🎙 Eric Wall of Arcane Assets: "Bitcoiners Protect BTC Against 'Shitcoinism' But They're Also Keeping it From Valid Technical Ideas"
In this week’s episode I speak with Eric Wall, chief investment officer at Arcane Assets. Eric has many claims to fame. One is the now renowned Bitcoin rainbow chart which overlays the color scheme over the bitcoin price in a way that would imply it helps predict future prices. But that’s exactly what he wanted to debunk. After diving into the math and statistics of technical analysis he has become resolutely against it as an investment tool.
His other claim to fame is that he used to be known as the Altcoin Slayer, thanks to his brutal takedowns of non-bitcoin tokens in the 2017 ICO era, which made him popular among Bitcoin maximalists. But he’s not a maximalist anymore, and sees value in other blockchains as he has recognized they can fulfill use cases that Bitcoin can’t. He even argues Bitcoin risks being overtaken by Ethereum if it doesn’t adopt some ETH’s own features and developments, such as a fee-burning mechanism and a more expressive scripting language.
In any case, he believes that even if Bitcoin doesn’t become more programmable, it could remain the sector’s “digital gold” while Ethereum continues to develop as the settlement layer for financial applications. Still, there’s a little bit of maximalism left in him as he believes Ethereum flippening over Bitcoin, or any coin overtaking Bitcoin, would be a disaster for crypto as a whole, as it would prove that the sector doesn’t have a viable store of value.
Finally, something that isn’t really a claim to fame but maybe should be, is that when Eric had to choose between his comfy job at Nasdaq or Crypto Twitter, he chose Crypto Twitter. Hang tight for a fascinating interview.
The podcast was led by Camila Russo, and edited by Alp Gasimov. Transcript was edited by Owen Fernau.
🙏 Thanking our podcast sponsors:
Matcha, which routes orders across DEXs on Ethereum, Polygon, BSC, fantom, and Avalanche to provide the best possible prices without taking any commissions.
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👀 Only paid subscribers have access to the full interview transcript below.
Eric Wall: I was a computer science student at Lund University in Sweden. I discovered Bitcoin, I heard about it in 2011, and then I made my first investment in 2012. And at my university, we were covering the Tor network, figuring out how the Tor network works, and that led me to the dark web and discovering Bitcoin, and finally made an investment in 2012.
If I hadn't gone into computer science, I would probably have gone into finance. And with Bitcoin, I think I found an element that had overlaps from both. It had both the computer science and the financial element. And also, for me, it was like this was an asset class with a clean slate. So if I went into this asset and started to develop my experience and expertise within that domain, I assumed I could quite rapidly become one of the more knowledgeable people in the domain. So that was the first reaction and my initial thoughts on why I got into it.
“If I hadn't gone into computer science, I would probably have gone into finance. And with Bitcoin, I think I found an element that had overlaps from both.”
And I also wanted to understand how financial markets work and how trading works. So that sort of led me astray, actually, for a couple of years. Between 2012 and 2014, I was heavily involved in the technical analysis domain. Those are the types of people that you see that publish the charts with lines and the MACD indicators and the RSI indicators. And I was trying to use the same indicators that I saw that other prominent traders were using. And what happened was, I got far enough into my computer science studies and had learned to program sufficiently well that I was able to back test my trading strategies that I had developed and learned from other traders.
And that was a point of disillusionment for me because I discovered from a statistical perspective, there wasn't an empirical basis for the trading activities that I was doing were actually statistically profitable. So I started to ask other traders, do you have an empirical basis for using these indicators, and most of them did not. And it made me start to question the entire technical analysis domain when it comes to charting.
“I started to ask other traders, do you have an empirical basis for using these indicators, and most of them did not.”
And for some reason, I still somehow remain profitable. But what I understood was that there was always a discretionary element that I brought into my trades, like there was something going on in the industry. For example, I could see that there was some momentum building up around the Lightning Network that was finally going to solve the scalability issues for the Bitcoin network and I read the whitepaper of the Lightning Network. And those types of signals in the market, items that are connected to reality, were something that I could trade on. So I eventually eliminated all the indicators, chart-based, pattern-based trading, and now I try to distance myself from everything that has to do with technical analysis and focus on fundamental analysis and sentiment-driven analysis.