It is not an exaggeration to say that 23 years was a bull market. Last year, especially after the inscription craze started, from BRC20 to public chain inscriptions to NFT, the return rates were tens, hundreds, thousands (tens of thousands) of times. It seems mythical, but everyone knows how much they actually earned.
You can make a comparison. BTC has tripled from November of the previous year to now. After participating in various hot spots, did your total position triple, or did you pretend to be a big shot to make a small profit, and finally lost to Bitcoin? If so, you should reflect on the reasons for not holding BTC.
After exploring the investment market for so long, everyone should understand that the return on investment can be greatly increased if you dare to hold a large position at the bottom and then hold it until the bull market to reduce your position and make a profit.
But the problem is that when the market liquidity is at a low point and the market is trading sideways at a low level for a long time, there are only two projects that dare to hold a large position, BTC and ETH. Many people always fantasize about being free by investing in Ordi on March 10, but this is just psychological comfort. 99.99% of people don’t have that courage, so the only way to make big money is on BTC and ETH.
Another issue worth mentioning is the market value. A few days ago, I saw a big guy say that the A9 level must double five times this year to be considered qualified. But is the market liquidity so good? How many projects can support A9 to double five times and still be able to exit? From this perspective, the bull market in 2023 is a bull market for retail investors. Many projects have doubled dozens or hundreds of times and grown to a market value of tens of millions to hundreds of millions, and can still support the exit of hundreds of thousands or millions of funds.
Therefore, in this round of market, everyone should have a clear understanding of the position configuration. That is, large positions are configured for BTC/ETH, and small positions are used to find new trends.
I said earlier that this is a bull market for retail investors because these new concepts, such as BRC20 and Inscription, did not require such high costs in the early stages, and the odds were very high. However, few people participated in the early stages, and by the time everyone realized it, ordi had risen 10,000 times, and ordirocks had risen 100 times.
Most people usually participate at this time, and ORDI also rises later, from 50 to 60. But it is not worth participating at this time. If you take earning 10WU as the limit, you only need to spend 10U to buy ORDI on March 10, 1000U on April 10, 10,000U on May 10, and 25,000U on December 10.
If you buy it on December 10, you will have to withstand a 20% drop, and a few days later you will have to withstand another 25% drop. Just think about it, if you take out the money you have saved for several years and lose 20% in one day, few people can bear this psychological gap, let alone dare to hold it for a long time.
Don't bear such risks and pain. Change your mindset. Why not actively get up early and participate in new concepts? Many people knew about it early, but did not participate because they thought it was troublesome. However, if you are not willing to take such trouble, you deserve to lose money and deserve to take over at a high price.
Having said that, I would like to emphasize again that large positions should be allocated to BTC/ETH, and small positions should be used to devote more energy to participate in new concepts as early as possible. And improve cognition in this direction.
After talking about positions, let’s talk about the industry.
By November 2023, the Ethereum ecosystem is not performing very well - this refers only to the price of the coin. The problem that caused this situation is that the Ethereum ecosystem is not constantly emerging with new concepts, but is consolidating its infrastructure.
Ethereum's focus this year is on layer 2, but the core problem is that layer 2's core role is to enhance Ethereum, not to develop it. This leads to few new concepts in infrastructure, and repeated talk without substantial progress, which is difficult for the market to buy.
Active retail funds have been silent for too long and need a breaking point. So after the Oridnals protocol led to the emergence of BRC20 on March 10, 2023, the market began to stir, and then the inscription effect in turn opened up Ethereum and public chains.
Bitcoin miners are also happy to see this happen, and even fuel it, because the inscription transaction fees have accounted for 20% of the total revenue. CEX has also become active. Binance was in a mess because of the lawsuit. OKX came from behind and took the lead in cultivating the inscription market. At its peak, it had 50,000 new users a day.
But the function of the inscription is currently limited. Its greatest significance is to awaken the activity of the BTC ecosystem. Thanks to the raproot upgrade, the Bitcoin network has achieved infinitely close Turing completeness. After this, the BTC network can start to do something else better.
Once the BTC network starts to enrich its ecosystem, layer2 will have greater strategic significance than Ethereum, because layer2 is a pioneering effort for Bitcoin and just an expansion for Ethereum.
Therefore, I believe that in 2024, the layer2 of the BTC network will usher in an explosive growth. You must know that the current Bitcoin ecosystem is only a few billion US dollars, while the Ethereum ecosystem is as much as 200 billion US dollars.
At this point, another question arises. That is the inversion between the primary market and the secondary market. The Ethereum ecosystem, especially layer 2, is valued at tens or even hundreds of billions of dollars, and the same is true for other public chains.
The scattered players in the secondary market do not have enough power to take over, and the primary giants also know this. They are deceiving small institutions to take over in the primary market, and the exit is also in the primary market. A16Z and Ploychain are doing these things.
When it is the turn of small institutions to take over, the valuation is sky-high, and when investing in the secondary market, it basically becomes the peak from the beginning. There is no room for retail investors to make room.
