David Hoffman?

  Yeah, we're pretty damn small.

• 45:39Ryan Sean Adams?

  Maybe Mars, right? Like, something like this. And really, if the sun decides to do something, the Fed decides to do something, we're just kind of along for the ride until crypto accrues enough mass to sort of decouple from the central banking system, which could happen, but we are a ways away from that. This is one of the themes, I think, that we're going to be exploring a lot on Bankless, though, David, which is over the next like three to six months into the bear market, is figuring out what the Fed is going to do next. So, an episode that we have coming out today on inflation with Jim Bianco is kind of his take on, you know, why inflation? When's it going to end? What is the Fed's response going to be to this?

• 46:21Ryan Sean Adams?

  Because there is the reality that the Fed doesn't want to induce Max Payne and cause another depression, right? It's going to have to turn things around at some point in time. So, what are the catalysts for that? What signs should we be looking for? And how do they get out of it? And what happens on the back of that? Those are areas that I think we want to level Bankless listeners up on. So, we'll be doing a lot of macro content over the coming weeks and months.

• 46:46David Hoffman?

  Yeah, and that episode with Jim Bianco is in three hours. So, if you're watching on the YouTube right now, come back in three hours and we're going to be asking Jim Bianco these questions pretty damn soon here. The other thing I wanted to bring up is that, like, the Fed pivoted, started doing quantitative tightening, reducing its balance sheet, increasing interest rates. Not too long after that, like, Luna crumbled. And there is no coincidence that that happened. And like now, like then crypto prices go down even more. And now it's Celsius that is being caught with his pants down. And now there's rumors that Three Arrows Capital of all places, like complete rumor, unsubstantiated. We don't know, but like Three Arrows Capital is also perhaps insolvent at this particular moment. That's what I want.

• 47:31David Hoffman?

  Yeah, like that's a, that's a great tweet, Ryan. Nice one. Oh, wow. And so this is what rising interest rates are actually supposed to do. So if you cannot, as a financial asset or a project, survive raising interest rates and you collapse because of that. This is what's called like the tide going out and we are catching people who aren't wearing swimming trunks. As it turns out, there was not enough of a liquidity base under U S T to sustain Terra. As it turns out, Celsius was not able to offer all of its redemptions. A unfortunate reality of this is it's also to do with you can't withdraw a staked ether out of the beacon chain. And so they got kind of stuck with that, but also they can't service their withdrawals.

• 48:13David Hoffman?

  And so like this is what bear, like bear markets and rising interest rates do. They flush out the fluff of the markets. They, we are currently burning the underbrush and ultimately this is healthy. So once this underbrush gets finished getting burnt, like that's when we get reduced down to our fundamentals. And that's where generational wealth is made. We are just in this like flushing out period of all the underbrush that was unsustainable that got out over its ski tips. And so like, they're like, the, the point of this tweet, Ryan, that you put together is that like, somebody's next. And like people are getting liquidated in Ave and Compound and these are all microcosm, like mini versions of these big ones. Like this is the general market flushing it out.

• 48:55David Hoffman?

  And so if you can stay solvent and if you can keep yourself over your, like on top of your foundations and also lean into like buying opportunity, this is how you make generational wealth. Just don't get out over your ski tips.

• 49:08Ryan Sean Adams?

  Yeah, I think people think that Luna and Celsius and these things are the cause of the bear market and it's like, no, it's actually a symptom, right? So what happens in these sorts of bear markets is all of the weak assets get flushed out, right? It's a real detox. And as you were just saying, David, that's what makes it more healthy on the other side is because like, unlike the too big to fail banking system in, you know, 2008, which kind of got a, you know, full prop up by the central, the central banks in the US and a complete bailout, crypto doesn't have any bailouts coming its way. So what happens to like, basically a banking system for a stablecoin like an algo meme,

• 49:51Ryan Sean Adams?

  like algo stablecoin like Luna, it gets completely destroyed. It literally goes to zero. That's what we saw happen. With Celsius, the same sort of thing is happening. Now, I don't think Celsius goes to zero. They have a lot of assets, many of which are locked up. It's not going to be the same as a Luna. I, you know, I'm hopeful that those listening, there were over a million people, David, that had deposits in Celsius, right? This is again, a case of, you know, bear market lesson, right? Not your keys, not your crypto, all right? If you're depositing into an institution, this is not decentralized finance, you don't have access or your keys, you have no idea, you're just putting it in a black box. And Celsius is, you know, moving some of it over here to earn yields, moving some over here, taking some risk you're not aware of, okay? At the end of the day, you lose control.

