US stocks plummeted across the board, coin halving VS economic crisis, buy high or buy low?

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The cryptocurrency world was silent last night, even full of warmth - compared to the bloody purge of Bitcoin bulls in the past week, there were more shorts that were liquidated yesterday. Judging from the chart, yesterday was an extremely mild day.

The smallest margin call in the past 30 days was yesterday. Many people who only look at prices will immediately think, "Has the price fallen enough? Is the bull market coming?" when they see the steadily rising prices.

But the old saying still applies: you should look at the K-line, but don't be superstitious about it - most of the time, the K-line sends out wrong signals.

Height determines vision. When the direction is unclear, I try to look at the problem from a higher perspective - I find that the halving story is difficult to tell.

Today’s article will first analyze the economy from a macro perspective, and then finally talk about my personal views on future trends.

1.

Yesterday, U.S. stocks suffered the biggest plunge in history.

At the close, all three major indexes fell by more than 4%, with the Dow Jones Industrial Average down 1,199.39 points, the Nasdaq down 4.61%, and the S&P 500 down 4.43%. Microsoft and Apple both fell by more than 6%.

Trump was angry about the plunge in U.S. stocks, believing that U.S. health officials' warnings about the epidemic scared investors.

However, he may have underestimated the situation.

On the same day, major European stock indices closed sharply lower, with the UK FTSE 100 index falling 246.07 points, or 3.49%. The German DAX index fell 407.42 points, or 3.19%. The French CAC40 index fell 188.95 points, or 3.32%. In addition, the FTSE Italy MIB index fell 623.17 points, or 2.66%.

The earliest signs of an economic crisis are always in the stock market.

In 1929, the U.S. stock market plummeted, marking the biggest crash in history. Not only the United States, but the entire world was swept up in this financial storm.

Since then, the United States and the world have entered a 10-year economic depression. Within four years after the crisis, the US GDP fell by 30%, investment decreased by 80%, and 15 million people were unemployed.

Of course, the stock market crash in 1929 was completely different from the current situation. At that time, it was due to the bubble bursting caused by people's blind pursuit of stocks. However, the stock market crash will not be without reason. Generally speaking, there are two types:

First, the speculative bubble bursts. There is no eternal bull market in the world. The same is true for the stock market, gold, Bitcoin, and real estate. They all have cycles. When the prices rise too enthusiastically and deviate seriously from their value, sooner or later they will return to their value and end up in a mess.

Second, the economy is in decline, the business environment is poor, the profitability of listed companies is declining, and stock prices are falling. In 2018, due to the friction between China and the United States, the economy was under great downward pressure. The stock market fell significantly that year, and it was also the most severe period of the bear market decline.

How bad is the survival environment for enterprises in the current situation? Let's take a look at some of the companies we are familiar with: Evergrande's biggest discount in history, Xibei's failure to survive for more than three months, Haidilao's loss of 5 billion, etc.

All of this is related to the spread of the new coronavirus. There are greater risks to global economic growth. Investors have doubts about the economic outlook and the stock market. There are many signals in both the spot and contract markets that the stock market is beginning to panic.

2.

Look at the COVID situation.

The latest statistics released by the Korea Centers for Disease Control and Prevention on the 27th showed that South Korea had 171 new confirmed cases of COVID-19, 1,766 confirmed cases in total, and 13 deaths in total. On the 28th, a total of 505 new confirmed cases were reported, setting a new single-day high.

As of 18:00 on February 27, Japan had a total of 912 confirmed cases of COVID-19, with a total of 8 deaths from the disease. According to a report by the Japan Broadcasting Association TV station, a total of 705 cases were confirmed on the Diamond Princess cruise ship.

In Europe, the total number of confirmed cases in Europe (including Russia) has exceeded 500. In addition, countries including Germany, France, Spain, Austria, Macedonia, Greece, Georgia, Sweden and others have also seen their first confirmed cases of COVID-19.

Italy reported 75 new confirmed cases of COVID-19 and 2 new deaths in a single day. The total number of confirmed cases in Italy has reached 528, with a total of 14 deaths.

