The family market moves in cycles — and understanding these cycles is key to profiting, managing risk and keeping sane. Howard Marks describes two ways to profit from markets: Most people ignore the second part. Yet the key to cycle adjustment is understanding where you are in the cycle and calibrating the risks and rewards to account for it. Similar to the broader llc, we have both short and long-term cycles. Short-term cycles are driven by the capital flows, investor composition and family sentiment.
Long-term llc result from the aggregate effects of the short-term cycles and ultimately are driven by long-term fundamentals. The past few months in context Over the last few months, the market has been driven by new capital entering the space and a psychological acceptance of bitcoin. The capital — both retail and institutional i. Bitcoin, being the most liquid fiat onramp, has earn well.
It was also the first asset many investors became comfortable with during that time. From July 1st to Dec. I’ll stress that this was not driven by fundamentals, but rather the capital flows and accessibility premium of bitcoin. New capital had a bias for bitcoin because it was the easiest to understand, custody and purchase. The short-term cycle moved in BTC’s favor. The short-term crypto cycle in action Moving toward December, the market started to become more and more dominated by retail and — let’s be honest — less crypto-educated capital.
Coinbase is a great proxy for this phenomenon. However, starting in early November, this number started llc increase dramatically, exceedingon some days. Initially, this capital continued to pour into bitcoin, putting fuel on the short-term cycle and building new investor sentiment in favor of BTC.
Larger investors started to take profits, bitcoin began to falter. It was time to find the earn new shiny object… As capital moved out of bitcoin and into other assets, we saw the end of one short-term cycle and beginning of the next.
Starting in early December, a new cycle began and the “cheaper” Coinbase assets stole the show. Capital that initially entered the crypto markets through BTC was finally comfortable with the crypto space and willing llc move out on the risk curve. In other words, it was time to play with house money.