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Opinion: This round may be a BTC bull market, and it is rare to encounter a "violent" copycat season

Lila

24-03-05 10:37

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Original author: Dr.Y.Ting, crypto KOL

Editor’s note: Today, Bitcoin exceeded $68,000, and it is said that it only takes 1.2% to hit a new all-time high increase. Recently, the MEME token has also seen a general rise in the market along with the rise of Bitcoin. In previous article"Bitcoin hits $64,000, "Cheqing "There are few people", is it actually an institutional carnival? ", some analysts pointed out that institutional investors have dominated this round of Bitcoin's rise. For retail investors, buying altcoins may make it easier to gain huge accumulation of wealth in a short period of time. So, will the copycat season of this bull market come? Crypto KOL Dr.Y.Ting analyzed it from a macro and microeconomic perspective on X Why he thinks there is likely to be no copycat season in this bull market, BlockBeats reproduces the full text as follows:

Whether there will be a copycat season in this bull market, my thoughts may be the same as Most people are different. I think there is probably no copycat season. I will express my views from the macro and micro levels respectively. Before that, in order for everyone to have a better understanding, I will share with you some of my superficial understanding of the macroeconomic cycle. If you think that the macroeconomics is weak and will not help you make money in the currency circle, you can skip it directly. . The following is the thread:

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[1] At the macro level, we will experience a complete cycle every 50-60 years on average. The Kangbo cycle goes from recovery to prosperity, from prosperity to recession, from recession to depression, and finally from depression to the recovery stage of the next cycle, and so on. Every technological innovation that changes the destiny of mankind promotes the birth and development of a new cycle.

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We are currently in the depression stage of the fifth Kangbo cycle, because the technological innovation driving this cycle has Stagnation (the technological innovation of this cycle is the Internet. Look at the wailing of web2 now, and compare it with the wealth creation effect of web2 10 years ago. If you are familiar with Web2, you will definitely feel how big the gap is),

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The global economy has stagnated; more importantly, in response to the financial crisis that occurred during the previous recession (this round is During the 2008 financial crisis), governments around the world had to start a frenzied money printing mode (the COVID-19 pandemic severely exacerbated this action), which saved the economy in the short term, but also created a time bomb of inflation. In order to remove this bomb, governments around the world have to raise interest rates and lock tables like crazy.

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These two things taken together create the depression phase. The core feature of the depression stage is stagflation. For ordinary people, stagflation is far more terrifying than inflation or deflation (you can ask your friends who are engaged in non-web3 industries how they are doing in the past few years). To sum up the Kangbo Depression in one sentence: You lose money no matter what you do, and the cost of doing anything is still very high. No matter you are the boss or the worker, life is difficult for everyone.

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I am sure many people will be curious, what does this have to do with the currency circle? In fact, it has a lot to do with it. From 2019 when the currency circle began to be gradually accepted by the traditional world, to the recent adoption of spot ETFs, if you have a relatively sensitive perception of the market, you will find that the trading methods of bookmakers before 19 years are completely different from those after 19 years. , in fact, it is essentially that old money has gradually entered the currency circle and replaced the original local bookmakers in the currency circle.

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And old money is deeply involved in all aspects of the economy. If there is no money in the entire traditional financial market, The currency circle will definitely also run out of liquidity. During the depression period, due to ultra-high interest rates, hot money will shift from the risk market to the risk-free bond market. The currency circle is the risk market in the risk market. This is the reason why the currency circle has PVP in the past two years.

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So, when will this round of Kang Bo depression end? We can find a pattern from history: when interest rates are raised to the point where they can no longer be increased, the economy is on the verge of collapse, and the unemployment rate soars, the depression period is about to end. Many people expect the Federal Reserve's interest rate cut to come soon, and imagine that Bitcoin will not rise to $200,000 by the time the interest rate is cut?

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But I think this view is too optimistic. It’s not that I don’t think Bitcoin will TO DA MOON, but However, the interest rate cut may not be as fast as expected. The current U.S. unemployment rate, a key indicator for judging whether the recession is coming to an end, is still at a historically low level (see the chart below). To put it simply, regardless of how high the interest rate is, everyone is living a better life. If the inflation rate is still simmering, then the Fed will have more confidence to further control inflation.

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Real interest rate cuts are We were forced to cut interest rates because there was no other way to cut interest rates until the economy could no longer bear it. Now it seems that the economy is quite resilient, so I estimate that this era of high interest rates is likely to last for a long time. The current interest rates are already similar to those of the 2008 financial crisis. The situation is almost the same as before (see the figure below), and the longer high interest rates last, the greater the probability that it will crush the global economy at some point. Crypto has been integrated into traditional finance and cannot be immune.