In the United States, the Centers for Disease Control and Prevention (CDC) confirmed on the evening of the 26th that the 60th case of new coronary pneumonia was confirmed in the United States, and the source of infection was unknown. This is the first case of community transmission of the new coronavirus in the United States.

The epidemic is a bit sensitive, so I can't say too much. Although there are many controversies in the response to the epidemic, such as on specific issues such as mask control, there are some different voices, and some "experts" suggest that market-based means should be used for regulation (I personally don't agree), but no matter what, I think our country's response must be stronger than many other countries.

Many other countries now consistently adopt market-based regulatory measures. We will soon see how effective this is.

Once the new coronavirus spreads further in some countries (I think this does not include China, as China’s most difficult time is over) and large amounts of funds withdraw from the market (such as the US market), then the “nuclear bomb” that detonates the economic crisis will officially appear.

An economic crisis will cause currency depreciation and increased inflation. The government will have to spend a lot of money to reverse the economy (for example, Haidilao, will it just go bankrupt? Banks will grant billions of dollars in credit). However, only part of the company can be saved. Corporate performance will be poor, unemployment will rise, funds will flee the stock market, consumption levels will drop, and the stock market will continue to plummet, forming a vicious cycle.

Are you still funny when you see the jokes on Tik Tok nowadays?

Hello, due to the epidemic, the holiday is extended by seven days;

Hello, due to the epidemic, the holiday will be extended for another seven days;

Hello, due to the epidemic, the holiday will be extended for another seven days;

Hello, due to the epidemic, the company has closed down, so you don’t need to come to work...

3.

This time is very different from previous SARS and H1N1. Both the internal and external environments have changed. Overall, it is not optimistic - there are too many specific evaluation indicators, and because they are too boring, I will not list them one by one.

In general, most indicators send a signal that this time the impact on the world will be greater. Take one indicator as an example: leverage ratio. Let's refer to the macro and sectoral leverage ratios of different countries in the second quarter of 2019.

From a horizontal perspective, China's macro leverage ratio has surpassed that of the United States and is following closely behind Japan and the United Kingdom.

Among them, the leverage ratio of non-financial enterprises is as high as 154.5%, which is twice that of the United States and 1.5 times that of Japan, which ranks second; the household leverage ratio is lower than that of the United Kingdom and the United States, and is comparable to that of Japan and Germany, and higher than that of Brazil and India, which are also developing countries; only the government leverage ratio is relatively low, only higher than that of Russia.

The leverage ratios of businesses and households are higher, which means they need to pay more interest and face a greater risk of bankruptcy, so it is more difficult for businesses to cope with the negative impact of the epidemic; after the epidemic is over, businesses and households will have less room to borrow for consumption and investment, which means that the economic recovery will be slower.

The more turbulent the economy is, the more money seeks safety, and Bitcoin is clearly not a "safe" investment. Even the price of gold is currently falling.

The reason is simple. When the economy is tense, people have more places to spend money - especially in countries that rely solely on market regulation, while considering a series of factors such as corporate bankruptcies, worker unemployment, soaring prices, and stock market crashes.

Will there really be a lot of money invested in the cryptocurrency market at this time? If we analyze it from a broader perspective, will we find that the halving story is a bit dry?

Regardless of whether the market cap is small and easy to pull, we must prepare for the worst when investing in the cryptocurrency world. The more anxious we are to get rich, the more likely we are to suffer huge losses - I have already paid the tuition with USDT in the crash a few days ago.

4.

When talking about mining, Jiang Zhuoer said that mining is often not profitable, so why do miners still mine? Because the advantage of persisting in mining is that you will not miss the bull market. You will mine when the bull market comes, and you will still mine when the bear market comes. Not leaving the market means that you can eat from the head to the tail of the fish. At the same time, tall factory buildings are also good financing tools - yes, he is very proficient in the use of over-the-counter leverage, although he emphasizes that adding on-site and off-site leverage is a death wish.

From the perspective of spot investment, the risk of investing in Bitcoin going to zero is extremely small, but if you expect to achieve high returns in the next bull and bear market by investing in Bitcoin spot, you should be cautious.

