Muse #18: Thoughts on Bear Markets, Cycle Peak, and Reflections

My Unfiltered Thoughts

First off—this isn't me calling the top. I'm not trying to time the market, and you shouldn’t sell your bags just because you read this. Consider this more of a cautionary reflection. Second, this is a personal reminder: not to HODL through the bear market. I made a vow not to repeat my 2022 mistakes. This is my second full cycle—I entered in 2020 post-COVID—so while I’m no expert, no millionaire, and definitely not driving a Lambo, I’ve seen enough to understand how brutal bear markets can be.

Despite actively following the market back then, I still got caught offside by the 2022 bear. Funny enough, I even tweeted on December 9, 2021, noting that a price drop below STH RP likely signaled the start of the bear market—though I can't find the tweet now. I do have screenshots, but I don’t add images in Muses, so that’ll pass. In hindsight, that was the top—not the absolute peak, but close enough that selling then would have put you ahead of those who held on longer. As Arthur Hayes says, “He who sells first, sells best.” Did I sell? No. I finally capitulated in late January 2022, rotating into coins I thought would hold value. But the truth is, I didn't fully believe the bear was here—not yet. Looking back, the signs were obvious.

I never felt comfortable holding metaverse and gaming tokens like AXS, SAND, and MANA. The hype had faded, and I knew I should sell. That was the right call—except I rotated the profits into AVAX, SOL, ATOM, and NEAR. And, well, the rest is history. It wasn’t until March 2022 that I fully realized we were in a bear market. In hindsight, I should have sold then. I would have gotten a better exit—though I still would’ve lost money. But instead of cutting losses, I did the opposite: I doubled down.

I had already been DCA-ing since January, but I ramped it up in March, thinking I was buying the dip. I bought: AVAX at $113 (now down -76%), SOL at $170 (now +12%), ATOM at $32 (now -86%), NEAR at $15 (now -78%). And that’s after they recovered. Later that year, those coins would drop over 90%. I finally stopped DCA-ing in May after the Terra Luna collapse—partly because I got rekt trading futures, but also because I started questioning why I was blindly HODLing through the bear market like everyone said to. I had run out of cash to invest and realized I was making a mistake.

In hindsight, selling during the Terra Luna crash still would’ve been a decent exit. What followed was absolute carnage. The market collapsed, Bitcoin went searching for crude oil, and altcoins got obliterated. Every day was red. Every piece of news—bullish or bearish—was just an excuse to dump further.

I kept researching throughout the bear market and gradually lost faith in everything I was holding—except Solana. By August, I finally pulled the trigger and sold everything. We had just come off 3AC’s liquidation, which nuked the market and sent BTC down -37% in a month. I was terrified. When we got a relief pump in July, I took advantage of it and decided it was time to walk away.

Another factor was the Merge. It was set for September, and I had read an Arthur Hayes piece predicting that ETH would sell off into October because of it. I was a fan of Arthur’s takes (still am), and even though I didn’t hold ETH, I figured—if ETH dumps, what happens to my altcoin bags? Arthur had been spot on throughout the bear market, so I took his advice (despite the not financial advice disclaimer). That turned out to be the right call. The next few months were brutal—BTC crashed to $16K, SOL hit $8. It was hell. I was relieved to have exited before things got worse.

I don’t regret selling. If anything, I regret not selling sooner. Most of those tokens never recovered—even three years later. The only exception was Solana. But even that is just +12% from my entry. In crypto, that’s the pump of ants.

Now that the preamble is out of the way—I'm starting to get the same vibes I had in early January 2022. That wasn’t the absolute top (the market had peaked two months earlier in November), but in hindsight, it was still a great time to sell. I knew the bear market had started, but I kept telling myself it couldn’t be.

The gaming/metaverse narrative was just kicking off. Facebook had rebranded to Meta in October and was diving headfirst into the metaverse. Crypto had just crossed $3T in market cap—surely the next stop was $5T. At the time, BTC at $100K felt inevitable. If you ran a poll on Crypto Twitter, 80%+ would’ve said BTC was hitting $100K in 2022. We had just set a fresh ATH at $69K, and the sentiment was that this was just a pullback before the next leg up.

The hopium was strong: Fibonacci extensions were all pointing higher. Plan B’s Stock-to-Flow model was gospel, predicting a cycle peak of $150K—he was practically worshiped. Pi Cycle Top Indicator said we were about to enter the banana zone, mirroring 2013 (Rekt Capital was a big proponent of this). Fractals comparing 2013 to 2021 suggested we were just getting started. On-chain metrics were flashing bullish across the board. Fundamentals were strong, and the general belief was that the party would continue.

