Factors that drive crypto market trends

Chairman Mao Zedong has two classic articles that I often like to study: "On Contradiction" and "On Protracted War".

"On Contradiction" talks about how we analyze the various contradictions that can affect the development of things in the process of things, how to find the main contradiction that dominates the development of things from many contradictions, how to distinguish between the main contradiction and the secondary contradiction, and the development and changes of the main contradiction and the secondary contradiction. This is the methodology that guides us to analyze problems.

"On Protracted War" is a classic interpretation of "On Contradiction" for analyzing actual situations. In this article, the author deduced the development and changes of contradictions throughout the war of resistance based on the development and possible changes of the national conditions of China and Japan in the early stage of the war of resistance, deduced the development stages that the entire war of resistance would go through, the situations that would arise between the enemy and us at each stage, and the countermeasures we should take in each situation. This is an article with great guiding significance and reference value for predicting the medium- and long-term development of things.

Back to the specific issue we want to discuss: For us, now that the entire market has entered a bear market, and according to my previous prediction, the market has entered the second stage of the bear market, we can start fixed investment. Then the main issues we need to focus on at this time become two: First, how long will this bear market last? Second, how to use this time to set a fixed investment price and plan that suits us?

If we want to try to analyze these problems, the two articles mentioned above are worth our reference and study.

On the one hand, the current trend of the crypto market has been increasingly influenced and dominated by large institutional funds. On the other hand, it still has its own unique development conditions and laws. Therefore, I believe that there are two major contradictions that dominate the development of the bear market: one is the macroeconomic policy of the Federal Reserve, and the other is the conditions and laws of the crypto ecosystem itself.

The so-called macroeconomic policy of the Federal Reserve includes two points in popular terms: one is the regulation of interest rates, and the other is the printing of money. These two points directly determine whether there is new external capital entering the entire crypto market, and whether there is new external capital entering the market directly determines whether the market has direct upward momentum.

We have talked a lot about the impact of the Federal Reserve’s policies on the crypto market before, so I will not go into details in this article. I will continue to analyze and deduce in the following chapters.

There are two main aspects of the so-called problems of the crypto ecosystem: one is the negative problems of the crypto ecosystem itself, and the other is the new vitality contained in the crypto ecosystem. The former is generally speaking how many bombs will explode and cause the market to collapse, and the latter is generally speaking what kind of new scenarios and new ecosystems will be generated.

Here we will focus on analyzing the problems of the crypto ecosystem itself.

First of all, the negative problems in the crypto ecosystem will, on the one hand, trigger a market crash and further drag down the market, and on the other hand, will seriously hinder the entry of new funds.

The depegging of UST is a classic example. The collapse of UST directly brought down LUNA and Bitcoin, while the plunge of Bitcoin brought down the entire market. Without the collapse of UST, the market would not have fallen so badly in such a short period of time. The collapse of UST not only affected the crypto ecosystem, but also attracted great attention from regulators: after the US Treasury Secretary named the risks and problems of UST two days ago, it was reported that the US Securities and Exchange Commission was investigating UST.

Obviously, this thunder has affected not only the insiders, but also the outsiders and even the traditional financial world. We can imagine that after such an accident, traditional big funds will obviously stay away from this circle in the short or medium term.

The new vitality contained in the crypto ecosystem is the hope and vision for the long-term development of the entire crypto ecosystem. It is the future that all of us investors are looking forward to, and it is also the fundamental motivation and basis for us to stick to this position. It is also the fundamental reason for attracting new funds to enter the market in the future. Once a new ecosystem breaks out, people will see new opportunities and new chances, and new external funds will continue to enter the market, thereby driving the market again and ushering in the next bull market.

Well, we have listed the two basic contradictions that will affect the development of the bear market in the future. So how will these two basic contradictions interweave and affect the development of the bear market in the future? This is the focus of our next article.