"Black swan theory" refers to those events that are extremely unlikely to happen, but actually happen. These events mainly have three characteristics. Those that meet the first two points can be called "black swan events":
This event is an "outlier" because it occurs outside the normal range of expectations and past experience makes it unlikely that it will occur.
It will have a huge impact.
Even though an event is an outlier, once it occurs, humans are naturally bound to come up with some explanation that makes the event explainable or predictable.
The core logic of the black swan theory is: what you don’t know is more meaningful than what you know, because many black swan events occur and intensify under unpredictable circumstances.
When it comes to the cryptocurrency market, what really determines the direction of the market is often the eye-popping, unexpected extreme events, rather than the events that can be expected.
For example, the LUNA thunderstorm in May 2022, known as the "Lehman Brothers incident in the currency circle", and the bankruptcy and collapse of FTX, the world's top three exchanges, in December of the same year. These events were unpredictable at the beginning. , but it caused great damage to the market.
On the contrary, the emergence of Ethereum ICO and the emergence of DeFi in 2019 brought about the entire bull market. These positive events were also something that no one could predict. These are called positive black swan events, while the negative ones are called negative events. Toward a black swan event.
To make money in this market, you not only need to see the superficial phenomena, but also need to have extraordinary imagination, as well as awe and respect for the unknown. We need to be prepared for those black swan events because they can happen at any time. Our task is to respond quickly when these events occur to minimize losses; if it is a positive black swan event, we must maximize benefits.
At the end of 2023, the emergence of the BRC20 inscription sector subverted our understanding of asset issuance methods, and also led to the vigorous development of Bitcoin Layer 2, or the passage of Bitcoin spot ETFs, which all contributed to the huge increase in BTC in this bull market. These events are also positive black swan events. Next, if the ETH spot ETF is launched for trading as scheduled, it may also be a singularity in the Ethereum ecosystem. Will it drive the development of the entire ecosystem? I think this is to be expected.
