What could be the next narrative to ignite the crypto bull run?

When we have begun to adapt to the rhythm of the bear market, I noticed that some people can't help wanting to quickly jump to the next market stage. But here I need to remind you to be careful, as the historical cycle shows, the bear market always has its own specific rules.

Everyone’s experience in the cryptocurrency cycle is actually not much different from the archetypes of the characters in “The Hero’s Journey”. It always takes a long time to move from “returning” to a new “adventure calling journey”. In the face of the cryptocurrency bear market, it is best for everyone to be patient and wait for a while.

Some of you may be ready for the next adventure, trying to see every possible narrative as a lifeline in a bear market. But some "supernatural" opportunities don't often appear in this market. Right now, the real world we live in is facing interest rate increases, inflation, and a series of economic wars. In this context, I feel that those opportunities that accelerate everyone to a bull market will never come to you.

Until we see some new narrative emerge, it may feel like the market is in a bearish state forever and there will be no more light. The term “market bottom” will be wiped out of our vocabulary forever because the entire market will become so stable that people will feel like a big deal when the market moves up or down 5%.

On the journey to the next bull market, we will also encounter some unskilled prophets, some of whom will even talk about some strange things called "fundamentals" that they avoided during the big bull market.

Crypto community searches for a new narrative

The irony is that we usually laugh at fundamentals when times are good, and beg the market to acknowledge their existence when times are bad. A familiar narrative recently is the "Ethereum merger."

Gather all the seven dragon balls and start summoning the dragon

While fundamentally an important event, those hoping to get rich quick with the Ethereum merger will be in for endless pain and disappointment, as things take time to develop, and such an important event will take time to be widely recognized by the market.

When people find out that the bottom they predicted or bet on is not the real bottom, most people will lose all hope. When fear turns into disappointment, and disappointment turns into lying down and dying, we may feel that we have no way out.

But when most people start to lose interest in cryptocurrencies, they don’t know that a small number of people are working day and night on innovative tools that later become the real driving force behind the next bull run through the magic of liquidity. In order to prevent our senses from being so dull in the upcoming dull period (after healthy volatility), I will explore the potential narratives that may become the tipping point of the next bull run in the following content.

The real bull market driving force comes from the macro level

For a riskier asset class like cryptocurrencies, the real bull market driver comes from the Fed's money printing press. Of course, this applies to almost all asset classes. If builders don't continue to dig deeper in the next year or two, it may be difficult for new hype narratives to drive the arrival of a big bull market. Those innovative and eye-catching narratives are important and are an important part of the industry's vision reset.

We need to embrace a new round of vision. Epoch-making opportunities do not all start from the market's highs.

Until we wait for a new innovation narrative, the trend of cryptocurrencies will mainly depend on the macroeconomic level. Therefore, when the market lacks innovation and the technical fundamentals have not changed, we need to jump out of the original circle and look outward to see if the world will change its position on this new asset class.

This has happened repeatedly with Bitcoin, which reliably changes the narrative around it every once in a while. Since the market crash in 2018, the cryptocurrency community has been shouting in unison that “institutions are coming in big time.” Institutions are indeed coming, but they are not coming when the market crashes and needs an emergency transfusion, but when everyone is bullish on cryptocurrencies.

An old post by @hasufl dives into the changing narrative of Bitcoin.
Bitcoin appears to be macro-reactive. Recent claims about Bitcoin’s “inflation hedge” being an updated “digital gold” + “non-correlated asset”.
Bitcoin is very good at promoting narrative and market fit.

Bitcoin as a technology is not going to change. Bitcoiners holding the door are like missionaries who are deftly manipulating global macroeconomic events to sell the story of the one true currency, embellishing it in the process. From payment systems, through digital gold and inflation hedges, all the way to Swiss bank cloud accounts/trusted neutral bonds.

Another credible neutral asset is Ethereum, which is getting a new upgrade. Ethereum is now mature enough and its narrative has become relevant at the macroeconomic level. Ethereum is now strong enough that it can compete with Bitcoin on a macro narrative scale. In addition, it also offers a nice yield.