It’s not that there are no opportunities. There are opportunities, but they are only when there are airdrops and large-scale industry crashes, which will give retail investors the opportunity to buy at low prices. More and more people will understand, and the opportunities will become fewer and fewer, but also more and more certain.
Only new models and applications can create ripples on the public chain and Ethereum layer 2. In the past, it relied on airdrops, and the airdrop model was constantly innovated, from ordinary interactions to various conditional restrictions, and then to the pure financial Blast, which made it increasingly difficult for retail investors.
But the airdrop still needs to be done. If you don’t take it, there will be no chance at all. If you take it, there is still a chance. You just need to weigh many things and travel during off-peak hours.
The rest are applications, or social and GameFi. Xpet, a pet game, took over the inscription craze and became the hottest Dapps in the market.
Before Xpet, there was Friend. Speaking of which, during the bleak times of the year before last, as the blockchain game track with the most financing, there was not much achievement, but some small games created a popular effect.
I have long believed that crypto games should not follow the old path of traditional games. There is no point in striving for 3A. More small and beautiful games, or strategy games that do not require high configuration, are needed to be easier to develop.
This is also an indispensable engine in every bull market. Now the public chain is not capable of becoming the engine of the bull market, only DAPPS can. Because the story has been told, the market is not pulling up. On the contrary, DAPPS is more likely to have a super multiple due to its low market value, and it is easier to attract market traffic. Then the major public chains will promote the ecological process by seizing such hot spots.
Solana performed very well in this round. In the past, I really underestimated the big players in the Solana ecosystem. Their speed in following up on hot topics and their strong technical performance are commendable.
In 2023, Solana, as the representative of the resistance, did have a significant impact on Ethereum. Even the top MakerDAO expressed its desire to build Maker-Chian on Solana, but unfortunately it was suppressed by the emperor Vitalik, who angrily sold 500 MKRs, and ended up with MakerDAO making a punching bag statement.
What we discussed above is more about the industry development related to retail investors, but in the mainstream, the resurrected concept of Depin has changed its packaging and revived in the Solana ecosystem.
Don’t underestimate the concept of “new wine in old bottles”. It’s simple. If the wine is useless, there is no chance to refill it. When DeFi first came out in the last bull market, it was described as “new wine in old bottles”. What was the result? It became the biggest code for wealth.
The same is true for Depin. In the past, HNT and IFPS also told similar stories, but they were just brief, without DAPPS or more convenient entrances to access, and they all started strong but ended weakly. Even HNT was delisted by top CEXs such as Binance and OKX, which shows how little market attention it received.
But now it’s different. HNT has emerged again around Solana. BitTensor (TAO) has increased tenfold, and the market value of Render Network (RNDR) is close to 1.7 billion, eight times in one year; the remaining IOTX, FET, Honey, Dimo, MOBILE, and HNT have basically increased four or five times.
Let's talk about some very subjective opinions here. Messari did exaggerate the Depin track a bit. This is the same as Ifps at the time, taking out traditional giants to touch porcelain, fantasizing about their own competitiveness, and arranging a track worth hundreds of billions.
This is all fake. The crypto industry has no direct competition with traditional giants, and it is impossible to beat them. This is true for cloud storage and Depin.
Encrypted things are used for encryption, and it is difficult for the traditional world to intervene. The subversion we are talking about is not to fantasize about something that can defeat the giants in their own fields, which is too ridiculous. It is to start a new game, make our own business bigger, and thus eliminate those things.
Messari is the mouthpiece of top institutions. He said that these scams are not targeting insiders, but outsiders, and are intended to lure new capital into the market. In fact, it has nothing to do with retail investors, and it is even a good thing.
On the one hand, they continue to add narratives to Depin to attract capital to boost its market value. On the other hand, they pull up the secondary market to attract the attention of retail investors. At the same time, they also create some Dapps to attract freeloaders.
What needs to be noted here is that if new VCs buy into this, then the primary market of Depin will be hyped up, and there will not be much room in the secondary market. They will either look for early Depin projects such as Theta, ar, etc., or do airdrops.
These airdrops are likely to be worth thousands of dollars at 0 cost. Don't miss them.
In short, the cyclical lows of cryptocurrencies have passed. Those who did not open positions at that time should be more cautious and bold. Future opportunities will no longer be given all the time like in November last year, but will be given every opportunity.
The cautious thing is to avoid being affected by Fomo in the large short positions, and the bold thing is to seize every big drop to increase positions.
I originally wanted to publicly announce my positions and holdings, as well as several projects I’m currently keeping a close eye on, but I guess Zhihu rules don’t allow it, so I’ll just give everyone some direction.
Key areas of focus in 2024: Bitcoin Layer 2, Ethereum Layer 2 (airdrop), Depin, GameFi, intra, and socialFi.
Oh, by the way, I have written about the Depin track, but I haven’t discussed it in all aspects. I’ll find time to write an article. I have posted it sporadically on WeChat Moments, but I haven’t sorted it out because it has increased a lot.
