1. Market Analysis
Bitcoin performed very strongly yesterday, breaking through a new high and currently consolidating at $57,000. Ethereum also broke through a new high yesterday, reaching a peak of $3,288. Most altcoins also saw a wave of increases yesterday, and various MEME coins also began to surge.
It is worth noting that since February 7, Bitcoin has accumulated a 32.5% increase in 20 days. The market has now reached a consensus that the violent bull market has officially begun.
In terms of capital inflows, since the SEC approved the Bitcoin ETF application on January 11, 11 Bitcoin ETFs have been listed one after another. Over the past 40 days, the bull market signs in the crypto market have become increasingly obvious, which is closely related to the growth of net inflows of ETF funds.
The number of Bitcoin holdings of these 11 ETFs increased from 619,491 to 732,549, and the size of funds under management increased from US$28.59 billion to US$37.21 billion, with a cumulative increase of US$8.6 billion in funds.
Currently, the holdings of Bitcoin ETFs account for 3.73% of the total supply of Bitcoin, exceeding the number of Bitcoins held by Binance exchange wallet addresses. Judging from the net increase of 110,000 Bitcoins, the launch of ETFs has brought about 9.34% of the new circulation demand in the crypto market, which has a direct stimulating effect on the growth of Bitcoin prices.
According to the latest data, the total trading volume of the nine Bitcoin spot ETFs reached $2.4 billion, the highest record since the first day of listing. Among them, the trading volume of Bitcoin spot ETF IBIT of BlackRock subsidiary iShares reached $1.3 billion, showing the market's great interest in Bitcoin ETFs.
In addition, the performance of Bitcoin spot ETF has attracted widespread attention, with its net inflow exceeding that of gold ETF by more than US$8 billion.
According to Bloomberg's ETF analyst Eric Balchunas, this momentum is likely to continue, and the asset size of Bitcoin ETFs is expected to surpass that of gold ETFs within the next two years.
Currently, the net inflow of Bitcoin ETF has reached 5 billion US dollars, and if GBTC is not counted, the figure has even reached 12 billion US dollars. In contrast, the gold ETF has seen a net outflow of 3.6 billion US dollars. Currently, the scale of US gold spot ETF is about 90 billion US dollars, while the scale of Bitcoin spot ETF is about 36.4 billion US dollars.
In general, Bitcoin's market performance has attracted not only the attention of retail investors, but also the favor of institutional investors. All this points to a broader trend that cryptocurrency is gradually becoming an indispensable part of investors' asset allocation.
I still maintain my previous view that after the Bitcoin spot ETF is approved, it is only a matter of time before the market value of Bitcoin surpasses that of gold. The price of Bitcoin is likely to break through the previous high of $69,000 in the second half of this year. With the current purchase speed of major US ETFs, the time point of breaking through the previous high may be advanced.
2. Ethereum Ecosystem
Ethereum also performed strongly yesterday, leading the Ethereum ecosystem to a wave of compensatory gains. Yesterday, the Ethereum Foundation released an announcement on the Cancun mainnet upgrade. Dencun is expected to be activated on the Ethereum mainnet at 21:55 Beijing time on March 13, 2024, with a block height of 269568.
Node operators and stakers must upgrade their software to the versions listed in the announcement. The upgrade introduces temporary data blobs with EIP-4844, also known as protodanksharding, which will help reduce L2 transaction fees. After the Ethereum Cancun upgrade, transaction fees will drop significantly.
Ethereum's founder, Vitalik Buterin, has previously planned a grand upgrade blueprint, which includes six stages: The Merge, The Surge, The Scourge, The Verge, The Purge, and The Splurge.
The Cancun upgrade is a key part of The Surge phase, especially EIP-4844, which has the most direct impact on Layer 2.
The first to benefit are ARB and OP in the Layer 2 sector. Judging from the current total locked-in volume, ARB and OP are the undisputed No. 1 and No. 2.
Therefore, I still maintain my previous view that after the Ethereum Cancun upgrade, it will be a long-term benefit to the Ethereum ecosystem. We can focus on the projects in Ethereum’s layer 2 and staking sectors.
3. Decentralized Storage Track
Yesterday, the decentralized storage Long Er AR performed very strongly, and its price also broke a new high, reaching a peak of US$20.8, with a 24-hour increase of up to 20%.
The main reason for the rise is that Arweave released the Arweave AO public test network, which is designed to support smart contracts and blockchain protocols and is highly scalable. In addition, Arweave also disclosed plans to launch the main network in 2024.
In the past few months, as the AI+Web3 concept has become popular in the encryption field, the AI concept tokens related to it have shown significant growth. Especially in the fields of data storage and decentralization, the storage track, which has always been considered relatively calm, has experienced widespread price increases in the past month. Among them, the token prices of projects such as FIL and AR have increased by more than 70%, demonstrating the market's increasing attention and investment in the storage field.
Of particular note is the movement of Arweave, which plans to launch a supercomputer called AO on the testnet on February 27, aiming to promote decentralized storage into the computing era. AO's design allows any number of processes to run in parallel and be connected into a network through a message passing standard, thereby supporting a wider range of and flexible computing operations while maintaining the verifiability of the network itself.
