Quote I heard at some point (about crypto, and many things): Money is a star which obscures our view of the planets orbiting it.
Blockchains have many use-cases. The community's insistent push toward tokenization and assetiziation of this technology near-totally obscures the fundamental technology and what its capable of.
Arguably, it isn't even the tokenization. Tokens make sense. Tokens which have value makes sense. But then enters: greed. It's not just about having a token which has value and can do things via interfacing with the blockchain. The asset has to be an investment. We don't think about ETH in terms of what it can do on the blockchain (utility); we think about it in terms of an ETH:USD price. Its utility is impossible to detangle from Growth; Deflation; my Investment portfolio.
ENS is my favorite example. Arguably; this is how domain names should work. A distributed, trustless ledger. Power to the people! And then you realize, it costs $100USD/year to register a domain name. Today is pretty cheap; thursdays are cheaper than fridays, but you should really buy one on a wednesday because that's when gas is at its lowest.
Why is it so expensive? Because the token is an asset. Thousands of stakeholders, really every ETH user, has an interest in seeing the token go up. Token goes up; utility of the token goes down, as it becomes prohibitively expensive to actually do interesting, real, utilitarian things with it.
Real world: Assets which have both Utility & Investment Potential are somewhat rare. Cash has little investment potential, but high utility. Gold, Silver, etc; low utility (not zero, but low), classic investment options. Corporate shares? Low/moderate utility; maybe you can use them to vote on corporate direction, but at the end of the day that vote is in service to investment potential.
It turns out that assets which overload Utility and Investment Potential inevitably screw over someone who needs that utility. They aren't egalitarian, even by the perverted definition of capitalistic egalitarianism. They inordinately favor early adopters and capital holders. The biggest real world asset class which suffers from this: real estate; and our world is observing, in real time, the decades-long consequences of treating housing like an investment.
That leads me to three conclusions about crypto:
1. Crypto & Blockchains are too intertwined with money. It will never not be about money. Most will recover from this crash, and still be about money.
2. Some people say: "How can bitcoin have value? it's nothing. just bits in a computer." That's literally its best feature! Not only is it irrelevant that it can't do anything; it's a good thing. It's among the purest investment vehicles ever created. A store of wealth with near-zero utility. I say let it grow! Every dollar tied up in BTC is a dollar not being spent to make housing more expensive, or grow the tendrils of gigacorporations into every nook and cranny of our lives.
3. Some people say: "This crypto project will be successful; it's doing something really cool, blockchain for wifi networks, or dogs, NFTs for games, whatever". I disagree. Crypto projects which try to be utilitarian Will Always Fail; unless they can detangle themselves from the deflationary investmentization of their tokens. None do that; all are started to make money; their founders being the biggest holders of the tokens, look for a return on investment of their time and effort. You can't engineer greed away.
And here's a prediction for the immediate future: The stock markets are red this month, abstractly, simplistically, because of Fed rate hikes. Recent analysis has suggested that the markets have already priced in more rate hikes than the Fed has gestured it wants to do, for the foreseeable future. That would tend to signal that a broad market crash isn't forthcoming; I'm not timing the bottom, or saying we're heading up, I'm just saying that there's reasons to be positive right now.
Crypto is still dumping; hard. The first reason is the Luna situation, which is REALLY bad, I don't think its possible to understate how bad that is. The second reason is really that last paragraph; value, or money, is a fixed entity. If institutions are seeing positive signs concerning the stock market right now, they're seeing whats happening to Luna, they may be positioning to move capital out of the crypto markets and back into the stock markets.
Crypto diehards will be unhappy to discover that most coins are correlated with one-another. That's sad; there's an alternate reality where people could lose faith in Luna, but still maintain faith in BTC or ETH, and different coins become inversely correlated.
But there's another test running in parallel to that: is the crypto market as a whole inversely correlated with the stock market? Over the past eight years, the answer to that has been No; but its also not been tested in the fires of a major sell-off in one or the other. Today is that test. And if the result ends up, actually, being Yes: that's REALLY good. I can't understate how good that is, for both crypto and our economy; it will give our economy another $1T+ alternative store-of-value to bonds, it'll desync boom-bust cycles which lessens the economic impact of recessions, it just gives capital holders optionality.
What we don't want is: everything crashing at the same time. Crashes are necessary; but its healthier to have smaller, isolated crashes in specific asset classes.