I saw a piece of news last night saying that the approval rate of Ethereum ETF exceeded 80%. As soon as the news came out, the market feedback was very positive. BTC rose by more than 8%, just a little bit away from the previous high; ETH was even more intense, with an increase of more than 23%, which was more than the increase of various altcoins.
Many people previously vowed that Ethereum would not pass, and also said that the bull market would end earlier than usual. This is all unreasonable. Giants like BlackRock never fight unprepared battles. They always have a trump card ready and are just looking for the right time to make a move.
Even if Ethereum is said to pass with a high probability this time, there may be another reversal, which will drive the price down again. Traditional financial supervision is already quite strict, and it is difficult to manipulate the market. In the crypto industry, it is a new scenario where "no taboos" are allowed.
Only by seeing through the essence can we unravel the mystery. When the market is sluggish, I repeatedly say that the bull market is halfway through, and heavy positions do not require excessive operations. Only those who are short need to grit their teeth and overcome psychological barriers and build some positions, so as not to be left without any soup when others are eating meat.
If you didn’t hold coins before the surge, you should not open a position during the surge, especially for small coins. The only two coins worth holding are BTC and ETH. Past statistics show that the probability of a coin increasing 100 times in a bull market is only about 2 in 40,000, and it will be accompanied by violent fluctuations (and it may not rise back). If you choose to hold a total position to gain a few tens of percent of profit, you may lose more than 50%.
Speaking of this, we have to talk about the altcoin market. Before this increase, basically all small coins fell back to their previous lows, and even many tokens broke through their previous lows, causing many retail investors to suffer heavy losses.
Even Binance is paying close attention to this matter and has made a report titled "Low Float & High FDV: How Did We Get Here?" Most people attribute the problem to VCs, saying that VCs complement each other and only care about pushing up the valuation of the primary market, resulting in limited room for growth in the secondary market; it also mentions a scary statistic, that is, between 24 and 30 years, $155 billion worth of tokens will be unlocked.
Therefore, Binance called on project teams to consider token economics as much as possible, but in fact, these are just superficial phenomena, and there are deeper reasons.
Simply put, the valuation created by the primary market is far greater than what the secondary market can accept.
In a normal capital market, the scale of the secondary market is larger than that of the primary market, but the opposite is true in an unhealthy capital market, which is the case with the crypto-copycat market.
Big companies + professors from famous universities are considered to be top-level projects, which can obtain the resources of top VCs. However, such projects are rare in crypto, with limited shares, insufficient supply, and rising valuations. As a result, they peak as soon as they are listed on the secondary market. It is believed that VCs are only concerned with dumping and token economics is not good. Some people also call on Binance and other large exchanges to strengthen the control of listing coins.
This is part of the reason, but it is not the core issue at all. VC is venture capital, not a secondary public fund. What it needs to do is to exit and make a profit in the secondary market. This is the role it plays in the market. What the market needs is not for VC to take over in the secondary market, but a lack of secondary funds.
The question is, why is there no decent, large-scale fund in the secondary market of cryptocurrencies? Supervision and law are one aspect, but the more important aspect is "uselessness". 99.99% of the current crypto projects are useless, including the so-called top-level projects.
It’s that simple. The way to play in the primary market is to push up the valuation and make a profit in the secondary market. Now it seems that many VCs have low costs in the primary market, but they may not make money. Top institutions can let second- and third-rate institutions take over, and second- and third-rate institutions can only guard the floating profits on the books, with extremely long lock-ups and extremely low secondary liquidity. Many of them cannot be sold at all, and there may even be a situation where the OTC sells coins at a 10% discount.
The core is useless. If these projects are valuable, the market will form a sufficient amount of buying, such as BTC and ETH.
The project party does not have a profitable business model.
Let alone a business model, there is not even a product that is useful for production and life, let alone other things. Now all crypto projects revolve around "transaction fees". There is no other way to create a profit model.
Pure financial platforms can still generate revenue, such as DeFi projects, LSD, lending, and exchanges; but infrastructure, applications, and even various public chains are strategic losses at best, or just a waste of money at worst. The space for maneuvering is to manage the currency price in the secondary market.
You don't have the ability to make money, and it will be hard for people to see your project's ability to make money in the next 1-5 years. You don't have a monopoly effect, and your traffic data doesn't continue to grow rapidly. How can you attract big money to lay the foundation? All the investors are retail investors, and the characteristics of retail investors are that they use daily, weekly, and monthly cycles. When they gather, they are small positive lines, and when they disperse, they are large negative lines.
What’s the point of letting the project design the token economics and not letting Binance list the coins? Garbage belongs in the trash can. If you make a beautiful package for the garbage, it will only deceive you for a while. Once you open the package and find that it is garbage, it will be thrown away.
But this is not a cause for panic, nor is it a problem that can be solved by current market participants. Rather, it is an inevitable cycle of industry development.
If we look to history for answers, the current crypto market may be more like the shape it was in before the bursting of the Internet bubble in 1999.
At that time, the Internet was as crazy as encryption. It was not that companies like Amazon, Apple, and Google that experienced the crisis in 2000 cherished the opportunity to go public, but that they were able to eventually transform their technology into products and promote social progress. After gaining a monopoly position, they converted it into high profits and allowed people to see that there is still huge room for profit growth in the future.
That’s why they have the recognition of big money and why rating agencies keep raising their valuations. It’s that simple.
What about cryptocurrencies? Cryptocurrencies cannot be valued investments. At best, they can only be called risk-value investments. Because most projects now do not see profits, let alone sustainable profits. The core point is that they are useless. None of their products can promote social progress.
Fortunately, although projects come and go, the track remains the same. The crypto industry is valuable, and BTC, Ethereum, DeFi, and even more decentralized products will definitely be valuable in the future.
Because from a philosophical perspective, we can see clearly that blockchain and distribution are the only means to solve the periodic collapse of capitalism. Also, because social productivity will surely improve, and when the inherent social organization form will migrate to the upper level, metaverse, federalization and other forms will appear, only then can we truly enter web3 and "valuable" products will appear.
Therefore, the crypto industry will be in the "first year of concepts" for a long time in the future, with new concepts constantly driving the market to cyclically produce bubbles - bubble bursts - new concepts are proposed and the cycle repeats.
But the core remains unchanged. The only project with high growth and certainty in the future is BTC (Ethereum is not so certain). This is a gift from the crypto industry to everyone, because BTC is the foundation of the crypto industry.
The remaining things may make people money, but they test their knowledge of the industry, their understanding of the business model, and their luck. Most retail investors do not have these things, but they are the ones who love to chase after them.
Always remember to buy coins in a bear market, and always remember the 82 rule (8 layers of BTC and 2 layers of altcoins/8 layers of positions and 2 layers of U). After doing these two points, you will be confused as to why some people are still losing money in the market.
But it is not so easy to achieve these two points. Because you have suffered too little loss, because you will not reflect on it after suffering a loss, and because no one will wake you up on how to learn about investment, how to understand the capital market, and how to judge the business model.