This year is the half-yearly decrease in Bitcoin price as part of the four-year cycle of the crypto market, but most people do not seem to be very happy, and some may be at a loss. People who are used to "looking for a sword by carving a mark on a boat" find that this bull market is obviously "not in line with expectations". As the market fluctuates and even remains sluggish, some people begin to feel a sense of frustration like "waiting for a rabbit by a tree", and are uneasy about the question of "is the bull still there?"
01
Why is this bull market so different? In the past 10 years, the crypto market has experienced four bull-bear cycles, including the current one. This bull market seems to be very different from the previous ones. People who have experienced the previous three bull markets should not find it difficult to find the clues after careful analysis: 1) Differences and similarities between the previous three bull-bear cycles a. Similarities
Bitcoin will always remain the narrative and consensus of “digital gold”;
Bitcoin halving has always been the fuse and catalyst for major market movements, and the bull-bear cycle is highly consistent with the Bitcoin halving cycle;
In the bull market, all sectors rotate equally, almost all projects can perform well, and many people make money.
b. Differences
The main narratives are different: decentralized applications such as digital gold, smart contracts, DeFi, and GameFi have exploded;
As time went by, new narratives emerged, institutions multiplied, and infrastructure improved;
As the size of crypto assets grows, the volatility of Bitcoin is gradually decreasing.
2) In addition to the expected changes that the industry will mature, with more narratives, more institutions, and more complete infrastructure, we have discovered obvious anomalies in this round of bull market, such as "no mutual takeover", "almost no sector rotation", and memes flying all the way. Even Ethereum, the protagonist of the past bull market, is "not doing well"...
In fact, the incomprehensible changes in this round include "no mutual takeover", "almost no sector rotation", and Memes flying all over the sky. This is because the substantial participation of institutional capital has changed the grassroots gameplay of the past crypto industry. The influence of capital is getting bigger and bigger. With the listing of Bitcoin spot ETF, capital inflows are accelerating, which makes the old leeks a little uncomfortable and at a loss for a while. It is better to play fairer Memes by themselves than to expect institutions to lead the project. In addition, institutional funds are more rational and prefer new narratives such as Bitcoin and AI, DePIN, which has led to the old narratives and old projects that no one has paid attention to becoming unpopular. The discourse power of institutions is getting bigger and bigger, and it is difficult for retail investors to influence the market. With more narratives, institutions may not necessarily reach a consensus, and there are even gangs between different institutions. The Chinese area is engaged in the Bitcoin ecosystem, while the Western area is deploying AI and DePIN.
As for Ethereum, it was definitely the most dazzling star besides Bitcoin in the first two rounds of bull market, but now it is a bit cold, partly due to the diversion of new narratives that are not Ethereum itself, and partly due to the preference of new funds for Bitcoin, which has led to Ethereum's current embarrassing situation. Of course, in this special situation, Ethereum may also be undervalued.
In fact, the impact of Bitcoin's four-year halving on the crypto market is gradually decreasing. In addition, the direct cause of each bull market comes from external factors and new narratives, rather than simply repeating history. Whether this bull market will continue depends on the external and internal factors that affect this bull market in the future...
02
The external and internal factors that will truly affect this round of bull market are: 1) External factors: Mainstream crypto assets cater to the rhythm of the external environment. In recent years, it is not difficult to find that Bitcoin and crypto assets are increasingly affected by the external environment. Among them, the biggest influence is the relevant policies of the Federal Reserve. Behind every market boom and pullback, it is almost always because of the main external factors such as the environment.
The Fed's interest rate hike will cause a large amount of global funds to flow back to the United States, leading to an increase in the US dollar and a fall in the prices of commodities, precious metals, and foreign exchange markets denominated in US dollars. On the contrary, when the Fed cuts interest rates, the US dollar exchange rate falls, which is conducive to improving the performance of commodity prices. After the Fed's interest rate hike, interest rates and exchange rates will fall, and US dollar liquidity will gradually recover, bringing momentum to the market to rebound. Due to the international status of the US dollar, the global economy will be affected accordingly.
Bitcoin, denominated in US dollars, has gradually moved from its original small circle of cryptocurrencies into the category of mainstream assets. Today's Bitcoin is no longer a niche digital asset that could be promoted by a group of enthusiasts in the "grassroots" era. The increasingly mainstream Bitcoin will change in the future more due to the influence of the rhythm of the Federal Reserve's interest rate hikes and cuts.
2) Internal factors: New narratives are the real bull market engine. In fact, the reason why each bull market is accompanied by halving is that Bitcoin halving is a very good opportunity in the crypto industry. Before and after the halving, the crypto community tends to be active due to strong expectations. Institutions and innovative developers make arrangements along the halving cycle and resonate with the community to achieve twice the result with half the effort.
At the same time, the active crypto industry and the surge in crypto asset prices have also continuously attracted more new builders during this period. In fact, the reason why more and more people have been able to come together to conduct "large-scale human society" experiments like Bitcoin is because of consensus, and consensus needs a main narrative to support it, such as "digital gold", just like the past few rounds of crypto bull markets have been supported by new narratives.
Behind the new narrative are the new "shining points" of blockchain and Web3 explored and discovered by KOLs and innovative entrepreneurs in the crypto community, and more and more solutions. They not only solve the problem of high cost and low efficiency of blockchain, but also solve the landing problem of crypto applications like DeFi and GameFi, bringing funds and a steady stream of new users to the entire crypto industry. Of course, innovation will not stagnate. More and more new narratives are empowering the crypto industry, bringing stronger momentum, becoming the source of the intrinsic value of the crypto industry, and driving the market higher.
03
Is the bull still there? First of all, we still need to have a correct mindset. It doesn’t really matter whether the bull is there or not, because no matter it is a bull market or a bear market, there are people who lose money. In a bull market, because of all kinds of slogans and exciting narratives, it is easier for people to rush in on impulse, and end up being stuck at the top of the mountain, with even greater losses. For more people, a bull market is the beginning of losing money.
In addition, "stop predicting" is indeed a mature attitude in investment. Mature investors usually focus on fundamental analysis, asset allocation, risk management and long-term investment planning, rather than trying to find short-term profit opportunities in every market fluctuation. They understand the uncertainty and volatility of the market and accept this uncertainty, so they are more inclined to take a steady, long-term investment approach.
Both the internal and external factors of this round of market trends tell us that there is a high probability that there will be follow-up. At present, it is impossible for the printing presses of countries around the world to stop for a long time. Once the gears of the printing presses are turning, crypto assets led by Bitcoin will always be an important part of many asset allocation portfolios. In the future of AI, Web3, and the metaverse, crypto assets will definitely stand at the center of the stage.
The crypto industry is changing every day, and we must look at it from a development perspective. It is difficult to predict the future market because the macro environment has extremely high uncertainty in the short term, so there is no need to be too keen on "predictions". What we can do is to keep an eye on new things, grasp the development trend of the industry and find new dividends. Perhaps temporary fluctuations will make people feel confused and anxious, but if the timeline is extended, the future of crypto is still clearly visible.
