Shenyu: There may be no "copycat season" in this bull market

During the Hong Kong Web3 Carnival, Shenyu shared how the halving pattern will affect the market. Interestingly, he also shared his current state of mind about his investment.

The copycat season may not come

At present, the daily emission of Bitcoin is about 60 million to 70 million US dollars. After the halving, the block reward will be directly reduced by half. In this regard, Dongqu asked Shenyu about his views on the market of altcoins after the Bitcoin halving, and how much will the increase and expectation be?

This time, there will most likely not be a "copycat season" because the current players in the market are different from the previous players. From the perspective of miners, after the Bitcoin spot ETF was passed on January 10, they had already hedged their risks several months in advance to cope with the risk of Bitcoin halving. In addition, we have seen that many listed companies have used the good news of the ETF's passing to raise a large amount of legal currency funds.

Some miners have moved their mines to lower-cost South America and Africa, which reduces their cost sensitivity and allows them to maintain a gross profit margin of about 10% to 20% even with the previous generation of mining machines. Therefore, even in the case of a Bitcoin halving, the economic impact on these miners is relatively small, especially considering that the price of Bitcoin has risen before the halving.

For investors, especially those who invest in altcoins, this cycle is characterized by the inflow of funds into Bitcoin mainly through channels such as ETFs. As for when these funds will flow to other cryptocurrencies, we are still observing.

In May last year, Shenyu assessed that it was in the "early stage of the bull market" and the absolute bottom of the bear market had passed. The cryptocurrency industry was in a state of looking for new narrative logic and development. So, at this stage, for this cycle, where is the cryptocurrency market?

I think it is highly likely that in the mid-term of the bull market, the market has begun to pick up and has found a new narrative logic, but it is not yet in a state of very high leverage and FOMO.

Shenyu also reminds readers that since the market is a dynamic, complex system with multiple parties competing against each other, relying solely on a single indicator or historical data to predict the market top is often not suitable for the current situation.

He suggested that the best practice is to continue to observe market developments and rebalance and reallocate assets when a certain stage is reached. This approach can help them maintain a stable mentality when the market falls rapidly or enters a bear market, and may increase their absolute returns.

The necessity of Bitcoin ecosystem expansion

In the review at the end of 2023, Shenyu once said that he was a little surprised by the development of the Bitcoin ecosystem, which may be "unnecessary" for many Bitcoin "valueists". Judging from the current situation, it is not just Layer2, Side chain, Rollups, NFT, etc., the BTC ecosystem is now flourishing, and the funds invested by users are also quite amazing. Shenyu shared his views on the current Bitcoin ecosystem.

The current Bitcoin system can be divided into two parts. First, the Bitcoin main chain is mainly used as a value storage, which is difficult to be significantly updated or iterated. Its core function is to ensure decentralization and relative stability.

On this basis, many innovative attempts are gradually emerging from the bottom. In the past year or so, we have also seen many interesting attempts emerging from the bottom up. In the end, everyone found that it was still difficult to innovate on the first layer of Bitcoin, and finally had to choose a second layer or a side chain to develop.

In addition, although technologies such as the Lightning Network lack bottom-up application scenarios, the recent economic incentives have solved this problem to a certain extent, attracting a large number of real users to try it in the BTC ecosystem, which is a gratifying progress. At the same time, we are also closely observing the development trends of these second-layer and sidechain technologies, which are still in the early stages.

The current situation is this: with a large amount of assets deposited in Bitcoin, these assets have an urgent need to obtain income and interest on Ethereum. These demands could not be met for a long time in the past. These scenarios suddenly emerged, and everyone will test and try them out.

What will be the final state of the Bitcoin ecosystem? It is not so obvious now, but these attempts are good, and we need to try and eventually find a path.

Talking about the Bitcoin ecosystem, Shenyu also shared the challenges it is currently facing. He believes that although it is in its early stages, the ecosystem is moving in an optimistic direction.

I think the early views of some large companies and Bitcoin Core on the Bitcoin ecosystem show a positive trend. Even if some members of the Core team may not like the emerging changes, they cannot stop these developments, which is the charm of the decentralized network. This network naturally promotes many market demands and innovative gameplay, even if these innovations may seem clumsy in the early stage.

Just like many things that emerged on Ethereum in the early days, it was also a mess and full of various problems, but in the end there were indeed successful cases. The same is true for Bitcoin. We need to observe more and give it enough time and patience to develop. There should be some revolutionary new developments. At present, we are still in the early stages of this process.

Last December, Bitcoin core developer Luke Dashjr posted a post on X, saying that the inscription was actually a spam attack on the Bitcoin network, and hoped to fix it before the latest version in 2024. As a result, it became one of the main factors for the plunge of $ORDI at the time, and Dynamic Zone also took this opportunity to ask Shenyu for his opinion.

The Bitcoin ecosystem is a three-party game: core developers develop code and submit proposals; miners use computing power to vote to decide whether to support and implement these proposals; and finally, users vote.

This structure ensures the decentralized nature of the system, meaning that even the Core Team cannot unilaterally reject a feature or new idea. This decentralization is a major advantage of Bitcoin over other tokens or chains. In its current state, it is difficult for any new development on the chain to be determined by a single entity.

