Latest observations: 7 judgments on the causes and trends of this round of Bitcoin bull market

Since November, Grayscale Trust and other overseas investment institutions have continued to release news about their support for Bitcoin, and Bitcoin is getting closer to breaking the high point of December 2017. The market defines this bull market as an institutional bull market, which is more stable than the past two bull markets. However, during the Bitcoin price carnival, market sentiment did not seem to be high, which was a huge contrast to the previous two bull markets. Some netizens even joked that this bull market was the loneliness of "Bing Ge".

Chain Catcher used this phenomenon as a starting point and interviewed many industry insiders, including early Bitcoin evangelists, miners, exchange personnel, market maker teams, lending institutions and industry KOLs, hoping that through the observations and judgments of these frontline people, it can help you have a deeper understanding of the current status and trends of the cryptocurrency market. (The following seven guests are ranked in no particular order)

Author | Wang Dashu Original title: 7 judgments on the reasons and trends of this round of Bitcoin bull market

01

Individual investor Frank: The asset allocation strategies of giant whales such as Grayscale are not of reference value

In the long run, the volatility of the entire crypto market is declining. Excluding the extreme market conditions on March 12, the intraday volatility of Bitcoin is now rarely higher than 5%. Regardless of whether the floating chips are locked or lost, the floating chips in the entire market are getting fewer and fewer. In addition, from the perspective of Grayscale's continuous increase in positions, Bitcoin has become digital gold, which is completely an asset attribute. In this process, the most worrying thing is that everyone still uses the mindset before 2019 to examine this market.

Because before the end of 2019, the market had been in a state where both bulls and bears were making money, and bears even made more money. But this year is different. At present, the competition between bulls and bears is not fierce. The market is more in a state of scrambling for shares. There is no so-called large-scale air force dumping the market. Therefore, if you still use the old thinking to make investment strategies this time, you may very likely lose all your chips.

In this situation, exchanges or certain institutions may face insufficient reserves due to failure to cover positions at low levels, which can easily lead to the risk of a bank run.

However, this is both a shock and a reflection. From 2017 to now, China has always wanted to catch up with the entire cryptocurrency industry chain, but the problem is that we have not done it well. At present, Bitcoin is rising on its own, which has nothing to do with the development of the industry. For example, wallets and other links in the industry chain are not very profitable. At present, the rise in Bitcoin prices or the rise in cryptocurrency prices is good for mining and mining chips.

Of course, this is for the industry. For ordinary investors, there is no need to be too excited, because Bitcoin has come to this day almost by a series of coincidences. The asset allocation strategies of institutions such as Grayscale are of little reference to everyone. Their investment in mainstream crypto assets is only a small part of the asset scale of more than 10 billion US dollars. They are more afraid of missing out on opportunities in this era, so it doesn’t matter if it goes back to zero bit by bit, but for ordinary investors, it is obviously unbearable to go back to zero.

02

Alameda Research trader Sam Trabucco: BTC prices have risen, but liquidity has not really changed much

The risk of investing in mainstream crypto assets is that they are generally more volatile than traditional financial assets. Due to the lack of prime brokerage business of investment banks, leverage margin management of crypto assets is also much more complicated than traditional financial assets, which makes large-scale liquidations very common and means that there are risks for any investor holding a leveraged position.

Although the price of Bitcoin is rising at present, due to BitMEX's increasingly strict KYC audit and OKEx's suspension of its withdrawal business, many companies have perceived the risks that come with it and suspended their trading activities on OKEx, so the liquidity of Bitcoin has not really changed much.

But it is undeniable that the rise in Bitcoin has been accompanied by multiple institutions announcing that they are buying Bitcoin, or otherwise becoming more open to cryptocurrencies, giving people the belief that Bitcoin prices may continue to break out and buying Bitcoin in advance would be a good strategy. But it is unclear whether this will actually reach the level expected by the market, and Alameda Research does not have any specific expectations here.

So, if you are an average investor, don’t assume that any naive patterns will automatically hold true (Bitcoin has been going up, so it will keep going up; Bitcoin reached price X once, so it will go up again). Because prices are more random and less predictable than they seem.