• 50:36Ryan Sean Adams?

  This is not decentralized finance. This is centralized finance. And so this is what happened. And, but I don't think that Celsius and all of the depositors are going to zero. Hopefully, they get some of their assets out of this. It just might take some time. But the big question is, what is the next weak player in the market, right? As you were saying, David, there's some talk of some major funds being weakened by this. There's certainly a lot of collateral that's getting liquidated by cascading prices going down and you sort of have to wonder what's going to be next. So this is definitely a time to protect yourself. So make sure that you are not in any kind of risky positions, maybe think about how to Take more custody of your own crypto assets.

• 51:21Ryan Sean Adams?

  Maybe think about where you are lending out your assets. This is certainly a time to bring all of that forward and to learn some lessons. But David, you want to switch to the recovery. Okay, so we are in kind of this bear market relapse period of time. What do you think about? What is your bull case for recovery here, right? So why are you continuing to hold your ETH? Is maybe another way I would ask that.

• 51:52David Hoffman?

  So at the risk of sounding tone deaf here. And I'm actually going to go back and zoom out just to provide some context. In the eras of high interest rates. A high interest rate is meant to increase the value of a dollar. Because the value of a dollar is decreasing. That's why we have inflation. So a high interest rates increases the incentive to hold dollars. So bond yields go up because there's more opportunity for dollar holders and bonds are a proxy of dollar holders. And also, this is why real estate is always a really good investment during recessionary periods. And in periods of increasing dollar demand, because people have to service their debts. And so they need to buy dollars to service their debts. And if you have access to dollars, like you are king.

• 52:37David Hoffman?

  When markets go down, whoever's holding cash wins the most. And so this turns into like a real estate. Real estate is a fantastic anti bear market asset. Because they're associated with cash flows. So especially rent producing real estates and like real estate assets. So like this is just a basic lesson of just market cycles. Is that like real estate owners tend to be the best like weatherers of all cycles. Because in bear markets, they have the cash flows to sustain themselves. They have the cash flows to prevent themselves from going solvent. Now, understanding that, I also want to talk about like the whole like crypto as an inflation hedge narrative. So we have real estate as an inflation hedge. There's like, there's something I learned about all this rhyme, and I'm going to connect all

• 53:22David Hoffman?

  this in the end. Crypto is like, treated as like, oh, it's an inflation hedge, Bitcoin's an inflation hedge, crypto is an inflation hedge. And then the Fed started raising interest rates, and then the crypto assets started going down in price, and people got really confused about like, wait a second, if they, if crypto assets are inflation hedges, but then the Fed is raising interest rates to fight inflation, why are the crypto assets going down? And like, I think if you think critically about this, it actually makes total sense. Because if the Fed is raising interest rates, they are trying to fight inflation, and therefore they're also trying to fight inflation hedges at the same time. So if they're trying to bring down inflation, the value of an inflation hedge should also

• 54:03David Hoffman?

  come down if they are successful. And so, in reflecting on the rise of crypto prices, like Bitcoin, Bitcoiners in the crypto industry saw inflation coming a mile away, when like the Fed saying like, oh, inflation is just transitory, the crypto industry just laughed at that, knowing that inflation is not transitory. And in hindsight, if we did know that, that they are going to increase, that would be a statement saying that they would increase interest rates going into the future, which would put a price pressure on risk on assets. And so crypto assets, they're not inflation hedges, they are just exposed to the anticipation of inflation. And once that inflation is accounted for, then the, that's like the

• 54:47David Hoffman?

  top of the crypto asset market. Does this all make sense to you? Am I explaining this okay?

• 54:52Ryan Sean Adams?

  Yeah, I think another way to say what you're saying is like, anything inflationary long term is good for a commodity deflationary fixed supply asset like crypto, right? It's good for all commodities, long term. But in the short run, I don't know if you remember our podcast we did on the dollar milkshake theory?

• 55:10David Hoffman?

  Right.

