This year is the half-yearly Bitcoin devaluation in the crypto market's four-year cycle. However, unlike in the past, most people do not seem to be too excited, and some may even be in a loss. People who are used to "looking for swords on the boat" in the bear market find that this round of bull market does not seem to "meet expectations". As the market fluctuates and even becomes sluggish, some people begin to feel frustrated. They become anxious like "waiting for rabbits by the tree", unsure whether "the bull market is still continuing".
Why this bull run is so different
In the past decade, including the current round of market conditions, the crypto market has experienced four bull-bear cycle rotations. For those who have experienced the first three bull markets, they may notice that this round of bull market is very different from the previous ones, and they can sort it out from the following aspects:
1) Similarities and differences between the first three bull-bear cycles:
a. Similarities:
Bitcoin is still seen as “digital gold,” and this is an ongoing narrative and consensus.
Bitcoin halving has always been regarded as the fuse and catalyst for major market trends, and the bull and bear cycles are highly consistent with the Bitcoin halving cycle.
In a bull market, sector rotation is common and widespread, and almost all projects have the opportunity to perform well, resulting in many people making profits.
b. Differences:
Different dominant narratives: The dominant narratives of the first three bull markets were “digital gold,” “smart contracts,” “DeFi,” and the recent explosion of decentralized applications such as “GameFi.”
Over time, more and more new narratives, institutional players, and the continued improvement of crypto infrastructure have emerged.
The overall market value of crypto assets is getting bigger and bigger, and the volatility of Bitcoin is gradually decreasing.
2) Obvious anomalies in this bull market
In addition to the major changes that can be foreseen, such as the maturity of the industry, the increase in narratives, the increase in institutions, and the improvement of infrastructure, we have also noticed some obvious anomalies, such as "no takeover", "almost no sector rotation", and the emergence of a large number of Meme projects. These anomalies are actually caused by the substantial participation of institutional capital in changing the basic way the crypto industry has operated in the past. With the listing of Bitcoin spot ETFs, the accelerated inflow of capital has caused the old leeks to feel a little overwhelmed. They expected that the takeover institutions would lead the project, but they found themselves more willing to participate in the fairer Meme projects. In addition, institutional funds more rationally prefer Bitcoin and new narratives such as AI and DePIN, which has caused old narratives and old projects to become unpopular.
Institutions have more and more say, and it is difficult for retail investors to influence the market. The increase in narratives has also made it difficult for institutions to reach a consensus. There are even obvious differences between institutions in different regions. For example, the Chinese region prefers the Bitcoin ecosystem, while the Western region focuses more on AI and DePIN.
As for Ethereum, it was the brightest star besides Bitcoin in the first two rounds of bull markets, but it seems to be cooling down now. Part of the reason is that new narratives have been diverted to non-Ethereum projects, and part of the reason is that new funds prefer Bitcoin, which has led to Ethereum's predicament. However, Ethereum may also be undervalued in this special situation, and its value discovery possibility remains to be seen.
In fact, the impact of Bitcoin halving on the crypto market is gradually weakening, and the direct cause of each bull market comes from external factors and new narratives, rather than simply repeating history. Therefore, whether this bull market is still there depends on the external and internal factors that will affect this bull market next.
Next, the external and internal factors that really affect this round of bull market
1) External factors: Mainstream crypto assets cater to the external environment
In recent years, we can clearly observe that Bitcoin and crypto assets are increasingly affected by the external environment, one of the most important influencing factors being the relevant policies of the Federal Reserve. Whether it is the highs or the pullbacks in the market, it can almost be traced back to these important external factors behind the scenes.
The Fed's interest rate hike policy will trigger a large-scale return of global funds to the United States, leading to the appreciation of the US dollar, which will lead to a decline in the prices of commodities, precious metals and foreign exchange markets denominated in US dollars. On the contrary, when the Fed cuts interest rates, the US dollar exchange rate falls, which is conducive to boosting commodity prices. When the Fed ends its interest rate hike policy, interest rates and exchange rates fall, and US dollar liquidity gradually recovers, bringing momentum to the market to rebound. Due to the global dominance of the US dollar, the global economy will be affected accordingly.
Bitcoin, which is denominated in US dollars, has gradually moved from the original small circle of cryptocurrencies to the mainstream asset category. Bitcoin is no longer a niche digital asset promoted by a group of enthusiasts. The increasing mainstream trend shows that the future changes of Bitcoin will be more affected by macro-environmental factors such as the Fed's interest rate hikes and cuts.
2) Internal factors: New narrative is the real bull market engine
The reason why each bull market is accompanied by Bitcoin halving is that Bitcoin halving is an important opportunity in the crypto industry. Before and after the halving, the crypto community is often active due to strong expectations, and institutions and innovative developers will also follow the halving cycle to make arrangements and resonate with the community, thus achieving twice the result with half the effort.
At the same time, the active crypto industry and the rise in crypto asset prices continue to attract more new builders to join. In fact, more and more people are able to come together to conduct "large-scale human society" experiments like Bitcoin, mainly because of consensus. And consensus needs a main narrative to support it, such as "digital gold", just like the past few rounds of crypto bull markets have been supported by new narratives.
Behind the new narrative are the new "shining points" of blockchain and Web3 discovered and explored by KOLs and innovative entrepreneurs in the crypto community, as well as more and more solutions. These new narratives not only solve the high cost and low efficiency of blockchain, but also solve the problem of landing crypto applications such as DeFi and GameFi, bringing funds and new users to the entire crypto industry. Innovation will never stagnate, and the introduction of more and more new narratives is injecting energy into the crypto industry, providing a stronger impetus for the rise of the market, and becoming the source of the intrinsic value of the crypto industry.
Is the cow still there?
We need to have a correct mindset, because there are risks and opportunities in both bull and bear markets. Bull markets are often more likely to make people impulsive to enter the market because of exciting narratives and slogans, which may result in being stuck at high levels and suffering even greater losses. For many people, a bull market is just the beginning of losing money.
In addition, "stop predicting" is indeed a mature attitude in investment. Mature investors usually focus on fundamental analysis, asset allocation, risk management and long-term investment planning, rather than trying to find short-term profit opportunities in every market fluctuation. They understand the uncertainty and volatility of the market and accept this uncertainty, so they are more inclined to adopt a stable and long-term investment approach.
Both the internal and external factors of this round of market trends indicate that there is a high probability that there will be a sequel. At present, it is impossible for the printing presses of countries around the world to stop. Once the printing presses continue to operate, crypto assets led by Bitcoin will continue to be an important part of many asset allocation portfolios. In future trends such as artificial intelligence, Web3, and the metaverse, crypto assets will inevitably occupy an important position.
summary
The crypto industry is undergoing changes every day, and we need to look at it from a development perspective. It is difficult to predict the future market because there is a high degree of uncertainty in the short term in the overall environment. Therefore, we should not be too keen on predictions, but should keep an eye on new things, seize industry development trends, and find new opportunities. Although temporary fluctuations may make people feel confused and anxious, if we extend the timeline, the future of the crypto industry is still clearly visible.
If you feel helpless, confused, and can’t see the direction in trading right now, you can click on my avatar or the link at the end of the article, and we can make progress together!Boil leaves---
