Bitcoin hits new high, do altcoins still have a chance?

Bitcoin continues to hit new highs, and not many people are talking in many WeChat groups. The reason is actually very simple, that is, most retail investors hold altcoins, not Bitcoin. Therefore, the surge in Bitcoin has nothing to do with most retail investors.

Many people believe that this round of bull market was caused by Grayscale and other Wall Street companies openly buying coins. In fact, the author believes that things are not that simple. On the surface, it is Wall Street that is buying, but in fact the funds behind Wall Street are actually the influx of international hot money. These funds come from all over the world, but Wall Street just acts as a tool. We must understand this principle as to the funds themselves.

For example, the famous Rothschild family holds a large part of Grayscale's Bitcoin Trust. The Rothschild family's base is in the UK, not the US, but this does not affect their investment in Grayscale's Bitcoin Trust.

In this way, Bitcoin is caused by the purchase of other institutions, and other altcoins are in an awkward situation. Before mainstream institutions bought Bitcoin, there were actually many digital currency trading institutions in the market, which can be divided into three categories:

The first category is what we call private equity and other institutional investments in the cryptocurrency circle, such as a16z, Binance Capital, etc. These institutions mainly invest in the early stages of projects, and the cost of the coins they get is relatively low, but there is a lock-up period. These institutions are partially open and can basically be found on the official website of the project.

The second category is secondary market investment institutions. Such institutions are basically completely secretive. To put it simply, they are a bit like market makers. Many people don’t even know the names of these institutions, or they don’t have names at all. It is completely a big investor who finds a few traders to carry out the trading.

The third category is market makers and project parties. They generally do market value management and liquidity management in a bear market, ensure market trading activity, and prevent exchanges from being delisted. In a bull market, they are mainly responsible for discussing how to make money and boost the market.

Regardless of which category, the final method of shipment is either large-scale over-the-counter transactions without going through exchange channels. This type of situation belongs to institutional relay and we ignore it, or it is sold in the secondary market. In this way, retail investors have to take over. In other words, no matter what the outcome is, the market-making institutions and project parties will eventually leave the high-priced coins to retail investors. This is the core purpose.

In addition, the market is mixed with various arbitrage traders or hedgers. They are generally programmed traders, which is what we call trading robots. Different exchanges have different trading strategies, and there are also many god-level people among the people. Therefore, this type of people are also hidden.

If we add another category, it would be the ordinary retail investors, who are the ones who eventually take over at high prices.

Here we make two assumptions. The first is that altcoins do not rise or even fall. The second is that altcoins rise or even skyrocket.

First of all, if the value of altcoins does not increase, it means that the project party is basically not operating, because the project party has either sold all the junk coins they issued, or they have no money. I believe this is easy for many people to understand.

In this way, we should be able to judge that the altcoins that do not rise are the altcoins of poor project owners. As for why investment institutions are not mentioned, the main reason is that investment institutions do not really care about the future development of the project. They are more concerned about whether they can make money. If the project owner intends to increase the price, then the investment institution will have to pay. This situation is equivalent to a greatly increased risk for the investment institution. Unless they are very trustworthy, it will be difficult to get things done.

The second is that if the altcoin rises, then there is at least hope here. At this time, we should pay attention to how much the project should rise.

Some projects will increase the price by dozens or even hundreds of times, while others may only increase by several times. There may even be a wave of regulatory black swans in the middle, and then the price will be dumped and the goods will be sold. This is also possible. At this time, we should pay attention to whether there are many or few coins in the hands of retail investors in the market.

If retail investors have this coin, it basically means that the coins in the hands of institutions have almost been sold out. If retail investors have none, and the project is still quite wealthy and can operate for at least three to four years, then it means that the project may have the intention to stir up trouble in the later stage.

For the altcoin project owners, if they want to do something, they must pull the market in the bull market and then harvest it. In this way, they can ensure that they have money and survive in the bear market. This is very critical. In fact, according to the current situation, the cost of a blockchain project is still not small, of course, the premise is that they are willing to work hard. If they don't want to do anything, then the cost will naturally be very small. Basically, they spend some money and then find someone to develop it casually. There is nothing new. In the end, they will just live one day at a time, and when the bull market comes, they will save money, find an institution to discuss, pull the market and harvest.

Therefore, the key here is whether the altcoins are doing anything, whether they are spending money openly, and whether they can be audited, because only in this way can they do things in an orderly manner. If they want to earn more income in the bull market, they can only do it by pulling up the price and selling coins. Some founders even have their own private wallets in addition to their shares in the foundation. Even if they want to make their own private money, they need to pull up the price, which is a bit like insider trading.

Such a notable feature is that their GitHub code submission volume is relatively high, or their marketing activities are relatively active, one of the two or both. If the market is not active and the code is not submitted, then the simplest question is, what are the project parties busy with every day? This will expose the true nature of most junk projects.

There is another major premise for the situations mentioned above, that is, there are projects that have raised funds in the market, that is, similar to the 1co issuing tokens. We all know that there is a form of POW mining. This type of project basically depends on computing power. Although project development is one aspect, the growth rate of computing power is an important indicator. This indicator can be used to deduce the profit of miners, and finally determine whether the project is worth participating in.

Simply put, at the same price, if a mining machine can generate higher returns per unit of computing power over a period of time, then it means that the price of this coin may have a periodic high point, and miners have a strong desire to sell. On the contrary, the profit is very low, but the computing power has not decreased or even increased. This means that miners are currently optimistic about this coin, and naturally there may be upward momentum in the future.

Summarize

Through the above analysis, it is very clear that in a bull market, although the increase in altcoins may be greater than that of mainstream currencies such as Bitcoin and Ethereum, their pull-up is often carried out by collecting chips. Altcoins will naturally undergo a wave of harvesting in the bull-bear rotation. The price can be increased from a few yuan to hundreds of yuan, but it can also drop from hundreds of yuan to a few yuan. Only in this way can they ensure their survival in a bear market.

In fact, altcoins are not very friendly to novice retail investors, and the risks are also very high. The most important thing is that most of the current altcoins are POS currencies, and many of them have no upper limit on the issuance volume. As a result, in the long run, these altcoins are not as good as Bitcoin, and even some mining coins are not as good as them. After all, mining coins are obtained through mining, while POS altcoins are issued at zero cost. Although retail investors can see these altcoins rise tenfold or a hundredfold in the short term, the time window for ordinary people to sell is basically very short, and once they fall, it is basically the time when a large number of retail investors stand on the hill.

After all, altcoins still have a relatively high speculative nature, but investing in Bitcoin is not the case. Experienced investors basically choose the leader of an industry rather than the younger brothers behind it. This is also an important factor why many knowledgeable people buy Bitcoin.