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Back to the currency circle to look at this issue, as long as high interest rates continue, hot money in the market will only There will be less and less. Without new funds entering the market, it can only maintain the PVP state, a zero-sum or even negative-sum game. It will be difficult for funds on the market to flow into higher-risk altcoins on a large scale.

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[2] At the micro level, every bull market in the past probably followed this pattern: Innovative technology opens a new narrative - >Early wealth effect->The first wave (bubble wave)->The value of technology is far lower than expected. Narrative collapse->The market is oversold and bottoms out to find reasonable value->The big wave washes away the sand, and most projects return to zero, but At the same time, several leaders who truly create value have emerged ->The second wave (value wave)

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That’s it It may be a bit abstract, let’s give two examples: #1 ETH: ETH opens the programmable era of blockchain, which is equivalent to turning the blockchain from Nokia to a smartphone. This is a disruptive innovative technology, and the ERC20 standard makes Everyone can issue assets, ICO brought early wealth effects, various public chains emerged one after another, the 2017 bull market was the first wave of bubbles, and then everyone discovered that air coins are really just air.

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The market’s expectations for programmable blockchain are too high. In reality, only air coins can be created, and the narrative collapses. In the bear market of 2018, the market was oversold and bottomed out at the end of 2018. Most of the L1 public chain projects returned to zero, and ETH emerged as the leader in truly creating value. The follow-up includes the second wave of programmable blockchains until now. The market only recognizes Valuable public chain.

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# DEFI: @uniswap created a disruptive AMM mechanism to make on-chain liquidation possible, this is the way to go The foundation of centralized finance (if the chain cannot be liquidated, on-chain lending is out of the question), from DEX to DEFI, in the DEFI summer of 2019, the wealth effect pushed up the bubble and brought about the first wave ->Then the zoo narrative collapsed-> ;After the great wave, most of the DEFI projects of that year have been reset to zero, and a small number of valuable leading DEFI and DEX continue to this day

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From Leek’s point of view, the first wave is the easiest to get rich, and you don’t need to understand anything. As long as you follow the right narrative track, you can get rich with anything you buy; in the second wave, the difficulty index of making money increases, and only those who have more than most people in the market Only capable people can make money, not only if they are on the right track, but also on the right track.

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From a project perspective, the first wave is also the easiest to get rich. PPT+fork valuation is not tens of billions To dream, all you need to do is not to do anything. Being able to do things and speculate on concepts is the most important. In the second wave, the difficulty of making money has also increased exponentially. The business model of the track is self-generating. Only by winning PVP with competing products can you survive. Surviving is a monopoly. Make money while lying down.

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In this pattern, the first wave of each new narrative is driven by bubbles, from the small-scale wealth effect within the circle To the large-scale wealth effect within the circle, it finally successfully exited the circle to attract new leeks from outside the circle to enter. It was these new funds that drove the main rise of the bull market. In the end, because the new funds were exhausted, the bull market peaked and collapsed.

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So, now come back and take a look at this bull market. It seems that the wealth effect is not caused by a certain innovative technology. This will attract new leeks from outside the industry to enter the market and promote the main rise in the bull market. What drives this wave of bull market rise is ETF! ETFs have indeed brought a large amount of old money and new money into the market, but the crux of the problem is that ETFs can only buy $BTC. If they make money on $BTC, they can only cash out into US dollars and cannot continue to invest in altcoins.

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(Just like if you buy the CSI 300 Index Fund, your money fund will only help you buy those 300 stocks, if you want to buy the 301st stock through this fund, you can’t buy it), this is related to the altcoin season caused by the spillover of foreign funds (Guzhuang pulls mainstream currencies, after making money, the funds overflow to pull altcoins, and after making money, the funds return to mainstream currencies) There are essential differences, so we saw some very strange phenomena this time:

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a) BTC surged, copycats The currency shortage does not follow, and BTC keeps sucking blood

b) I feel that the market should be very hot, but it seems that the enthusiasm for leeks is not as high as in the previous bull market. Most people have not made any money, and there is no past. The large-scale wealth effect of the bull market

c) The volume of open positions in the current contract is at a record high (see the figure below), indicating that the market is extremely hot, which is in sharp contrast to 2) the perception of leeks

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[3] Summary: Based on macro reasons , the total amount of hot money in global investable risk assets must be decreasing. On this basis, plus micro reasons, I think this bull market is likely to be a BTC bull market, and the funds that can spill over to altcoins are far greater than in previous bull markets. There are few, and the copycat still mainly focuses on PVP with the amount of funds in the market. Before the interest rate cut cycle comes, it will be difficult for a real bull market to create wealth to come.