03

Candaq CEO Lin Zihao: Get used to thinking in reverse and never make the last penny

I may be more pessimistic and accustomed to thinking in reverse. I think the price of Bitcoin at $20,000 is a resistance level. At a time when most people think it will break through the previous high, I happen to think there will be a strategic contraction, which means that this wave of market is basically over.

On the one hand, there have been no major technological breakthroughs in the past two years, and there is no unified consensus on a bull market. People who are familiar with the operations of traditional financial institutions understand that very few institutions will operate publicly. Therefore, I regard the public appreciation of these institutions as a dangerous signal, because large positions must have been established in a bear market. Although I cannot say whether prices have reached their peak now, I must pay attention to risks in the process and never make the last penny.

On the other hand, most people are staying out of this market, and there is no typical bull market speculation atmosphere and psychological basis. In addition, the current circulation rate and turnover rate of Bitcoin have dropped a lot, which means that most of the positions are in the hands of large institutions. Therefore, a one-sided rise cannot be ruled out, and how much it will rise depends on the psychological expectation price of the institutions.

Although there will be some impact on the Chinese market dominated by Bitcoin at present, this may be a good thing for Chinese investors. The most unstable factor in China is policy. China's market came from speculation and ended with policy. This has basically been the habitual script in the past few years. In my opinion, it is not a healthy cycle. The reduction in the overall influence of China's market on the market can to a certain extent exclude the impact of external factors such as policy on the entire market, thereby highlighting the economic cyclicality and regularity of Bitcoin or the cryptocurrency world.

04

RTA President Ruomise: The market is always there, but those who try to catch every wave of profit will eventually be eliminated

We are currently in the early stages of the third bull market in the digital currency market. Recently, whales such as Grayscale have bought mainstream crypto assets. Now is just the stage of their position building. After the position building is completed, there will be a consolidation stage. Spot can ignore the price and dance with institutions, but futures have a lot of uncertainties after the price rises rapidly. If you enter the market with high-leverage futures, there is a high probability of dying in the darkness before dawn.

In fact, in the digital currency market, Bitcoin is still an effective market. It is impossible for it to only rise without falling, and it is impossible for it to only fall without rising. The air force will only be late but not absent. And from the technical analysis of the wave theory, this wave is very likely to be the last wave of this year, and it will face a daily or even weekly level correction. Of course, if Bitcoin breaks through $20,000 this year, it means that the analysis is invalid.

I personally have a full position in futures around 10,500, cleared futures at 14,000, and cleared spot at 16,000. I am currently in a state of being left out. But as a trader, any trade that does not lose money is correct. I will patiently wait for the market to pull back or fluctuate sideways before entering the market. The market is always there, and those who want to catch every wave of profits will eventually be out early.

05

Qimi Capital founder Mint: China's influence on Bitcoin is weakening

Currently, Bitcoin has surged to over $18,000, and it is entirely possible that it will break new highs in the short term. However, given that OKex has passively locked up 300,000 coins, Grayscale holds 500,000 coins, Blockone holds 140,000 coins, and the shrinking channels for miners to sell coins, Bitcoin will face the problem of a sharp drop in liquidity or even exhaustion.

It is now obvious what large institutions hold, with Grayscale holding 500,000 coins and Blockone holding 140,000 coins. More institutions will get involved in the future, and the participation of these large institutions can promote the local compliance of Bitcoin, indicating that the world's recognition of Bitcoin is increasing. After its tenth year of development, Bitcoin has become more tenacious.

In fact, overseas institutions such as Grayscale have been investing in Bitcoin for a long time. They have established a lot of positions on March 12 this year. These mature institutions must have received 70% to 80% of the coins before releasing their holdings information. The entry of overseas institutions will rapidly change the current Bitcoin market structure.

The influence of China on Bitcoin is rapidly weakening. Although before this, we had incomparable advantages in Bitcoin chips, mining machines, mining pools, exchanges, etc.

Overseas institutions have many interests in Bitcoin. They are not satisfied with the current position, but have made in-depth layouts in the upstream and downstream of Bitcoin. The most obvious manifestation is the transfer of mining farms . Previously, mining was mostly distributed in Sichuan, Yunnan, Xinjiang and Inner Mongolia, but now it is gradually moving to countries and places with cheaper electricity resources, such as Outer Mongolia, Canada, Iceland and the Middle East.

