Is it suitable to switch to Bitcoin at this stage?

A reader left a message asking the following question:

Should I switch Ethereum to Bitcoin now?

I have actually written about this issue in an earlier article. Now that I see this issue again, I think I might as well take this opportunity to share with you some issues worth noting about fixed investment:

That is, once we find that the products we have invested in show signs of being different from our expectations in some aspects, we must take action early.

When the fixed investment in this round of bear market was just started, the ratio of Bitcoin price to Ethereum price was approximately 14:1 to 15:1, that is, one Bitcoin was exchanged for 14 or 15 Ethereums.

At that time, I set the ratio of Ethereum to be much higher than that of Bitcoin.

Why?

Because after the development of the last round of bull market, we have seen that Ethereum has developed a fairly rich ecosystem: DeFi, NFT, games, social networking, etc.

Bitcoin is still just "digital gold" - apart from being the most consensus-based value storage, it has very few application ecosystems.

Under such circumstances, I speculate that Ethereum will have greater potential and room for growth in the next bull market, because in such a rich ecosystem, as long as a new model or new scenario emerges, its popularity will gather again and its coin price will increase significantly again.

The magic of the crypto ecosystem is that it can reveal unexpected things at any time, allowing us to see new things that we can't imagine.

In this round of bear market, the rise of Bitcoin inscription technology is the first unexpected and unimaginable thing.

At first, I didn’t care much about this new technology, but after I paid attention to the development of this technology and the growth of this community, I felt vaguely:

If this thing can really develop, it will probably bring us a different scenario.

Moreover, it can solve the problem that after the Bitcoin block reward becomes smaller, the miners' income decreases, which in turn affects the security of the entire network. This phenomenon was particularly evident as early as May this year - at that time, the miners' fee income exceeded the block reward, all thanks to the rise of the inscription ecosystem.

In this case, if we ignore the possible subsequent impact of this situation, then our fixed investment may appear slightly inferior.

Therefore, I publicly shared my own follow-up operations in my article on May 22: I will increase the proportion of Bitcoin in subsequent fixed investments.

At that time, the price ratio of Bitcoin to Ethereum was about 15:1.

When I decided to do that, I had two main plans:

First, from the perspective of revenue, I think that once the Bitcoin ecosystem is established and continues until the next bull market, the price increase of Bitcoin may be higher than that of Ethereum.

Second, if you want to participate in the Bitcoin inscription ecosystem on a large scale in the future, you will probably have to consume some Bitcoins, so it is necessary to take some more as a backup while the price is relatively low.

Since then, the development of the inscription ecosystem has indeed greatly increased the popularity and price of Bitcoin. In the following period, although Ethereum also began to gain popularity in inscriptions, it was still not comparable to Bitcoin.

This situation has continued to this day, resulting in the price ratio of Bitcoin to Ethereum exceeding 19:1.

I believe that the leading trend of Bitcoin inscriptions will continue, at least until the next bull market comes.

In my opinion, the impact of ecological development on the price of coins also has a marginal effect, and this effect will probably become smaller as time goes by. In other words, even if the popularity of Bitcoin inscriptions continues to lead, it is difficult to judge how much higher the price increase of 19:1 can be.

Therefore, it is not that we cannot change positions now, but it is difficult to assess how big the potential benefits will be.

I can only say that I am not very good at changing positions.

In this process, I think one thing is very important: that is, we must see the signs as early as possible, and after seeing the signs, try to evaluate the possible impact of this sign on the ecology in the future. Once we find that this impact is likely to affect our profits, we must act as soon as possible.

If you wait until everyone knows about it and it's a fait accompli before taking action, not only will the timing be too late, but at least the benefits will be greatly reduced.