The significance of currency circle narrative
Narrative is a "consensus story" recognized by market participants within a specific period of time that can drive the market in an upward direction.
There are huge global macro-level narratives. For example, the 0 interest rate policy implemented by the Federal Reserve from 2020 to 2021 created a consensus that "the Federal Reserve will release unlimited funds and the era of negative interest rates is coming", creating an extremely grand and magnificent global capital market consensus - —The violent bull market.
There are also smaller-scale narratives. For example, in October 2021, Zuckerberg announced that Facebook would be renamed META and would be all in the Metaverse. This move created the narrative of the "Metaverse", which is driving the U.S. stock, A-share, and crypto markets. Skyrocketing, the Metaverse suddenly became a hot spot in the global capital market.
There are also smaller-scale narratives. It drove DOGE and MASK to rise sharply in a few weeks.
The ingredients for a narrative that significantly drives markets are the right time, right place, and right people.
Tianshi: Narratives are only formed when the market is relatively stable or in a bull market, and they often do not appear in the pessimistic stage of continuous market decline. The emotional side of the market should be stable or exciting. It is difficult to run a narrative in a pessimistic scenario because there are too few participants.
Location: The narrative itself must be a novel subject, or a sudden major event must have changed the fundamentals of the subject. Only when new things suddenly appear that are not expected by the market will more people be willing to believe the story and participate in it.
People and Harmony: Any narrative is indispensable without a Narrator. If you look at it from a large level, the narrators are the founders of investment companies | banks | hedge funds, famous macro analysts, founders of private companies, etc. In small market segments, those who have the right to speak out about narrative fermentation are big Vs with many fans following them, large retail communities, financial APPs, etc.
Who are the winners and losers in the narrative?
In most scenarios, a narrative takes place over a period of only a few weeks or up to a few months.
Who can make money: Storytellers who open positions in advance, hot money who manipulates the market to detonate themes, traders who intervene in narratives early, long-term investors who do not pay attention to narratives but sell at high levels
Who will lose money: People who believe in narratives and are willing to invest for the long term, participants who participate in transactions in the late stages of narrative fermentation #BTC