But as we know now—it didn’t.

There were a million reasons why BTC should have gone up—the halving, macro tailwinds, adoption narratives—yet, despite all of that, BTC didn’t go up in 2022. Unfortunately, I drank the Kool-Aid just like everyone else and ended up on the wrong side.

Think Bernstein’s $1M BTC predictions sound wild today? You should’ve seen what Cathie Wood, Michael Saylor, and Anthony Scaramucci were calling for last cycle. Pure outrageous numbers. And none of it came to pass. Mind you—these weren’t random Twitter accounts. These were some of the loudest voices in Bitcoin and crypto. Willy Woo was saying we’d go higher. Su Zhu and SBF were saviors of the industry. Peter McCormack and others were max bullish. And guess what they all had in common? They got BTC price predictions wrong. None of them predicted the bear market. All of them got caught off guard.

And today, the same types of people exist—just look around Crypto Twitter. I won’t name names, but just know this: They will all be wrong someday. They will never predict the bear market. They will be caught off guard—just like last time. If you drink their Kool-Aid like I did last cycle, you’ll be caught off guard, too. Think for yourself.

In my 2025 predictions, I explained why you’ll never hear bearish calls from influencers or KOLs (as they’re called today). They have zero incentive to tell you prices will go down. Who’s going to buy their bags if they turn bearish? Where will the hopium come from? They need to keep the bullish narrative alive to grow their following and close deals. And let’s be honest—it’s a bigger flex to call BTC from $16K → $100K than it is to call it from $69K → $16K.

You’ve probably seen those charts with annotated tweets—

“See? I called BTC at $16K! Look where it is now.” If BTC is heading to $250K as many believe, it makes sense to be bullish now—

Make bold calls, take screenshots, and farm clout later.

Call $50K, and if it happens, you can still flex—

But nobody will care much. Instead, they’ll be salty because their bags are still underwater.

If you’re wrong, you’ll get dragged.

But if you’re wrong on a bullish call?

Say BTC hits $150K instead of $250K—who cares?

We all made money. Even if BTC stops at $75K, your $150K call isn’t "wrong"—it just hasn’t happened yet.

Because in crypto, “just wait” is always an option. The people who called $100K BTC last cycle eventually got it right—four years later. But here’s the problem with that reasoning: most people aren’t just buying BTC.

They’re looking at BTC and then making a bet on something else—an altcoin as a beta play.

• If BTC goes up → The market is strong, my bags should pump.

• If BTC goes down → Those beta plays get wrecked.

BTC eventually recovers. Most altcoins don’t. I made this mistake myself. I analyzed BTC, then bought AVAX, ATOM, SOL, and NEAR instead. And I’m convinced that’s exactly how the rest of the market plays it. It’s nothing new—TradFi investors use the S&P 500 as a benchmark before picking individual stocks.

Crypto traders do the same with BTC—except altcoins don’t have the same recovery odds.

When it comes to TradFi investors—or as crypto calls them, "institutions"—they finally showed up this cycle in the form of ETFs. You might find a handful of bearish takes on CT if you look hard enough, but you will never see a TradFi institution publicly make a bearish prediction. Do you really expect Larry Fink (BlackRock) to go on CNBC and say, "BTC is only going to $75K this year"? Or for Matt Hougan (Bitwise) to publish a bearish report on Bitcoin? Lol, forget it.

Even if that’s what they think, they will never say it. Because they have a product to sell. The ETF business is asset management, and selling hopium is part of the game. Just like CT influencers, they need to keep the optimism alive—it’s all about financial incentives.

So far, I’ve touched on three key themes:

1. Making up your own mind.

2. Too much good news, yet price refuses to follow through.

3. Outrageous price predictions.

In each cycle, the patterns repeat. Circling back to my second point—this cycle’s big narrative is AI. If you’ve been around, you’ll recognize the pattern. AI today mirrors the metaverse hype from the last cycle—both narratives exploded in Q4 and cooled off in Q1. In fact, the metaverse felt more tangible than AI does now. Remember when Mark Zuckerberg rebranded Facebook to Meta and pivoted the entire company? That wasn’t just marketing—it was a massive shift. AR/VR glasses were everywhere, virtual land was selling for millions, metaverse games were booming, and Zoom meetings were supposedly moving into digital worlds.

I can’t help but wonder how today’s AI moonboys would have reacted if they had lived through the metaverse frenzy. Billions flowed into the sector, with giants like Apple, Meta, and Alibaba making major bets. We all saw how that played out. All that hype evaporated as soon as prices started falling in January of the following year. Reality set in—people realized none of it was real, or at least, it wasn’t going to take over the world anytime soon.

