Personal Views on Cryptocurrency Trends 👍

1. The Underlying Drivers of Supply and Demand

Rigid Constraints and Dynamic Adjustments on the Supply Side

The total supply of cryptocurrencies like Bitcoin is fixed (e.g., 21 million), making their scarcity similar to gold and forming the core logic of the anti-inflation narrative. Changes in supply directly affect market expectations; for instance, the Bitcoin 'halving event' (where miner rewards are halved periodically) reduces the influx of new coins into the market, historically driving long-term price increases multiple times. Miner behavior also constitutes a short-term supply variable; if coin prices are sluggish, miners may delay selling and instead hold onto their coins in anticipation of a price increase, while the opposite may prompt quicker cashing out.

2. The Capital Game Between Institutions and 'Whales'

Market Manipulation by Large Holders

The top 1% of holders, known as 'whales', control over 90% of the circulating supply, and their buying and selling actions directly influence price trends. For example, concentrated selling by large holders may trigger a follow-the-leader sell-off, while news of institutions increasing their holdings (such as MicroStrategy's continued Bitcoin purchases) attracts retail investors to follow suit.

Asymmetry of Market Liquidity

Small-cap cryptocurrencies have limited circulating supplies, allowing a small amount of capital to control the market. Traders may create the illusion of active trading through false orders, luring retail investors to chase prices before executing reverse trades for profit; such manipulation is particularly common in low liquidity coins.

3. Transmission Pathways of Macro Economy and Policy Environment

Enhanced Linkage with Traditional Financial Markets

Global liquidity tightening (e.g., Federal Reserve interest rate hikes) may lead to a flow of funds back from cryptocurrencies to dollar assets; during stock market crashes, some funds may view Bitcoin as 'digital gold' to hedge risks. Recent data shows that the correlation between Bitcoin and the S&P 500 index has exceeded 0.724.

The Double-Edged Sword Effect of Policies and Regulations

Regulatory attitudes directly impact market confidence: China's ban on mining previously halved Bitcoin's hash rate, while the approval of Bitcoin ETFs in the U.S. is seen as a long-term positive. Tax policies (such as capital gains tax) and anti-money laundering rules may also alter investor behavior.

4. Dynamic Balance of Technological Evolution and Security Risks

Value Reconstruction through Technological Upgrades

Significant updates to blockchain protocols (such as Ethereum's transition to PoS) may change token economic models, affecting supply and demand relationships. For example, the ETH burning mechanism reduces circulating supply, potentially supporting long-term prices.

Systemic Shocks from Security Vulnerabilities