Past, present and future with Tony Spilotro

2022 is drawing to a close and our staff at NewsBTC has decided to launch this Crypto Holiday Special to provide a perspective on the cryptocurrency industry. We’ll be talking to more guests to understand this year’s ups and downs for cryptocurrencies.

In the spirit of Charles Dicken’s classic, “A Christmas Carol,” we’ll look at cryptocurrencies from different angles, examine its possible trajectory for 2023, and find common ground between these different visions of an industry that could support the future of finances.

Spilotro: “As a nascent technology, cryptocurrencies have not been as susceptible to rate cycling in the past. But because it has become a bigger part of the financial system, it now follows the rules of that system more than the community might want.

We close this series with an internal guest, our managing director, Tony Spilotro. Dedicated to imparting knowledge and tools for anyone willing to listen, Tony keeps his eye on the market by fostering critical thinking, going against the grain, and developing a methodical approach to trading.

Spilotro: “I am confident that the mainstream media is terribly wrong. In fact, the “magazine cover indicator” is one of the most time-tested ways to pick the highs and lows in the stock market.

Tony is a proponent of Elliot Wave Theory, who has perfectly described the price trajectory of Bitcoin and cryptocurrencies since the early 2010s. The market is about to embark on a critical path, but in which direction? This is what he told us:

Q: What is the most significant difference for the cryptocurrency market today compared to Christmas 2021? Beyond the price of Bitcoin, Ethereum and others, what has changed from that moment of euphoria to today’s perpetual fear? Was there a drop in adoptions and liquidity? Are the fundamentals still valid?

A: The biggest difference today versus back then is macro conditions and money flow. The Fed tightening did the trick of her, taking the bull by the horns so to speak. Ned Davis Research had a rule, “Don’t fight the Fed” and it has proven true over the past year and more. As a nascent technology, encryption hasn’t been as susceptible to cycle rate in the past. But because it has become a bigger part of the financial system, it now follows the rules of that system more than the community might like. The sector has been severely damaged by the domino effect in recent months, exacerbated by the collapse of LUNA and the FTX fiasco. But Bitcoin and some other cryptocurrencies feel fundamentally strong. Given how difficult it is for many stocks, it’s remarkable how such a speculative asset class is holding up. My confidence in Bitcoin is not shaken, but like anything, it will continue to have its ups and downs of investor enthusiasm.

Q: What are the dominant narratives driving this shift in market conditions? And what should the narrative be today? What do most people overlook? We’ve seen a major cryptocurrency exchange explode, a hedge fund deemed untouchable, and an ecosystem that promised a financial utopia. Are cryptocurrencies still the future of finance or should the community pursue a new vision?

A: For me, time drives narratives. The market will find a narrative when the time is right. The latest narrative has been Bitcoin as an inflation hedge and it performed horribly during the highest inflation in years. The narratives are very often false, but we all fall for it again and again. The next narrative will likely be overly euphoric and result in his eventual destruction as the tide of sentiment turns. I turn once again to a few things. Crypto is a nascent technology where we have barely scratched the surface of what is possible. The Internet is also early in its planning compared to the highway or railway system. Crypto is a newborn by comparison. Just like the internet before it, when people don’t fully understand it, it’s easier to fall victim to increased market sentiment and narratives. The dot com bubble is a prime example. Just like all the other times Bitcoin has been declared dead, it just shocks the non-believers and sucks in those who are ready to believe. Sadly, I don’t think there is a financial utopia in sight, rather Bitcoin becomes our best bet by retaining ownership rights over value. I think it becomes the digital version of the money in the mattress.

Q: If you have to pick one, what do you think was a significant moment for cryptocurrencies in 2022? And will the industry feel the consequences in 2023? Where do you see the industry next Christmas? Will it survive this winter? Mainstream is once again declaring the death of industry. Will they finally get it right?

A: The most significant moment for cryptocurrencies in 2022 had to be the FTX situation, although one could argue that it would never have happened without the LUNA crash before it. I think the industry is heavily impacted by the fallout for the next few years and beyond. Radical regulation should occur, wiping many shitcoins out of existence. Rules will be put in place so that no company can raise capital with FTT tokens. Some innovations will stifle, especially around DeFi and Ethereum. Scarcity and stronger network usage fundamentals will separate from the rest of cryptography. I am confident that the mainstream media got it terribly wrong. In fact, the “magazine cover indicator” is one of the most time-tested ways to pick the highs and lows in the stock market. When the mainstream media starts talking heavily about it, there’s usually extreme sentiment.

Q: What was the best indicator to watch in 2022 and what indicators are you tracking for 2023? We know that you have based much of your analysis on Elliott Wave Theory; what can market participants expect next year according to this theory?

A: The best indicator for 2022 was the weekly Ichimoku cloud. The moment BTCUSD broke out of the Ichimoku cloud, the lights went out for the bulls and a deep decline ensued. Of course, this happened after Bitcoin’s value had fallen slightly: it was confirmation that the bull run was long over. I should have put more weight on this, especially after seeing how Bitcoin performed after losing the cloud in March of 2020. Elliott wave theory matches price patterns that the crowd doesn’t often look for, such as zig-zags or dishes, with extreme prices and most importantly, extreme feelings.

I’m a big contrarian in general and my name is Tony “The Bull” so I lean on the upside on BTC in general. If the crowd is bearish, I feel more confident about being bullish and vice versa. That said, I am bullish on BTC for one last rally. I have been building the last 1-2 years of positions in anticipation of what I believe will be a shocking Wave 5 for Bitcoin and the total cryptocurrency market cap.

Crypto vacation BTC BTCUSDT Binance CFO Wei Zhou
BTC price is moving sideways on the daily chart. Source: BTCUSDT Tradingview

Just when everyone turns bullish once again and we’ve made ridiculous new highs, I will temporarily retire Tony “The Bull” and turn to the biggest bear in cryptocurrencies, because this is what I believe will be the grand finale for some time.

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