Then came Meta’s wake-up call—a -33% drop in February after missing earnings. That was just the beginning. The stock went on to lose -75% in 2022, marking the death of the metaverse trade. Of course, Meta has since recovered, surging +700% from its December 2022 bottom, but by then, the damage was done. Right now, Nvidia (NVDA) is to AI what Meta was to the metaverse—the face of the hype. And just like Meta’s collapse marked the turning point for the market back then, NVDA’s inevitable reckoning could be the moment that flips sentiment on AI and sends markets into a real bear phase.

NVDA dropped -11% last month after the DeepSeek news but has already rebounded +7% this month, making January’s dip seem insignificant. But despite the recovery, I still believe NVDA’s "Meta moment" is inevitable. At some point, people will realize: Wait… this AI thing isn’t as real as we thought.

And that moment will set the clock for the bear market. Importantly, this won’t mark the top. By the time it happens, prices will have already pulled back, convincing people it’s just a normal dip before the next leg up. But in reality, that’s when the bear market starts. The first sellers will be the ones who escape unscathed.

I don’t know when it will happen, but I’m confident it will. And it might not even be NVDA—it could be another major tech company. Whenever it happens, whoever it happens to—that’s your cue to walk away.

Despite the NASDAQ and S&P 500 fully recovering from the DeepSeek saga—up +3.2% and +3.5% for the year—I still believe 2024 will be more muted than the last two years. The S&P 500 has averaged ~25% annual returns over the past two years—an outlier in historical stock market performance. I’ve projected a more reasonable ~15% gain this year (you can read my full thesis here).

Meanwhile, Bitcoin is becoming increasingly correlated with equities due to the influence of ETFs. The days of BTC trading purely on crypto-native cycles are fading—BTC is macro now. I covered this shift in depth in my 2025 predictions. How Does BTC Perform in This Environment? The level of weakness in BTC right now is starting to concern me. Think about it—we chopped sideways for 8 months last year, finally broke out for two weeks, and have now been stuck in another sideways grind for the past two months. Classic technical analysis would call that a sign of exhaustion—the bull market is either losing steam or already over.

After 8 months of consolidation, BTC should have exploded higher. If you went back and read the predictions from last year, you'd think we’d be sitting at $150K+ by now. Instead, here we are at $96K, struggling to gain momentum. If you had been in a coma all this time and woke up today, and someone told you BTC consolidated for 8 months, what price would you guess? Certainly not $96K. It’s surprising. Honestly, I’m shocked.

When predictions start missing the mark or price fails to meet consensus expectations, it becomes a problem. We can’t all be wrong at the same time—and if we are, then something fundamental has changed. I’m not saying we’ve peaked just yet. I don’t think the stock market has topped, either. We likely still have another +15% rally this year, and since BTC is increasingly correlated with equities, it should trade higher, set a new all-time high, and align with my 2025 projections.

If the stock market has already peaked—or is about to—then BTC has likely peaked as well. It might not be obvious yet, as price is still ranging and showing signs of strength. But the moment equities start selling off, say goodbye to $90K support—that’s the gateway to an official bear market, and from there, it’s nothing but carnage and pain, just like 2022. That’s not my base case, but the longer we flirt with $92K, the higher the odds of $90K breaking, triggering a nasty price collapse. What I’m saying is: that either BTC already peaked at $109K, or it’s about to. We might have one last pump left—the final cycle top, the ultimate bull trap, the move that convinces everyone, "We are so back."

Except, in hindsight, that’ll turn out to be so wrong.

What happens to our altcoin bags? With most altcoins already down 50% or more from their recent highs, there's a strong chance they’ve already peaked. In fact, the odds that alts have topped are even higher than BTC’s. Even if BTC gets one last pump, I doubt most altcoins will follow suit and set new all-time highs. Sure, they’ll pump—but probably not enough to break past their previous peaks. So, if you bought the top, the harsh reality is that breaking even might not be in the cards.

At this point, you have two choices:

1. Cut your losses now while it’s early—because trust me, if this is a bear market, things can get way worse from here.

2. Sell into any major pump—before liquidity dries up completely.

And yes, you know exactly which tokens I’m talking about—memecoins, AI agent tokens, all the high-beta plays. I know I made big predictions about them in my 2025 outlook, but based on how markets are evolving, I’m starting to walk that back a little.

Last month was packed with good news, yet the market barely reacted. In fact, some might argue it was one of the best months for crypto in a long time, yet BTC only managed a +10% gain while the rest of the market bled. Travis Kling compiled a list of all the major positive developments—you can check it out here. This kind of price action is a classic sign of market weakness or an early-stage bear market. When good news fails to push prices higher, but bad news sends them tanking, it's a red flag. It gets even worse when both good and bad news trigger sell-offs—or when even neutral news causes panic selling.

