It’s not a bear market, just a bull market pullback: Yanowitz
And why the SEC’s memecoin statement is a mixed bag, though a positive for crypto regulation
Blockworks co-founder Jason Yanowitz | Permissionless III by Mike Lawrence for Blockworks
This is a segment from the Empire newsletter. To read full editions, subscribe.
Need some reassurance after watching bitcoin fall under $80,000 last night?
We managed to climb back above that level this morning, but only slightly — at least at the time I was writing this. I hope I didn’t jinx it. ETH, on the other hand, is holding on to $2,100.
On the Empire roundup this week, co-host Jason Yanowitz explained his thoughts on the current market. For him, there are only three options: The start of the bear, the end of the four-year cycle or a simple pullback.
If you voted for pullback, then you’re right on the money.
“ I feel very convicted that this is not a bear market. So let me just [go] on the record, this is not a bear market,” he said, giving it a 20-30% chance that this marks the end of the four-year cycle and roughly an 80% chance that this is merely a bull market pullback.
Yanowitz gave 2021 as an example, citing the 56% pullback that bitcoin experienced a few years ago.
“ ETH drew down 61%, SOL drew down 67%. And a lot of other things, in the middle of the year — in the middle of what we look back and think [of as the] 2021 peak bull market — drew down like 70 to 80%. I just think people are very quick to forget that,” he said.
If Yanowitz is right — and my reporting this week is in favor of what he’s said — then the harsh truth is that pullbacks are tough and anxiety inducing, but they’re not forever.
I know it’s an utter cliche at this point, but the Brits really nailed this one: Keep calm and carry on.
And now you know.
A dose of clarity was handed over to the market last night in the form of an SEC statement on memecoins. I think, after spending some time on it, that I’d characterize this as a bit of a mixed bag, though I’m leaning towards optimism.
Let’s start with the good: The SEC actually put the Howey test to work without a lawsuit! Huge. Love this for them. It’s exactly what the industry has wanted to see — and no one had to file a lawsuit or a FOIA for this clarity.
If the collectible language sounds familiar, it’s because crypto czar David Sacks seems to have paved the way for this statement by saying, back in late January, that memecoins resembled something more akin to collectibles than securities.
SEC commissioner and head of the new crypto task force, Hester Peirce, also said that memecoins don’t fall under the SEC’s jurisdiction in an interview earlier this month.
Why is the SEC’s new stance a mixed bag? Because it now seems more likely that the industry will have to self-regulate, meaning that it’s still open season for memecoins.
The SEC isn’t totally washing its hands of them, noting that any “fraudulent conduct” in relation to the sale or the offer of memecoins is still subject to enforcement actions and prosecution by federal agencies.
But this statement did come at the perfect time: We’re starting to see memecoins slow down naturally, which could point to a focusing of market momentum elsewhere, potentially leaving memecoin hype behind.
My insight is that I think it’s okay to let them operate in their own bubble. We don’t want memecoins taking up so much space, but — bear with me here — I’m not sure I totally see them as something akin to baseball cards. However, I definitely think they’re like slot machines or something more along the lines of a crappy penny stock with no fundamentals. If people want to put their money there, then let them. The trick is to ensure that folks are well aware of the risks.
Now we only have to hope for a flight to higher quality tokens backed by fundamentals, and bam, we’re cooking again.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your day with top crypto insights from David Canellis and Katherine Ross.
- Forward Guidance: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.
- 0xResearch: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.
- Lightspeed: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.
- The Drop: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.
