Negative policy impacts will not have long-term impact on the market, and the bull market will continue

Later yesterday, regulators once again issued an announcement requiring financial payment institutions not to conduct business related to virtual currencies. In conjunction with this, the Shanghai Securities News published an article suggesting that if virtual currencies are to be completely blocked, relevant departments need to upgrade their technology at a deeper level.

Many investors regard this news as a major negative for the market, but I think that in the short term, this news may indeed affect some investors, but from the perspective of the entire market, it does not play a big role. It can even be said that we don’t need to care too much about it.

So far, in this round of bull market, all the negative news we have seen from domestic regulators is nothing compared to the 94 policy in 2017. When the policy was introduced, it was a catastrophic blow to domestic digital currency transactions, almost shattering the confidence of most investors. Only a small number of investors persisted and enjoyed the more crazy wave of gains that followed.

Why? I think an important reason is that in addition to domestic digital currency transactions, overseas markets were also booming. So after the domestic capital inlet was cut off, overseas transactions quickly made up for it. Therefore, overall, even such a big "bad news" had little impact on the subsequent market.

After 1994, overseas markets became the mainstream, and the domestic share was almost negligible compared to overseas markets. Therefore, the introduction of regulatory policies this time will have a smaller impact on overall transactions.

Furthermore, the two core driving forces of this bull market are the over-issuance of US dollars and massive money printing, and the massive entry of overseas institutions. Neither of these two factors is related to domestic investors and domestic transactions.

Of these two core driving forces, the most fundamental is the over-issuance of the US dollar. If there had not been an over-issuance of the US dollar, I estimate that the timing for overseas institutions to enter the market in a big way might not have been so early.

So what we need to keep a close eye on is the over-issuance of US dollars.

If there is any policy that can completely reverse the direction of this bull market, I think it must be a policy related to reversing the over-issuance of the US dollar. Any policy that can reverse the over-issuance of the US dollar (such as the Fed's balance sheet reduction, interest rate hikes, etc.) will be a policy that changes the direction of the bull market, and policies that have little to do with this will at most only affect market sentiment in the short term, but will not change the trend in the long term.

So that's why on the policy side, my focus is on the policies of the U.S. government, especially the Federal Reserve and the U.S. Treasury.

Although the introduction of this regulatory policy will not have a fundamental impact on the overall market, I estimate that it will have a greater impact on us retail investors, and it may become more difficult to deposit and withdraw funds.

In fact, when we take the first step into this field, we should have such a mental preparation in our minds: we are entering a no-man's land, entering a new world from an old world. The new world and the old world are two completely different ecosystems. When exploring in the new world, we will reap unexpected rewards, but we will also experience hardships that ordinary people can hardly imagine. For most people, they must first go through many hardships before they can finally achieve success.

Lack of understanding from others, strange looks from outsiders, various negative policies, etc. are all tests and challenges for us. If we want to gain something in this field, we must be mentally prepared to face all such challenges. Without such mental preparation, we cannot reach the other side of victory, let alone see a bright future.

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