Today's 2 thoughts:

1. What is the operating rule of BTC?

My own view is based on the grand narrative of the main capital continuously accumulating at the bottom and unloading at the top, repeating the process of accumulating at the bottom. In the process of rise and fall, they repeatedly harvest the wealth of financial market players.

Have you ever wondered why the big players have a constant flow of funds to drive the market? Because they can not only make money by going long on contracts at the bottom but also continue to make money by going short at the top. Since they determine the trend and direction, they almost always make a profit when they act.

Why this sudden thought? It’s because in the past six months, I have noticed that after the main players unload their goods, the market peaks and then slowly declines for several months, and after accumulating at the bottom, they start the next round of the market, and then they unload again, leading to a significant correction.

Each time the market is driven up, the big players can continuously earn several times their profits. Even as BTC's market capitalization grows larger, there is still continuous upward momentum and funding. Additionally, the narrative and application of BTC are unprecedented, which can continuously attract funds.

One hypothesis is that if there were no contracts or other financial derivatives, then BTC’s market capitalization might not be able to rise. Contracts allow the main players to magnify their returns several times, and similarly, they can also magnify the losses of retail investors by several times.

The essence of the market is the game between the main players and retail investors, where money flows from the cash-strapped retail investors to the big players who are not in need of money.

2. What is a contract?

The essence of a contract is volatility. If you bet on the right direction and control a position that can withstand volatility, you can continuously make money. The prerequisite is that the direction must be correct, which confounds 90% of people.