Competition in the custody business and the current situation of introducing DeFi

As the cryptocurrency market matures, including the launch of Wall Street ETFs and the gradual compliance of exchanges, traditional banks and custodians are entering the cryptocurrency field. What does this mean for Cobo, which has been committed to wallet custody since 2017?

First of all, this is a good thing. For a long time in history, new users in the crypto industry, especially novice users, have been troubled by a problem: "I know that cryptocurrencies may have value and a future, but after purchasing them, how should I store them and how should I store them safely?"

With the development of modular blockchain narrative, the performance of blockchain will be gradually solved in the next two to three years. The final possible state is that many applications we use use blockchain technology at the bottom layer, but users are not aware of it , such as MPC private keyless wallet, smart wallet (Smart Contract Wallet/Account, SCW), and AA wallet based on Passkey.

The user has the key without being aware of it, and in a relatively decentralized way. The development of a large number of good experiences on the chain and the development of keyless wallet technology will eventually allow a large number of users to truly use blockchain technology in a variety of scenarios.

Looking back at the development of the industry, at this point in time, does Shenyu think that the idea of ​​"decentralization" is contradictory to parochialism?

The development of the cryptocurrency industry has tried many technical routes in the blockchain, from the earliest impossible triangle, to the performance issues of the discovery chain, and then the problem of expensive block space.

After nearly five or six years of trial and development, we finally chose the modular blockchain approach, making some compromises and balances at different levels, and finally making the cost of the entire blockchain low enough for end users to adopt.

To some extent, it sacrifices a certain degree of decentralization, but for top-level high-value applications that have a great demand for decentralization, you can still choose to go to Layer 1. The cost at this level is higher, and it is OK to be willing to pay this price for this freedom and decentralization.

However, most of the information ultimately formed by the value network we transmit will not be of high value. There will definitely be a large amount of low-value application-side information, which can be guaranteed to be secure and transparent through a degree of weak decentralization. It can be said that there are now various choices and combinations to make the blockchain scenarios richer.

The investment philosophy of the whale and maintaining mental balance

During the Lunar New Year this year, Shenyu provided encouragement to crypto investors on the X platform and reviewed his previous "Crypto Asset Accumulation Plan from $1,000 to $100 million". He suggested that when personal assets reach $10 million to $100 million, 10-15% of the assets can be invested in the track you are optimistic about, which can not only keep investors busy, but also prevent unplanned investment behavior. It can also be seen that he is keen to track hot spots on the X platform.

Therefore, Dongqu also asked Shenyu, what track has been particularly concerned about recently? What trends must be paid attention to this year?

My style is to try something new and interesting, to make mistakes, and to observe the development of these technical routes. Today in 2024, I pay special attention to the development of "modular blockchain".

From the expansion problem of Bitcoin ecosystem in 2017 and 2018 to the expansion problem of Ethereum ecosystem, it took seven or eight years for the market to finally give the answer, that is, modular blockchain, and has demonstrated practical application cases. We don’t know what its final status and its upper-layer applications will be, but the trend is very certain. This market may be the next market worth more than 100 billion US dollars, so I personally put more energy and focus on the modular blockchain sector.

Interestingly, Dongqu also asked Shenyu what his current mental state is regarding investing in cryptocurrencies. Is he still investing in Fomo?

Everyone will definitely have FOMO, because groups have emotions, and the underlying biological principle is Fomo. The best thing I did in 2023 was to spend more time reading after the market turned bearish, and then reflect on the pitfalls and poor performance. The biggest gain in 2023 is to reduce the FOMO mentality.

Many times you just need to do a thought experiment. For example, when you see something new, you are very excited. You think about it for a day or two, and then the thing is over. You may not actually execute it or try it.

You just need to figure out what its core value is and what value it can capture. Then you might not do it, because once you figure it out, it might just be a short-term thing.

If you expand your local perspective and look at the entire market from a higher level, you will find that many actions are actually meaningless. You will not do things that may seem good in the short term, and sometimes they may give you a lot of incentives and make you feel good in the short term, but they are actually harmful in the long run. When you are used to thinking about things from a larger and longer-term perspective, you can get rid of the FOMO mentality at that time.

During the interview, Shenyu also shared that investors of different generations have different perceptions and reactions to the market, especially with the rise of a new generation of investors. Shenyu noticed that investors born after 2000, in particular, have lived in a digital and internet environment since childhood and are more sensitive and adaptable to market changes.

The new generation of post-00s are more adaptable to the entire process of Internet development because they have been Internet natives since birth.

They are more sensitive to market sentiment. As old investors and old cryptocurrency players like us, our sensitivity in this regard is definitely not as good as everyone thinks. We are also aware of this trait, so we pay less attention to and pay less attention to short-term changes in market sentiment.

You need to think clearly about what kind of money you are making, whether it is money from market sentiment or money from the cycle.

Different money has different return targets.

For the new, younger generation, they may have less original capital accumulation; but they have plenty of time and better Internet experience. With these advantages, the path of looking at market sentiment is more suitable for them. This is a big difference between the old and new cryptocurrency circles. Many post-00s no longer play with us.

I think the new generation of post-00s is also very good. They are more adaptable to the entire process of Internet development because they have been Internet natives since birth.