• 55:10Ryan Sean Adams?

  In the short run, because so much of world debt is denominated in US dollars, right? There's this, there's this like, this slurping effect from like, everything goes into like, the one, the dollar's milkshake. And so liquidity dries up everywhere else. But long term, if you kind of zoom out, and you like, saying that inflation of the US dollar is bad for crypto, doesn't make any sense. Inflation of fiat systems, and like, the, the

• 55:41Ryan Sean Adams?

  Basically, the loss of legitimacy of the dollar as a reserve currency is going to increase the prospects of sound money assets like Bitcoin and Ether. And anyone who says contrary, I don't think has really looked at the fundamentals of this. Now, what that does in the one-year, two-year time horizon, that's a totally different question. You have different mechanics at play. But if you zoom out and you look at like, hey, if the dollar is going like 10%, 15% inflation every single year, it's going to be good for the crypto industry. I think that's what you're saying.

• 56:14David Hoffman?

  Certainly, yeah, that's certainly what I'm saying. And as the Fed raises interest rates, what they're trying to do is they're trying to reestablish legitimacy of the dollar by making everyone like forced buyers of dollars. But like, to some degree, the legitimacy spell was already broken, probably in like 2008 and definitely in 2020, when we just airdropped a bunch of STEMI checks to the destruction of external economies that are pegged to the dollar because they didn't get any of those STEMI checks. So like, as the Fed raises interest rates, they're actually fighting all of the anti-inflation assets like Bitcoin, crypto assets, et cetera. So they are like, raising interest rates is fighting crypto assets. Now, where I was going with the real estate cash flow conversation is that cash flows,

• 56:56David Hoffman?

  when you have source of cash flows, to like, as interest rates rise, people need to buy dollars. And if you have incoming dollars from cash flows, like cash flows are everything to keep people solvent in bear markets. And like, the reason you ask, like, why am I holding on to Ether through the bear market? Because Ethereum, Ether, has cash flows. It has super strong cash flows. And so, proof of stake, staking Ether, plus EIP1559, is in a market where everyone is trying to get their hands on cash. Everyone is trying to get their hands on cash flows. Ethereum has this source of cash, which is itself, which is totally independent and totally agnostic to external market conditions.

• 57:37David Hoffman?

  And so, staking Ether, holding Ether, you get access to the cash flows from EIP1559. Now, those aren't payments to you, they're roundabout cash flows, but meaningfully the economics check out. And then you can stake that Ether and actually do get cash flows, again, in the form of Ether. And so if you are prepared to not have to sell for dollars, you have your living situation handled, you have your food and housing situation handled. Like the cash flows, the native economy of Ethereum has its own native cash flows, which becomes extremely attractive from an external standpoint. It's like, who, in this bear market, in this recession, who's got the cash? And Ethereum generates its own cash flows,

• 58:21David Hoffman?

  which is how you become a decoupled, self-sovereign economy. But that is not something that is learned in one year, two years, five years, that is learned over a very long time horizon if you can stomach through the bear market.

• 58:35Ryan Sean Adams?

  Yeah, I do agree. I think deflationary cash flows, which is something that only Ethereum really provides right now, and Ethereum is an asset, that will become the thing to have in the coming years. What has to happen first, and I think this is what's really happening is, crypto is kind of front-running the pain of even equities markets, right? It's like Ethereum down 75%, the S&P only down 22%. That's got to drop even further, in my mind. And I think crypto is kind of taking it on the chin and sort of front-running that. And again, this is getting into speculation territory. So it's kind of like moving into like David and I's wild-ass guesses, right, of what might happen. We are probably fundamentally, we are just fundamentally bullish

• 59:19Ryan Sean Adams?

  on crypto as an asset class for the next 10 years. But we're kind of prognosticating, trying to forecast based on what we think might happen over the next coming months or year time horizon. And that's where things get a little hazy. But I think crypto is front-running, all of that. I think equities will go down. And then I think, once we understand what the Fed is going to do next, we'll kind of start to paint a bottom on some of these assets. And then it comes back to, okay, what asset do you want to hold next? Because it ain't going to be dollars, because dollars are going to be inflated away. So what assets are you going to want to hold? And I think that the world increasingly will move away from other stores of value, real estate and equities,