Ethereum’s massive incorporation makes it strong both in terms of product and narrative.
The “productive asset” and “blue chip crypto” memes refer to the successful market run of the FANG (Facebook, Apple, Netflix and Google) stocks over the past decade.
Misunderstood in the early days, performed well in the long run.
This will be the new narrative that dominates cryptocurrencies over the next 12-24 months

As for current macro events, there is a school of thought that we are experiencing a major macroeconomic transformation caused by geopolitical events, which is a new form of interpretation of the conflict between Eastern and Western civilizations.

Obviously, bottom-up speculation about central bank conspiracies is pointless when geopolitical realignments are taking place. We are not in peacetime, we are in a war economy, which means liquidity is being pumped into building real things and less into online casinos (which is bad for crypto).

We will likely reach peak investment in bits within the next 10 years and see more investment in atoms in the future.

The premise of this line of thinking is that inflation is not demand driven but structural (supply driven) and will not be relieved anytime soon because there will be a fierce economic war in the colder parts of the economy (economy, cyberspace, etc.) Globalization is over and global trade will become fragmented.

We have heard that due to the freezing of the Russian Central Bank's foreign exchange assets, countries are considering diversifying away from the US dollar for international trade settlement. Since the US dollar is not a credible neutral currency, this is a big problem for people and sovereigns who are restricted from trading in US dollars during wartime.

I expect cryptocurrencies will attempt to spin a series of narratives around these geopolitical events. Some of these narratives may even become true for a time, because credibly neutral money is a fundamentally powerful proposition. Can the cloud kingdoms of Ethereum and Bitcoin defend their sovereignty and profit from the war like Switzerland did during WWII?

New narrative

In the past, macro narratives have typically accumulated capabilities over time, only to accelerate when they were mixed with a trigger point of new innovative technologies. Rather than relying on macro narratives, we should focus on exploring the micro narratives that are potentially relevant in the future.

The big bull run in 2021 started with the DeFi summer of 2020. The speculative feedback loop of lending (aka yield farming) was the main catalyst. After that, we had the new narrative of NFT and GameFi in the same cycle. But what other promising technologies can be the catalyst for the next bull run?

The real DeFi 2.0

While we’ve heard about DeFi 2.0, I don’t believe we’re really there yet. If there is a DeFi 2.0, it’s probably going to be a year or two away at the earliest. Here are some of my thoughts on what DeFi 2.0 might look like:

• More sustainable yields

• More sophisticated on-chain instruments, including the ability to build complex structured products

• More KYC (sounds bad, but would be nice if some zero-knowledge magic could be used to maintain privacy).

• Products that are connected to the real economy (I’m not talking about memes, of course)

• New stablecoin experiments (maybe not algorithmic stablecoins this time).

• I am still watching OlympusDAO carefully because I believe in the mission of building a crypto reserve currency independent of fiat currencies.

When the coronavirus crisis started in March 2020, I was looking for real-world applications of DeFi because I thought that with the collapse of global travel and trade, the world would move towards a local model, and we could imagine decentralized applications for local lending as a crypto extension of the real economy. Maybe this time someone will come up with a cryptocurrency model for the WIR franc.

Today, I’m curious about how we can connect DeFi to real commerce. Bridging this gap will allow DeFi to grow into a more sustainable product and Web3 native solution, rather than a purely speculation-based tool.

Web3 Business

The answer here seems to be GameFi. Due to their huge early success, decentralized applications like StepN are in a position where they have actually captured their users, but the challenge they now face is how to transform Ponzi token economics into a sustainable commercial relationship with their users.

In-game purchases, referral fees, utility NFTs, and other projects can actually turn to decentralized commerce. Of course, I haven’t seen any successful prototypes yet, but getting people to spend money on the blockchain instead of spending it on gas fees or speculation is something we desperately need.

Another rendition of decentralized commerce could be related to content production and monetization. I can imagine DAOs owning the IP for Tolkien, Harry Potter, Star Wars, and other franchises. Community-owned and operated media companies are an interesting proposition given the natural tendency of cryptocurrencies to drive capital formation.

