This article was originally written by IPFS Force Zone The path to long-term investment success is risk control, not recklessness. Throughout their investing careers, the results achieved by most investors will be determined more by the number and magnitude of their losing investments than by the greatness of their winning investments. Good risk control is the hallmark of a good investor. —Howard Marks, founder of Oaktree Capital For an investment, we need to understand the product’s value and price, as well as the risks it will face. Proper asset allocation will greatly increase the safety margin and maximize investment returns. This is why this article explores the possible market risks of Filecoin. Only by recognizing the risks can we win. The following are the time points when the FIL market may be at risk: It is expected that the crypto asset market will experience a correction around the Spring Festival; In April 2021, the cumulative FIL released by investors does not meet the cumulative computing power growth mortgage requirements; In May 2021, the release of mortgages in some sectors was started, and a large number of selling orders appeared; In August 2021, the cumulative computing power growth pledge exceeds the cumulative investor release + cumulative block rewards; On October 15, 2021, what will be the price of FIL after the sell-off?
1) It is expected that the crypto asset market will experience a correction around the Spring Festival 2014 and 2017 were the years when the crypto asset market experienced a bull market, three years apart, and the next one is likely to be in 2020/2021. Currently, Bitcoin is hovering around $19,000. Will there be a new breakthrough in the future? And how will it change after the breakthrough? This is a question that the entire cryptocurrency market is paying attention to. Generally, around the Spring Festival, Bitcoin will have a large correction, and other crypto asset markets will also be affected. Even if FIL has a stable internal circulation economic model and application scenarios, it may be difficult to digest the market sentiment caused by Bitcoin, and the "invisible hand" will readjust the market according to the general market conditions. 2) In April 2021, the Filecoin network grew too fast, resulting in a dynamic supply-demand imbalance At present, the growth rate of the entire network is too fast. We will consider whether the FIL released by the entire network can meet the future mortgage needs of the nodes. Let's first look at the recent node growth rate: According to statistics, from the launch of the autonomous network to December 5, the entire network has added 304 computing power growth nodes, contributing a total computing power of 201.67PiB; and with the 549PiB old nodes brought over by the space race, the computing power increased by 531.13PiB during this period;
New node number, scale and account status, source: IPFS Force Zone, 2020-12-07 During these 52 days, the average daily growth rate of old nodes in the space race was about 10.21PiB, and the average daily growth rate of new nodes was 3.88PiB. The main force was still mainly old nodes. Judging from the growth rate of new nodes (taking the computing power exceeding 500TiB on December 5 as a sample), the average daily growth rate of each node was 73.76PiB in October and 83.72PiB in November.
500TiB computing power growth, source: IPFS Force Zone, 2020-12-07 After counting the recent node growth rate, we calculate when there may be insufficient collateral: The old nodes have a computing power increase of 10.21PiB per day; Because new nodes will be the main force of computing power growth in the future, a certain computing power "acceleration" will be given to new nodes. According to the growth rate of new nodes in October and November, an average of 2 nodes were added every day, and each node grew by 78.74TiB per day (the average value in October and November). In the future, the scale of new node additions will be much larger than that of old nodes; Around April 2021, 350,000 FIL will be released daily by public investors, and it is expected that about 300,000 FIL will be released directly and linearly at that time. At the current growth rate, the entire network will need to pledge 600,000 to 700,000 FIL in April. This behavior will result in the daily release volume being insufficient for the pledge demand. In this case, the cumulative FIL pledged across the entire network will be exactly equal to the amount released by investors, which is approximately 60 million FIL.
Therefore, this supply shortage may cause a wave of selling while FIL is slowly rising. On the one hand, when supply exceeds demand, the high price will meet user expectations, and on the other hand, the market needs to release these tokens to increase computing power. 3) In May 2020, more than 100,000 FILs were released from sector pledge every day According to market research, most sectors on the market are based on 180 days. About 180 days after the mainnet is launched, that is, after May, more than 100,000 FIL will be released on the market every day, and there may be more and more in the future. This information is both positive and negative. This behavior can make up for the lack of collateral in the market to a certain extent, but because a large number of coins are in the hands of mining investors and are relatively scattered, greater uncertainty may cause negative effects. According to the current accelerated progress, the subsequent mortgage demand should be able to make up for the sector release, but whether the computing power growth can continue to withstand the daily sector release is a key. 4) In August 2021, the accumulated collateral coins will be equal to the accumulated block rewards + accumulated investor releases About 300 days after the mainnet is launched, if the computing power growth rate remains the same, the cumulative pledge will reach 150-180 million. At this time, the total pledge amount of the entire network is just equal to the block reward and the cumulative release amount of investors, which will cause a serious shortage of FIL in the market, and the remaining FIL in the market is only the part released by the sector. According to the description in "The End of Western Economics", anything with value judgment is actually convertible between good and bad. The following is a description of the conversion between high and low entropy (entropy is a measure of the degree of disorder in a system in a physical sense, and the value is a fixed value under constant conditions): high entropy - chaos - full mixing - seamless - uniform - orderly - low entropy, and it keeps circulating in this form. Because Filecoin belongs to a closed economy, no one can issue additional FIL, and it can only be adjusted through the market or rules. For example, in November 2018, the market believed that the price of Bitcoin could not fall below $6,000, because the production cost of many miners at that time was $6,000 per coin, which could be considered as "high entropy" at the time; after the market fell below $6,000, miners reshuffled and increased productivity to readjust the production cost of Bitcoin, going through "chaos" to the final "low entropy". Therefore, once Filecoin is in short supply under a big market, it is very likely to break the entropy value (most likely through official rule adjustments, increased circulation, or the market slowing down growth in advance), and move from "chaos" to "low entropy". However, this reshuffle process may cause large market fluctuations. 5) In the third quarter of 2020, how much can the FIL price return to after the selling pressure? In the third quarter of 2020, a large number of sectors will end their life cycles and the pledged FIL will be released. Will the market choose to continue to increase computing power or sell tokens? This will be a big turning point. It is temporarily planned that the 365-day computing power scale will be 7EiB, and the future price of FIL is estimated as follows: Price forecast, source: IPFS Force Zone, 2020-12-07 The computing power scale of the Filecoin network can be regarded as an investment scale. By comparing the computing power scale after the 365th day, the FIL circulated in the market and the market situation on December 7, it is estimated that after 365 days, the price of FIL will be about US$40. The author found that as the computing power of the entire network increases faster and the circulating FIL decreases, the price of FIL will increase exponentially. Assuming that the entire network reaches 14EiB in 365 days, the price of FIL may reach around US$400. Readers can refer to the above calculation method as the value calculation of FIL. 6) After anchoring the value, HOLD may be a good investment decision In short, the investment method that Buffett most recognizes is "value investment", because the investment products will be "sniped" as the market changes, resulting in price deviation. Only by mastering the correct basis for value investment and reducing operations can the maximum profit be achieved, otherwise you will become a forced seller in the market. Buffett's famous quote: Price is what you pay, and value is what you get, source: China Business News, 2018-10 PS: The above is based on the current market forecast. As the market changes, it may lead to delays or advances. The authorities may also adjust the rules to avoid risks. This article only provides a direction for thinking, not investment advice. If you happen to see this article and you happen to have invested in Filecoin, you can forward it to your friends, hoping to help your friends around you realize the future value of Filecoin.
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