• 1:00:03Ryan Sean Adams?

  and start to evaluate crypto based on some of its fundamentals. And in that world, Ethereum will be post-merge. It will look very strong. It will still have product-market fit, right? The internet fundamentally needs a property rights layer, okay? DeFi is fundamentally going to be an absolutely massive financial system in the future. Ether and Bitcoin are commodity assets that have sound monetary properties. If the system's don't, and so they're going to start to ask themselves, what do I want to hold? So there's one way of looking at this market right now and kind of because you're feeling the pain of the bear market, you're sort of looking at this with, I guess, not rose colored glasses, whatever the opposite of that is, like gray colored, stormy cloud glasses.

• 1:00:48Ryan Sean Adams?

  Shit colored glasses. Shit colored glasses. And you're saying like, oh my God, this is, this could be like the 1930s. Crypto has never experienced this kind of macro economic, like recessionary conditions. Look at how fast everything, like, was this a bubble after all? Was this wrong? Okay, that's the way you're seeing this market. The other way to see this market is maybe retrospectively in a few years, you don't want to be in a position of regret, but like, oh my God, this was the greatest buying opportunity ever in crypto. Like potentially the last time I get triple digit ETH ever in my lifetime, right? Lifetime of generations to come and all of my children. And I'm, look, I'm not saying this to make you like FOMO

• 1:01:33Ryan Sean Adams?

  into it. Okay. Like, that's the conviction that I have personally. And the reason like I'm super excited to hold, I'm super excited to buy a triple digit ETH, but like, that's not a conviction you should get by just listening to this, to Dave and I talk about it this episode. That's conviction you have to develop yourself. You gotta earn it. And you have to earn it. And this is when you earn it. It's during the bear market, right? So the question of like, when do I buy is sort of the question, right? So if you are, first of all, you have to get convicted. If you're not convicted, like just don't listen to what David and I say, go develop your own conviction. Okay. Just like stop the podcast and figure out what this asset class is for yourself. All right. Once you

• 1:02:16Ryan Sean Adams?

  do that, once you have conviction, then the next question you ask is, okay, when do I buy? And personally, David, I think that's kind of a fool's errand. Okay, I think trying to time the bottom is a difficult thing. The simplest, easy button approach is you dollar cost average in. It's what we've always said, just dollar cost average in. All right. If you want my take on a guess on the bottom, I think we're going to triple digits. All right. I think we're going to 80% plus. I think we might head towards 83, 85%. 90% would be the high estimate. I don't think we're getting to 95%. Okay. But these are wild ass guesses. If you don't want to like play the guessing game and go hard mode, just start dollar cost averaging in. It's a bear market. We're really close to, you know, triple digit ETH.

• 1:03:01Ryan Sean Adams?

  So like, that's, that's the question. And then the other question is like, okay, so how much should I put in? And I don't even want to begin to answer that question for anybody else.

• 1:03:10David Hoffman?

  It's an inappropriate question.

• 1:03:11Ryan Sean Adams?

  It's an inappropriate question. The answer to that question is always, this is, this is back, we're back to crypto OG lessons here, veteran lessons is, don't put in more than you can afford to lose. Okay, why? Because we could be wrong. You could be wrong. Yeah, even if you have extreme amounts of conviction, it's still a probabilistic bet. All right. And you don't want to put yourself in a position where you are like risking your food or your shelter or your family's livelihood.

• 1:03:36David Hoffman?

  Your relationships, yeah.

• 1:03:37Ryan Sean Adams?

  Right? But like, but also the answer to that question is also, I think sometimes people are like, oh, well, you know, it should be three to 5% of your net worth and that's the number. No, it's not. Look, if you're, if you're young, if you have a roof over your head, right? You're not worried as much about the future.

• 1:03:54David Hoffman?

  Ape it.

• 1:03:55Ryan Sean Adams?

  You're living at home in a basement? Like, why would you only do 5%? It's not, it's not going to affect you if you do something higher. It's not going to, you know, really be more than you for to lose if you're doing like a much higher, a greater amount. And so I don't think a specific number is right. Just make sure it's a number that it doesn't like, if things were to go wrong and if it were to zero out. All right. If, if all of this was completely BS, if the world's on fire, if crypto goes to zero, like. What would your position be?