Rather than thinking that Bitcoin will rise to 100,000, 200,000, or 300,000, I am more inclined to believe that even if it reaches such a high price, the collapse will be faster, because the price will never be out of value for too long.

Bitcoin is valuable, but the value of Bitcoin (decentralization, immutability, etc.) has not been well reflected at present, because all value seems very vague in a market with extremely small scale and manipulated by big capital.

Li Xiaolai said that "value investing is stupid" may be the "truth" of current cryptocurrency investment - don't get me wrong, I am also a value investor. Among my 800,000 spot stocks, mainly BTC and KEY, especially KEY. When other currencies rise, it can also fall. If it is not because of value investment, but short-term speculation, there is really no reason to touch it.

But when I realized that the cryptocurrency market was, is, and will always be a market dominated by speculation, my choice was to rise to the challenge and learn everything about this speculative market - because I will anchor my future and this blockchain world for a very, very long time.

Yesterday, I opened a 5-fold order at a low price and made a lot of profit today. Originally, I planned to keep holding it, but before publishing today’s article, after some research, I finally chose to liquidate the position and take profits. Now I continue to open short orders and wait (only 10USDT, please note that those who follow my order should not use more than 10U. Learn first and don’t rush to get rich).

In a speculative market, both ups and downs are opportunities. I have no shortage of opportunities, but I lack the vision to seize them. Currently, the market is very calm, but I am waiting for a direction like everyone else.

Personally, I think that direction is not the stars, but the sea.

5.

When we invest in digital currencies and believe in Bitcoin, how many people dare to talk about it with their friends, newcomers, and colleagues? For outsiders, many of them will advise you not to play with regret. If you talk to them about decentralization, they will tell you not to gamble; if you talk to them about value investment, they will think you are obsessed.

In the eyes of many people, Bitcoin is a scam, a risk, a gamble, or even illegal. Why do they say that? It's simply because they don't understand.

They are used to working, getting paid, and saving money. The most common investment behavior is to deposit money into Yu'e Bao and enjoy an annualized return of 3%.

If I were to give them one piece of advice: those who don’t learn or study Bitcoin will suffer losses, and those who don’t understand investing will suffer big losses.

Today's article discusses economic issues at the macro level and asks an economic question at the individual level: If a person with a monthly income of 5,000 finds a certain investment opportunity (hypothetically) that requires an investment of 2 million, what should he do?

You don't know, right? Apart from borrowing money, there are nothing more than banks and credit cards. But it's easier said than done. Knowledge at the operational level is worth a lot of money. If you think of loans and credit cards as gambling and only think of the risks, that's not what smart people do. Don't easily deny anything you don't understand.

So it is important to understand some things, but whether to do it or how to do it is another question.

I have often mentioned contracts in my recent articles. At first, it seemed that not mentioning contracts was politically correct, and there were some objections at first, but I am glad that many people have also started writing contracts. After all, some things are there whether you learn them or not.

Many people have no idea what a contract is. They are afraid of a margin call and think that contracts are equal to gambling and they will lose everything sooner or later. In fact, think about it, all mature financial markets are ultimately dominated by derivatives. Are Wall Street traders and investors all working together to figure out how to lose everything?

One of the biggest reasons why I didn't play contracts in the past was that injections were too abominable. The website was stuck in a very short period of time, and both long and short positions were blown up - where did the money go? Where did the money go when you recharged it? Generally speaking, the long and short parties play a long-short game under the adjustment of funding costs, but when the power is obviously unbalanced, the injection is of great significance, killing both long and short positions in seconds, and finally the exchange only needs to pick up the money. This unregulated market is very dangerous.

I agree with all the terrible advice about contracts: don't touch them. But if you are a confident person like me and agree that contracts are just tools, then by all means learn them.

Regarding life, the safest way is to go home and farm, raise pigs and grow vegetables, and live in a paradise. Once you go out, there will be many risks. The environment will bring changes and challenges, but it also brings opportunities.

In a bear market like this, the only important thing is to seize the time to learn - wealth is always a by-product of cognition.