We’re getting dangerously close to that phase.

For what it’s worth, the bear market could already be underway—we just don’t see it clearly because we keep using BTC as the benchmark. But that can be misleading because a huge part of the crypto market isn’t even buying BTC.

Take Total 2 (the market cap of all crypto assets excluding BTC). It’s already down -27%, even though the total crypto market cap is only down -16%. During BTC’s 8-month range last year, Total2 dropped -33% but managed to recover and set new ATHs. If we look at Total3 (which excludes both BTC and ETH since they have TradFi’s blessing via ETFs), the picture gets even worse. Tota l3 declined -32% while BTC went sideways and is already down -24% from its recent top. So while BTC itself might not be screaming “bear market” yet, the rest of the market definitely is.

If we take it a step further and analyze "Others"—the market cap of everything outside the top 10—we get a clearer picture of where the majority of crypto traders and investors are actually positioned. The top 10 itself doesn’t change much; it’s relatively stable and, frankly, a bit boring. Sure, rank #6 might flip #5 occasionally, but we rarely see entirely new entrants breaking into the top 10 and holding their spot for long. When they do make it in, they usually don’t last—the market eventually resets to how things were before their arrival.

If you look at the top 10 today, it’s mostly boring assets that CT barely trades or invests in. BTC and ETH are in a league of their own. USDT and USDC are stablecoins. stETH is just a derivative of ETH. That leaves XRP, SOL, BNB, DOGE, and ADA—and let’s be real: ADA, DOGE, and XRP have historically seen little action. XRP and DOGE have only moved recently due to speculation around the U.S. elections. BNB and SOL are the only real exceptions—and if we’re being honest, only SOL truly stands out. The point is that most of the action happens outside the top 10.

That’s where the narrative rotation game plays out—the L1 wars, AI agents, memecoins, L2s—you name it. It all happens outside the top 10. Crypto has always thrived on this game, but this cycle, it’s become even more pronounced with the rise of Pump.fun and the explosion of memecoins. The reality is that most crypto proponents trade and invest outside the top 10 because that’s where the real action is. That’s where the interesting stuff happens.

"Others" dropped -48% while BTC moved sideways last year and is already down -40% from its recent peak. It took five months to decline -48% from March to August before bottoming out. This time, it’s been just two months since the December peak, and it’s already down -40%—CT just hasn’t fully realized it yet. I think tracking 'Others' is more useful than Total Market Cap because that’s where most of our bags are. Others currently have a dominance of 8.43%, meaning the top 10 assets account for 92% of crypto’s market cap. BTC alone makes up 62%, ETH 11%, and together, BTC + ETH dominates 73% of the market.

The top 10 in crypto is heavily skewed toward BTC and ETH, which operate in a league of their own due to ETFs. The rest of the top 10—including stETH, stablecoins, and other less exciting assets—account for just 19% of the market. A significant portion of crypto’s total value is tied up in assets that CT doesn’t find interesting, rarely trades, or invests in—because they aren’t the ones delivering the next 100x. And let’s be honest, for those here for the money, that’s the real game.

A coin needs at least $25B in market cap to break into the top 10 today. That means 90 out of the top 100 coins have a market cap below $25B. But if we expand beyond the top 100, nearly 1,000 tracked coins fall under this threshold. Coingecko officially lists 1,000 coins, but in reality, there are ~30 million tokens in existence. This means that 99.99% of crypto exists outside the top 10, making the "Others" category a far more accurate representation of the broader crypto market than the total market cap alone.

We could also factor in the possibility that SOL, XRP, and DOGE might get ETFs soon, earning the TradFi blessing and moving into the same league as BTC and ETH. If that happens, it further skews the market structure, reinforcing the idea that the bear market may have already begun—or, if it hasn't, where to look for signs. As the bear market unfolds, expect the usual hindsight narratives to emerge. People will say, "Of course, we knew the market would peak as soon as the Fed signaled rate cuts at Jackson Hole in August 2021." Then, two months later, the market topped. These were the claims people made in 2022 after the fact, but that wasn’t the sentiment at the time. You can expect a lot more of that this cycle too.

These are just my reflections and warnings that a bear market is on the horizon, and when it hits, you'd better be prepared. I don’t know exactly when it will happen, but I’m fairly confident it’s just around the corner. Lastly, as I mentioned in my 2025 predictions, the biggest value trap will be expectations. Consider this a reminder to manage those expectations carefully.