Filecoin is not far behind. The Filecoin Virtual Machine (FVM) launched in March 2023 allows developers to deploy smart contracts on Filecoin, providing possibilities for storage provider lending markets, perpetual storage transactions, etc. As of December 2023, more than 200 projects have been built on FVM. Filecoin also plans to achieve scalability through the Interstellar Consensus (IPC) framework, allowing DApps to achieve sub-second transactions, further promoting the development of the Filecoin ecosystem.
In addition, other storage projects such as SC, STORJ, XCH, BTT, OCEAN, HOT and CRU also showed varying degrees of growth, showing the activity of the entire storage field and the interest of investors.
In summary, with the recent progress of mainstream storage projects such as Arweave and Filecoin, coupled with the market's enthusiasm for the concepts of AI+computing and data storage, the storage track is becoming a force that cannot be ignored in the crypto field. While the innovations of these projects are driving the development of the storage field, they are also providing investors with new focus and investment opportunities.
4. How to grab coins that can earn 100 times the amount in a bull market?
Imagine what would happen if a large number of ETF buy orders flooded into the market every day in the future?
I’ve said many times before that it’s only a matter of time before cryptocurrencies surpass gold in market capitalization, and it may happen sooner than most people expect.
At present, major institutions are scrambling for cryptocurrency chips, and MicroStrategy's holdings have reached the peak of its investment career.
So what should we do next? My suggestion is to follow the trend: factors such as large-scale purchases of ETFs, Bitcoin halving, and interest rate cuts are all positive signals. We just need to follow the market makers and we will most likely reap the dividends of industry growth.
So what are the projects worth paying attention to in each track at present?
1. AI track: This is undoubtedly the hottest track at present. Coins worth paying attention to include wld, rndr, arkm, etc.
2. Public chain track: In addition to arb and OP that I recommended before, new narratives such as chain abstraction zeta, modular leader tia, differentiated route strk, and technically strong manta are worthy of special attention.
3. Oracle track: I think both link and pyth are worth investing in. Pyth has been very strong in the past two days, and its price broke a new high yesterday. As the second dragon in the oracle track, it is worth investing in.
4. Bitcoin ecology: Bitcoin ecology and second-layer solutions are also important parts of the bull market. Projects such as Ordi, Bitmap, Merlin, Ckb, etc. have their own unique features and deserve special attention.
5. Blockchain game track: Projects like bigtime, gala, pixe, ron, etc. are worth paying attention to because they are wealthy and have a large number of users.
6. ERC404 protocol: Pandora has shown its potential because it has received support from OKX Wallet and Binance. I think if the Ethereum NFT ecosystem wants to rise again, 404 is definitely an important driver, which will benefit the entire Ethereum ecosystem. Because the 404 protocol allows for the transfer of images and coins, it allows NFT fragmentation, and it can reactivate Ethereum's NFT.
In terms of investment strategy, the key is timing. Although I think these projects have great potential, the timing of entry is crucial to the final return. My suggestion is to buy in batches, especially during the bull market, when the market will fluctuate greatly. Buying in batches can reduce risks and even out the cost of holding positions.
At the same time, keeping an eye on new opportunities is key, as new currencies and new narratives often bring unexpectedly high returns.
However, it is very important for newcomers to avoid blindly chasing short-term hype projects, and we should focus on projects that have long-term narratives and solve real problems.
V. Conclusion
In general, the overall market performed very strongly, with Bitcoin's cumulative increase reaching 32.5% in 20 days. Now the market has reached a consensus that the violent bull market has officially begun.
Judging from the current speed at which major ETFs are buying Bitcoin, the time for Bitcoin to break through the previous high of $69,000 is likely to be advanced. This round is an ETF bull market, and the price increase of Bitcoin is likely to exceed all of our imaginations.
All we need to do is hold the spot patiently to reap the benefits of the entire industry's growth.
I still maintain my previous view that the Bitcoin ecosystem may become the biggest super alpha in this round of bull market, and its certainty is getting higher and higher. We may witness the user scale of this ecosystem grow to millions or tens of millions, and the asset scale of this ecosystem grow to tens of billions or hundreds of billions. In this process, many 100-fold coin projects will definitely be born, so the projects in this ecosystem deserve our special attention.
The AI track is still very strong. As the current leader in the AI track, I think WLD will have great potential in the future. 2023 is the first year of AI, and 2024-2025 will be the year of the explosion of AI products. OPenAI still has a lot of good news to announce, so Worldcoin will have a lot of new narratives in the future. This project deserves our attention. In terms of operational strategy, once it has a big pullback, it will be a good time for us to buy at the bottom.
From a medium- to long-term perspective, after the Bitcoin spot ETF was approved, there are many smart new funds waiting to enter the market. So once the market has a big correction, it will be our last chance to get on board.
In terms of operational strategy, 80% of the long-term positions can be held without moving. It is recommended to use this part of the positions to buy Bitcoin mining machines or Bitcoin spot. The goal is to hoard more Bitcoin for a long time so as to reap the dividends of the entire industry's growth.
Remember, the ultimate goal of every penny we earn in the crypto market is to increase the number of Bitcoins in our hands. We should now define the market based on Bitcoin, not on fiat currency.
20% of the position can be used to buy leading projects in various tracks, such as Ordi in BRC20, Atom and Quark in ARC20, OP and ARB in Layer2, Lido and SSV in the pledge sector, etc. Or you can use it for short-term high-sell and low-buy, and stop profit in batches. In this way, you can attack and defend.