While people are increasingly skeptical of DAOs, we need to be careful to accept that their failure rate will be no different than a typical startup or company. They can still be effective governance bodies for content production and monetization. Getting to this stage requires a Discord and Kickstarter type application because we need a flexible user experience.

The simplest implementation of Web3 commerce is actually games on the blockchain, where the items in the game are actually owned by people, and perhaps they become more important than the game. This is good for the development of games because games are built around items in different games.

Web3 Social

This is already a very hot topic and we have already done a long think piece on this. Most commentators would argue that doing “social” on a blockchain is redundant. Web3 social will attempt to separate the social graph from the platform, giving users sovereignty in the digital realm and their connections can be carried across various social venues.

If Web3 social is only targeted at the cryptocurrency community, it will likely fail. Providing ideological motivations alone is not enough, the key here is to introduce new forms of monetization, which ties into the narrative of "Web3 business" mentioned earlier. These new tools must be intuitive and easy to use.

Returning our focus to the main advantage of cryptocurrency, frictionless capital formation, I think the next era of social will likely emerge around crowdfunding and community governance. Social media is already a large platform for content monetization. Web3 solutions can broaden the possibilities for creators and their audiences.

That’s why if NFTs are intrinsically linked to the future of social media, then the next major social application will be cryptocurrency-driven. The question we need to ask is: Is the future of social media really intrinsically linked to NFTs, or is it just a gimmick?

Decentralized Science (DeSci)

According to future.com, the trend toward decentralized science sits at the intersection of two broader trends:

In short, beyond the systemic failures described in the introduction, the problems of science or academia can be described as:

1. Institutionalized academia produces career bureaucrats who optimize internal reputation (journal publications) rather than taking the risk that has historically led to innovation.

2. Funding of innovation by the scientific community is centralized, corrupt, unhelpful, and not unlike the original tinkering/entrepreneurial nature of scientific discovery.

3. Knowledge is closed source, locked behind paywalls, which concentrates data (and power) in the hands of a few major publishers.

Funding research that helps alleviate their specific problems through online communities is an interesting prospect. Necessity is the mother of invention. I see a lot of people sharing tips about health issues online, especially when modern medicine has no real answers.

Giving them the ability to fund research and potentially develop treatments for their diseases is an exciting prospect, but turning Reddit into a crowdfunding platform to power scientific discussion, research, and development seems a little off (and maybe that’s why it’s so cool).

World of Atoms

For those who haven’t yet grown up, this is a crazy proposition. I’m hopeful that it will become a narrative that spans all of the above. By “atomic world” I mean the connection between cryptocurrency and the production economy, which is a real thing.

Let’s first look back to 2018, when we realized that tracing strawberries on the blockchain wasn’t that revolutionary, but maybe it’s time to revisit some of our ideas back then, when the technology was not so mature.

Things like Energy Web are still around, and although I think it's a long shot, it's still an effort to try to implement something that even regular people can benefit from. Optimizing the grid and decentralizing the energy market is an interesting idea at a time when we're talking about an energy crisis (we probably need more cheap energy first, especially in the EU).

Due to potential synergies, we can focus on providing crypto loans to local businesses and potentially form a DAO to build physical products or produce goods (Fusion DAO).

In a bear market, nothing is truly easy to achieve, meme coins barely bounce back, and builders have to dig deeper for inspiration. But on the bright side, necessity is the mother of invention, and perhaps it’s time for crypto to look outward and try to solve real problems for ordinary consumers and producers.

Go beyond your dreams, let’s chase them together

There may be other narratives that will carry us into future bull markets as many founders are working on decentralized computing (yes, again) and other niche solutions that I can’t think of. That doesn’t mean that if things failed in the past, they can’t work in the future.

In short, we want to see the imagination of builders that wows us. We will pay attention to new ideas and new narratives that will enable us to better reimagine the future.

At the same time, it can also prevent us from being too pessimistic.