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The financial market was in a state of mourning, and global assets plunged in panic. Even Warren Buffett said that he had never seen such a scene in his 89 years of life. Against the backdrop of the macro economy, the halving of Bitcoin also slowed down, causing a stampede-like plunge.
In the previous article, I mentioned the idea of halving. Halving is a known card to everyone. All players are fully leveraged and waiting for money. However, wealth will not appear out of thin air, it is just transferred. Why should the new funds from the outside market support everyone? This is just a game of passing the parcel in the circle. Finally, it is concluded that only by breaking the halving expectation and letting most people stop fantasizing can we usher in the real halving market.
In addition, a new variable has emerged in the recent Bitcoin price trend, or this factor has always been there, that is, the significant impact of the macroeconomic cycle on the crypto market. Bitcoin, like all risky assets, is liquidated in a crisis.
01 Bitcoin "digital gold" is a false proposition. In the industry, there has been a slogan that "the central bank hoards gold, and the world hoards Bitcoin". Bitcoin's limited total amount, decentralization, and global consensus are consistent with the characteristics of gold, and it has always been hailed as the Internet version of "digital gold". Due to this binding relationship, Bitcoin seems to have the same risk-avoidance properties as gold, at least many people in the industry believe this.
However, with the spread of panic in the global economy recently, Bitcoin still experienced a panic plunge despite the favorable expectations of halving and massive money printing. The safe-haven properties of Bitcoin have been exposed. Obviously, Bitcoin still cannot escape the influence of the macroeconomic environment and is ruthlessly abandoned like other risky assets. According to data provided by LongHash, throughout the history of Bitcoin, the price has a high correlation with the Dow Jones. From 2010 to March 2020, the Pearson correlation coefficient between the two exceeded 0.84, which is a strong positive correlation. In other words, the overall trend of Bitcoin is roughly the same as that of the stock market. Furthermore, once a financial crisis occurs, it is difficult for Bitcoin to remain immune, let alone hedge.
Bitcoin does not have safe-haven properties for three reasons:
1. The market value of Bitcoin is too small, and the entry of large funds can cause large fluctuations, and its safe-haven properties are difficult to highlight. To put it another way, once Bitcoin becomes a safe-haven asset, its market value will be far more than hundreds of billions of dollars.
2. Compared with Bitcoin, the traditional market has gold and US dollars, and the crypto market has a large number of stablecoins. The stability of these assets is far better than Bitcoin.
3. Bitcoin does not meet the definition of a safe-haven asset at all. It is a purely high-risk asset. The purpose of safe-haven asset trading is to preserve value, while investors in the crypto market expect to get rich quickly.
02Has the halving trend come to an end completely?
We always hear that every time Bitcoin is halved, the supply is decreasing, and it is highly consistent with the bull and bear cycles. Halving is equivalent to a bull market, which is a once-in-a-lifetime wealth opportunity for ordinary people.
At the beginning, we mentioned that halving is an open card. When everyone knows that they are heavily invested, who will pay for everyone to carry the sedan chair? Only by shattering the enthusiasm of halving can we provide more motivation for subsequent halvings. To be cruel, it is impossible for halving to make everyone make money, and there is no market in the world that can make the majority of people in the market make money and then successfully leave.
The decline of Bitcoin this time also illustrates this point, and also reflects the bloody cruelty of the capital market. So, will the Bitcoin halving industry reappear in the future?
History will repeat itself, but it is not a simple repetition. Many people believe that the halving expectation has been completely digested by the market and the halving market has ended. This obviously overestimates the market efficiency. From the previous two halving markets, it is not difficult to find that the two major Bitcoin markets did not appear before the halving. The halving was just a small peak. The real halving market started about half a year or a year after the halving and reached its peak more than a year later.
Of course, there is another view in the market. The first two halvings just happened to coincide with the craze of "digital gold" and "ICO", so it gave the market an illusion that halving equals a bull market. This logic is correct. The promotion of a big market cannot be driven by halving alone, but is determined by supply and demand. This bull market needs a new story, a new story that is far crazier than "ICO".
This can only be verified by time.
03How to face the bleak cryptocurrency market in the future?
The sharp drop in Bitcoin on March 12 has broken the original trend. It will take a long time to form a new trend. The market's despair has reached its peak. Whether to cut losses and leave the market or to continue to hold on is a problem that everyone in the cryptocurrency circle has to face.
Maybe everyone wants some chicken soup at this time, hoping that some big shot can predict the next market situation. Here I need to warn every cryptocurrency investor:
1. The operation of financial markets is in an uncertain state, and no one knows the future trend of prices.
2. No theory or model can deduce the future price of Bitcoin.
3. Always keep the above highlights in mind.
The nature of the world is disorder and uncertainty, and Bitcoin cannot escape this law, just like which big V or analyst predicted this crash.
Since the future is unpredictable, what else can we do?
1. Give up faith and believe in facts. Don’t talk about bullshit faith. Your only purpose in the cryptocurrency circle is to make money. The word faith is the most frequently used word in the cryptocurrency circle. After early Bitcoin investors achieved financial freedom, they gave everyone an illusion that as long as you have faith and hold on to your coins, you can embark on the road to financial freedom.
The early successes in the cryptocurrency circle were only the product of phased opportunities. As the biggest beneficiaries, they will of course actively promote the spread of faith, but don’t forget that today’s Bitcoin market is a bloody capital market. Most people who invest in a certain coin have a long love affair with the project, automatically shielding themselves from the risks of the project and only accepting positive signals.
Remember, you come to the cryptocurrency world to make money, not to buy faith.
2. In the long run, this plunge is just a small ripple. We have experienced too much of the huge volatility of Bitcoin, and there is no need to have extreme thoughts about whether Bitcoin is a scam because of this. From the historical trajectory of Bitcoin price development, this plunge can only be regarded as a small ripple in the big wave.
So, why panic?
3. Crisis is a major reshuffle How should we interpret the word crisis? 危 means danger, 机 means opportunity.
We often hear about "how to deal with a crisis". Fundamentally speaking, it is impossible to prepare in advance. When a crisis comes, what is more important is how we correctly understand it. Every crisis is bound to breed greater opportunities. As the saying goes, great damage will lead to great fortune.
The same is true for every major crash of Bitcoin. Coupled with the global economic crisis, this is a disaster for most people, but an opportunity for discerning investors. Usually, those with debts and leverage will die first, and then the assets of those dead debtors will be bought at a low price, and those who survive will become stronger and stronger.
Of course, the premise of all this is that you can survive to the end. (Block impression) |
