Partner of Spartan Group: Thinking about the development of the encryption market in 2022 from the perspective of venture capital
Original compilation: 0x137, Rhythm BlockBeats
Original compilation: 0x137, Rhythm BlockBeats
This article is based on the opinions published by Jason Choi, a partner of Spartan Group, on his personal social media platform. Rhythm BlockBeats organizes and translates them as follows:
I prefer to think about my decisions from a VC's perspective (5-10 years) because it makes me more fulfilling and fun. When making long-term investment decisions, I usually only consider the time horizon of weeks or months, and today's content is mainly to discuss the latter.
In November last year, I did some thinking on the question of "what will the next bear market look like?" In short, I think it is an extreme sector rotation and a rapid recovery of panic-sold sectors.
This phenomenon has continued from December last year to today: Compared with ETH, GameFi and Metaverse have fallen by 15-60%, while L1 has generally risen, and NEAR has created an increase of over 130%. At the same time, DeFi has also begun to show some recovery. Compared with ETH, SUSHI, CRV, and YFI all showed a 30-40% increase. During this period, Bitcoin has fallen by nearly 25%, which means that the industry as a whole has not created new wealth, and the industry's "Game of Musical Chairs" (The Game of Musical Chairs) has intensified. In the long run, I do believe that Bitcoin will become less important to the crypto market, but not now.
One might ask, wouldn't the billions in new financing lead to increased funding in the industry? In my experience, new capital focused on highly liquid cryptocurrencies tends to come and go quickly, and just because funds have the ability to be long BTC and ETH futures doesn't mean they have to. Most of the capital guaranteed to enter the market is deployed in venture funds, and most of the capital is used in private transactions, so in my opinion, the valuation of these transactions will continue to bubble, $50 million or even $100 million in seed rounds Financing will become the norm.
In short, private valuations will continue to increase, while the secondary market will continue to slump. This situation may continue until the returns of private VCs and the public market (risk premium) converge, but the VC game of "as long as I get in, I make money" is unlikely to last for too long. This is a tricky time for VCs, entrepreneurs in the industry will take advantage of the VC money that "must be deployed", but because the current industry is too rich, many founders are opportunistic, making VC and Job seekers are at high risk.
In addition, there are other reasons why I reduce my risk in December:
1. People are getting 50-100% gains from unheard of low cap altcoins while BTC and ETH have been weak
2. The peers are very optimistic about the market, and they are constantly looking for reasons for themselves to continue to increase their positions
3. The private placement quota of large VCs will be unlocked in large quantities
Purely from the perspective of short-term trading, it is difficult for me to have confidence in most high-cap Tokens. Many KOL calls for these projects on Twitter also look more like an attempt to leverage narratives in an increasingly "zero-sum game" industry. During this time, the market is less efficient than you might think, especially in small-cap sectors, and it can be very difficult to find quality investments, so many event-driven traders will get better returns than value investors. income.
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