• 1:04:27David Hoffman?

  Right.

• 1:04:28Ryan Sean Adams?

  Are you gonna be okay as a result of that?

• 1:04:30David Hoffman?

  When you buy the crypto assets, pretend that your money just got deleted.

• 1:04:35Ryan Sean Adams?

  Yes.

• 1:04:36David Hoffman?

  Do not account for it again until the bull run happens. And the only question the next is like, at what price do I sell? And so like when you dollar cost average in, pretend that money is going into a black hole and you are not able to go get that. It goes into a piggy bank. You're not able to see into the piggy bank. You don't know what's there. Pretend that you do not have that money to pay for rent or your food or to like have a nice night out with your loved ones.

• 1:05:01Ryan Sean Adams?

  Exactly. That's exactly what you should do. And then I don't know if we have any kind of concluding advice on how to survive the bear market, but like I would just go back to you like, listen to the crypto OGs and the vets, right? No margin. All right. Now you're seeing why you should have no margin crypto. Crypto is volatile enough and you want to like strap, you know, like bombs on the back of your chest and go parachute off a cliff. That's what margin is. Like, don't do that. You also realize they can always go down more than you expect.

• 1:05:31David Hoffman?

  Yep.

• 1:05:31Ryan Sean Adams?

  Like even some of the OGs and the veterans were surprised at the speed of this and like the pain. Don't play the short term games. All right. So we talked about Bitcoin and ETH down like 60, 75%. There's a lot of other assets that are like, have you looked at the dog coins lately, David?

• 1:05:50David Hoffman?

  Oof, I don't know.

• 1:05:51Ryan Sean Adams?

  Right? It's, there's a lot of pain out there. So these are some of the veteran lessons and I think we're kind of hearkening back to some of that old advice of like, buy, hold, dollar cost average in, just survive. The game of crypto is all about survival. What else would you say, David?

• 1:06:07David Hoffman?

  Yeah, like I said at the start of the stream, I'm, one of the most fascinating things to me is the relationship between the state of the markets and the state of human emotion. And when you can regulate your emotions, when you can become mindful and get yourself like just bare down your teeth and grow some grit and buy into that pain, that's when you are like god mode over your own state of mind. If you can buy into your own pain and DCA in while you have fear, that's, that is how How you balance those things out. So you are scared, yet you are still buying. Again, if you are in the appropriate financial position to do that, do not put yourself in financial stress because then you only get more scared and then things get whack.

• 1:06:49David Hoffman?

  And so there is a nice relationship between just, who's that quote? Winston Churchill made that quote, "If you're going through hell, keep going." The way that I interpret that is like, if you're scared, if you're down bad, but you keep on going. You pick yourself up every single day, you tuck away your savings, you dollar cost average in, and all of a sudden, that pain turns into euphoria on the other side of things. So like, accepting the pain, dollar cost averaging, getting yourself exposure during times of pain, turns into times of jubilation on the other side of things because you earned it. And so like, you can learn to feel good in the pain because it's about hard work,

• 1:07:30David Hoffman?

  and it's about grit, and it's about getting through to the other side where there is spoils eventually, if you get through it. The other thing I highly recommend to do is grab a bear market buddy. I grabbed a bear market buddy in 2018. His name's Ryan Sean Adams, and we made bankless in the bear market. So like, go do something. Like, in addition to like dollar cost averaging, go build something. Like, learn to do something in crypto. You're already community members, so like, become a community manager. Like, learn how to write, do something cool, and do it with a squad of people. Find a Telegram group, become familiar with the people in there, grow some bear market buddies, because like, you're gonna make it through to the other side. It's gonna be more enjoyable if you have a squad to do this with.

• 1:08:15David Hoffman?

  And so that is the other advice that I would have for all the listeners that are flying solo, and they have not yet found their bear market buddy, find your bear market buddy.

• 1:08:23Ryan Sean Adams?

  I think that's a great way to close things out. Then in the bear market survival episode, I'm reminded of something that Marc Andreessen said in our podcast recently is, "Stop pursuing happiness, pursue satisfaction." Okay, satisfaction, that is a job well done. That is something that has taken pain, sweat, you know, sleepless nights, but that you've earned on the other side. And so many people, I think, see those during, people in crypto during the bull runs, and they say, "Ah." Dude, these guys just got lucky.