Secondly, the rise of private mining pools. More and more invisible computing power has been discovered. They are not included in the three major mining pools and build their own private pools to maintain their own computing power . I believe that in the near future, the pattern of the three major mining pools will also be changed.

The second is the dilemma of exchanges . The lower the liquidity in the secondary market, the greater the price fluctuations. Judging from the current holdings of these whales, any holding can affect the price of the currency, whether it is to push it up or to crash it. When the amount of currency hoarded by these institutions reaches a certain level, they will choose to trade on their own territory. After all, no sovereign country will allow other "invaders" to touch the sensitive areas of blockchain finance. Existing exchange platforms may soon exit the stage of history.

As a coin hoarder and miner, I have participated in the three cycles of Bitcoin. I have been studying Bitcoin since 2013. In recent years, I have participated in the upstream and downstream industries of Bitcoin. Based on my own experience, Bitcoin will definitely rise in the long run. But in the short term, this market is treacherous and volatile, and the risk is very high for ordinary investors.

Bitcoin is a speculative product with high volatility in the short term, but it is a good investment target in the long term. This round of Bitcoin's rise is fast and its dormant period is long.

In fact, the fundamentals of Bitcoin have not changed. The essence of this round of Bitcoin's rise is the halving of production. It is because of the impact of the epidemic and the excessive financial leverage since 2018 that the previous price of Bitcoin was seriously underestimated by the market. The reason why Bitcoin quickly rebounded to the high point of 2017 is the result of the halving of Bitcoin production and the further increase in the global consensus on Bitcoin. Judging from this trend, the prophecy that many people may not be able to own a Bitcoin in their lifetime may become a reality.

06

Zhao Yi, founder of Whale Exchange: The real mainstream institutional investors have not yet entered the market

I am relatively optimistic about the price of Bitcoin breaking through $20,000 to set a new all-time high. The reason is that the truly mainstream institutional investors have not yet come in. The global asset management AUM is about 75 trillion US dollars. Currently, Grayscale, the largest investment institution in crypto assets, only holds more than 10 billion US dollars. At present, it can only be regarded as the beginning of a new era.

At present, Grayscale is a clear card and is optimistic about the long-term value of mainstream crypto assets, but I have always told my friends that they should not put all their assets in. I suggest investing 1% of household assets in mainstream crypto assets such as Bitcoin, with a weekly fixed investment.

07

PayPal Finance CEO Yang Zhou: Bitcoin's safe-haven role is being recognized, and we must be cautious of possible selling pressure

It seems that there are always some fluctuations in Bitcoin at the end of each year. In December 2017, Bitcoin reached its highest price at $19,783. This year, there may be a resistance level if it wants to break through $20,000. In theory, the breakthrough may not be particularly fast and requires a process of accumulating power.

In fact, with the holdings of overseas investment institutions, it is not difficult to see that the safe-haven role of cryptocurrencies, especially Bitcoin, as an alternative asset is gaining recognition from more and more mainstream investors.

Judging from the current results, the entry of institutions such as Grayscale has indeed built a good fundamentals. The increase in holdings by institutions even exceeds the current production of Bitcoin. Moreover, the industry is more cautious in leveraging than before, so a crash like the one on March 12 is unlikely to occur in the short term. This is a reflection of the stable development of the market.

However, it is still necessary to consider that there is a risk of selling pressure on incremental funds represented by Grayscale; in addition, traditional finance views Bitcoin more as an alternative asset, and there will be obvious investment orientations when the situation changes. If the situation changes in the future, institutions may make adjustments, which will be a potential risk for the market.

Of course, both institutional and retail investors still need a more patient and rational strategy, take a long-term view, and be friends with time. There are many more signals worth noting, such as the investment of US listed companies in Bitcoin.

Take PayPal as an example. Its way of participating in the market is different from that of Grayscale, but it can drive tremendous energy. Although there is no data yet on the recently launched Bitcoin purchase service, if PayPal can do this service well, its competitiveness and influence in the United States will be very large. Combined with PayPal's influence in the payment field, it is very likely to promote the development of crypto finance.

Note: The views in this article are for communication purposes only and do not constitute any investment advice