Beware of the "Currency Reduction" Trap

Since the beginning of 2020, the halving has become a hot topic, especially the surge in BSV in the past period of time has aroused the public's expectations and attention to the halving.

The discussion on the halving has also extended from Bitcoin to almost all currencies that are about to halve this year.

Let’s first look at the price trends of some of the more mainstream halving coins since 2020:

The first-tier Bitcoin BTC rose by about 50%; BCH rose by about 147%; BSV rose by about 300%; and ETC rose by about 200%."

DASH, a second-tier currency, rose by about 230%; Zcash rose by about 174%; and XZC rose by about 198%.

Among the first-line players, ETC Ethereum Classic is worth noting. This coin was created after the DAO incident and the split of Ethereum. It was very popular at the beginning and was once considered to be the authentic Ethereum. But later, due to the lack of successors in the development team and the reputation being greatly affected by the 51% attack in January 2019, it gradually faded out of the mainstream circle.

The second-tier DASH, Zcash and XZC are all privacy-related coins. Their overall popularity has always been far less than that of the first-tier BTC and BCH, but they have also attracted a lot of attention in this market.

There are dozens of coins that will be reduced in 2020. In addition to the coins listed above, the others are some unknown non-mainstream coins. Most of them have too small market capitalization and almost no trading depth.

For coins like this, any slight inflow or outflow of funds will cause large fluctuations in the price of the coin. Therefore, if you intervene in such coins, it is possible that funds can flow in but not out.

Among these halving currencies, many non-mainstream currencies have survived the market so far. My analysis is:

Even among these non-mainstream coins that have emerged from the market, many of them are ranked after 500 in terms of total market capitalization. They also lack trading depth and are susceptible to suspicion of capital manipulation.

In addition, for many miners who are currently mining small currencies, many of them have a speculative mentality and may sell at any time to make a profit by taking advantage of price increases.

Therefore, I believe that the current rise of many non-mainstream halving coins is related to the manipulation of funds and the exaggeration of emotions, and they are facing huge selling pressure, so it is difficult for the current trend to continue.

I still suggest that you do not speculate in the so-called production reduction coins that have a very small market capitalization and no trading depth. The concept of "production reduction" is more of a concept used for hype.

Today's Fear & Greed Index (FGI) is 65

Compared with yesterday's 61 , the degree of greed has increased . The FGI index is inversely proportional to the market state, 0 means "extreme fear" and 100 means "extreme greed".

Global Blockchain Index (GBI) 11727.75

The GBI index reflects the macro trend of the blockchain asset market. The peak index of the last bull market was 22570. The better the market conditions, the higher the index.

Risk warning: Investing involves risks. The content is only personal analysis and is for reference only. It does not constitute investment advice. Maybe what I said is wrong, so you have to be careful.