• 1:08:56David Hoffman?

  Right.

• 1:08:56Ryan Sean Adams?

  All right.

• 1:08:58Ryan Sean Adams?

  And there's an element that's true for people who've been there for six months to a year. Okay.

• 1:09:01David Hoffman?

  Let me tell you, I did not feel lucky in 2019. Did not feel very lucky then.

• 1:09:07Ryan Sean Adams?

  I mean, we're all like, from a macro perspective, we're, look, we're all lucky. We're living, we're breathing, we're in this time, we're in this place. So we're all lucky, yes, but we are also earning it. And during the summer of 2022 and beyond, in this bear market, this is where you earn it. So when crypto and ETH go to 10K and Bitcoin goes crosses 150K on its way to 200K, when they say you got lucky, you'll be able to say, no, I earned it. All right. During the bear market is when you actually earn it and it feels good. It's not happiness, it's satisfaction. On the other side, when you bet on things you're convicted about, and again, you gotta be convicted, right? I'm not saying go double down on like a dog coin that is down 90% just because it's down 90%.

• 1:09:51Ryan Sean Adams?

  I'm saying reestablish your fundamentals. Don't look at YouTubers for the next great idea. All right. Even though this, this is on YouTube right now.

• 1:10:00David Hoffman?

  The cringe face YouTubers.

• 1:10:01Ryan Sean Adams?

  Right. But like, go develop your own conviction, do your own research. That was a thing we used to say in crypto. People don't say that anymore. Okay. Do your own research, develop that conviction, double down on that. Don't risk more than you can afford to lose. And if you come out on the other side and you were right, that's where you get not happiness, but actually satisfaction. And that's where you earn your crypto gains as a, as a holder. And we'll be along with you for the ride. Okay. Bankless ain't going anywhere. We were born during a bear market. We got a newsletter, goes out six days a week. Make sure you subscribe to that. We got a podcast, we're doing that at least four times a week, David. As the Bankless Podcast, you're listening to that right now.

• 1:10:43Ryan Sean Adams?

  And of course, YouTube, it's feeling like every damn day we're doing a YouTube episode these days.

• 1:10:48David Hoffman?

  We're doing one in three hours.

• 1:10:49Ryan Sean Adams?

  Subscribe to that. Yeah.

• 1:10:50David Hoffman?

  Come back in three hours.

• 1:10:51Ryan Sean Adams?

  Absolutely. Make sure you like and subscribe. David, anything else before we close this on risks and disclaimers?

• 1:10:57David Hoffman?

  Yeah, just, just to reiterate, like, I remember in 2018 to 2020, like, everyone was just so scarred by tokens. There was this anti-token like narrative. I'll never touch another token again because it literally went to zero. And then you know what happened next, Ryan?

• 1:11:14Ryan Sean Adams?

  Tokens went up, David.

• 1:11:15David Hoffman?

  Some tokens went up.

• 1:11:17Ryan Sean Adams?

  Some of them.

• 1:11:18David Hoffman?

  And they did some astronomical numbers even by today's standards. And so like Link, Ave, Synthetix did like 100 X's during the bear market. And so if you dare, there are opportunities out there. You just have to go and find them. And the cool thing is in bear markets, Ryan, it's actually easier to find opportunities than it is in bull markets. Because there's less noise, the space is less crowded, there's easier to access information asymmetries. And the only way you access those information asymmetries is if you stick around during the bear and also grab a friend because it's easier to find information when there's two of you or five of you, or however many big your squad is.

• 1:11:55Ryan Sean Adams?

  Absolutely.

• 1:11:56David Hoffman?

  So there's riches in the bear market.

• 1:11:59Ryan Sean Adams?

  Grab a friend, grab a community. As Van Spencer said on a recent podcast, you got to measure your progress trough to trough. Not peak to trough, that's what you're looking at right now. It's like those highs I'm off, you got to do trough to trough. And we are still up from the last trough and I believe we will continue to be. Risks and disclaimers, of course. None of this has been financial advice. As we always say, Bitcoin is risky, so is ETH, so is all of crypto. You could definitely lose what you put in, but we're headed west. This is the frontier. It's not for everyone, but we're glad.