Zhikuang University talks with Wu Jihan: Is there still a bull market for Bitcoin?

Bitcoin is about to usher in its third halving in history. Why did the bull market that many people expected not come before this halving? The global COVID-19 has triggered a global financial crisis, and the Federal Reserve has released a large amount of money to save the market. What impact will it have on the financial market and the future trend of Bitcoin? Will Bitcoin still have a market this year?

In the first interview of the "Miners of the World" column of Zhikuang University on March 25, Bitmain's director and CEO Wu Jihan, who has not been seen for a long time, gave his views on the above issues.

The following are Wu Jihan’s in-depth answers to the questions:

01
Bull Market

At the second Global Digital Mining Summit held in Frankfurt, Germany last year, Wu Jihan predicted that the bull market might not start simultaneously with this halving.

Wu Jihan: Actually, Litecoin had already halved before Bitcoin halved. The trend of Litecoin is also a bad sign. Everyone took advantage of the halving to hype it up, and the price rose very high, and then fell again. It has not broken through the previous high so far. This is one of the reasons.

Second, as the market value of Bitcoin increases and the number of users expands, its volatility is actually gradually decreasing. The advantage of reduced volatility is that the currency value will be more stable, but the disadvantage is that it will not rise as fast as before. Bitcoin will eventually reach the saturation point of its market value one day in the future, and there will always be a peak. Before reaching the peak, its entire curve is becoming flatter and flatter.

Looking at the past 2019, the recovery of the entire market rose from the beginning of the year to the end of the year, and there were some twists and turns at the end of the year. If we look at it many years later, we will find that the price of the currency is actually rising slowly, but there are many twists and turns in the process. It is a relatively slow upward trend until it reaches the peak of the next bull market.

Based on this, I feel that the arrival of this bull market may not coincide so well with the halving, or it may not be so obvious, and there may be a time lag.

02
Impact of the epidemic on Bitcoin

Wu Jihan: In fact, when we predict the price of Bitcoin in 2020 at the end of 2019, the biggest feature we feel is uncertainty. At that time, we could see that many factors driving the price of Bitcoin were moving towards extremes, which would cause the price of Bitcoin in 2020 to rise to the sky or fall to hell. As a company, an investor or a miner, you actually have to be fully prepared for both situations. Bitmain has been preparing for both situations.

With the arrival of 2020, some of my previous judgments have indeed been confirmed. The driving factors of the entire economy are moving towards extremes. Buffett has lived for so long and has seen 5 circuit breakers. I am so young and have seen 4 circuit breakers. This shows that some driving factors in the economy are indeed very extreme. The Federal Reserve has been under tremendous pressure to push interest rates to a negative interest rate stage. The US dollar, as the foundation of the world's monetary system, now has a trend of negative interest rates. This is unprecedented. Although the phenomenon of the new coronavirus raging around the world had not yet occurred at the end of 2019, such political pressure was already visible at the time.

On the other hand, with the support of many years of monetary easing policies, debt leverage is very high around the world. Whether it is Europe, the United States, or China, debt leverage is actually at its limit. Under this situation, trade wars and so on have arisen. These factors will hinder production collaboration and the improvement of production efficiency. All of this will brew a crisis, because under the condition of extremely high debt leverage, this trade war will actually lead to a decline in global overall production efficiency. So it can be seen that both the positive side of the economy and the side that will make the economy worse are moving towards extremes. The currency price is affected by economic factors, and these two very extreme situations may also occur.

By the beginning of 2020, when the coronavirus started to emerge, I personally thought that the price of the currency should be more optimistic in 2020. There are several factors here: First, the coronavirus can be eradicated. This has been well confirmed in China and some neighboring countries, and the measures taken by these countries or regions are not exactly the same, but no matter what measures are taken, from the time the country feels a little panic to the time it is completely eradicated, it generally takes about two months. The United States basically started to panic in early March, and was relatively careless before, and the same is true for Europe. I think it took Europe and the United States basically two months to eradicate the new crown epidemic.

Second, after the epidemic, people's social and economic activities gradually began to return to normal. In addition, the major central banks around the world have loosened their fiscal policies during this period. These loosened funds can never be withdrawn, as can be seen from the financial crisis in 2007 and 2008. The Fed said it would shrink its balance sheet, and once it did, the entire market, the entire political community, and all voters immediately rolled on the ground.

With the recovery of economic activities, the money that has been released cannot be taken back, and I believe the prices of related financial assets will still be very good.

03
summary

Finally, let me summarize Wu Jihan’s views:

1. The duration of bull and bear markets is getting longer. The arrival of the Bitcoin bull market may not coincide so well with the halving, or it may not be so obvious. There may be a delay in time, and it is more likely to be a slow bull market with a slow rise.

2. It took about two months for Europe and the United States to eradicate the COVID-19 pandemic. After the pandemic, economic activities will gradually recover, and the money released by central banks of various countries cannot be taken back. The price of Bitcoin is optimistic throughout 2020.

What is your judgment on the price of Bitcoin in 2020? Please leave your opinion in the comment section.

Risk warning: The content of this article only represents the personal opinions of the guest, does not represent the views of Zhikuang University, and does not constitute any investment advice or suggestions.