The upcoming bull market has three major differences from the historical bull markets. Based on these differences, our trading strategies also need to be adjusted.
1) The amount of funds is different. The total market value of cryptocurrencies is now 2 trillion, and the price of BTC is 50,000. At the beginning of 2020, BTC was only 10,000.
2) The consensus on the bull market is different. Before the last bull market started, there were reports of cryptocurrencies returning to zero in 2018, 2019, and early 2020, and I personally saw many people leaving the industry. But in this cycle, even in the year of the big drop in 2022, most people believe that the next bull market will come.
3) Different market size
The above three differences are obvious, and can be used to deduce the differences of this round of bull market.
1. Increased market specialization and professional secondary institutions
As the amount of funds in the secondary market increases, the professionalism of the market will definitely increase significantly. The number of specialized secondary fund institutions will increase accordingly. The simplest reason is that when your funds are 100K, you can do your own research. When your funds reach 10M, you will need a professional research team to operate. In addition, there are funds that are specially established because they are optimistic about the secondary market. In general, these funds have professional teams, strong funds, and abundant resources. If you are a leek, you cannot fight against them. The difficulty of predicting the trend of BTC has increased in the past two years. This is also the reason, because there are more powerful large institutions, and it has become a confrontation between large institutions.
So what should we, the leeks, do?
1) The accuracy of some existing skills will decrease, which is an inevitable result of the improvement of market professionalism
2) Consider entering the core circle of professional organizations and interacting through relationships and connections.
3) If you can’t find an institution, work with some equally capable friends to conduct research together
4) In trading, you can take advantage of the disadvantages of professional institutions.
For example, investment decisions are made more slowly than by individuals, which results in slower response to new projects and new hotspots than by individuals.
The investment targets of institutions are limited, because institutions all follow a set of mainstream investment logic, and some investment sectors do not conform to trading logic. The most obvious one is inscriptions. In the future, tracks similar to inscriptions may have greater opportunities for getting rich quickly.
2. Deepen some projects or ecosystems
Assume that it takes a certain amount of funds to operate a project to a certain market value (for example, 1 billion US dollars in circulation). In this bull market, the amount of funds in the market has increased dozens of times, which means that the opportunities have also increased dozens of times. Of course, the actual situation is worse than ideal, because those projects with high initial market value need to be removed. But compared with the last bull market, the opportunities are still much greater. In other words, in this bull market, a good project or public chain, with a few institutions that are optimistic about it and some community users, can become a project with a high market value.
It also means that a project does not need many people to be optimistic about it, and even if it is not optimistic, there will be no problem. Because it only needs a small proportion of institutions, big investors, and retail investors in the market to agree, and it will still have a high market value.
Take this round of market as an example, inscriptions may have the biggest increase, followed by sol ecosystem. However, apart from the general market, many coins still have very good increases, and even many coins have never been heard of. Not to mention, some new online projects have benefited a group of people when they were launched, such as pixel, dym, etc.
However, don't be happy too soon. Although there are more opportunities, there are also more institutions and professional teams. Therefore, many people will be eyeing the better projects. So in this bull market, if you still only try a little bit or just follow the trend, you may only be able to eat some of the leftovers, and sometimes you can't even eat them.
Therefore, the way to maximize returns is to focus on good projects. Due to the large amount of market funds, good projects will have good returns in the future. But you must ensure that you are on board in advance.
3. Valuation premium is obvious, and there are very few undervalued projects
In this round of bull market, everyone has realized that many projects launched have very high market capitalizations. This is an inevitable manifestation of a market with abundant funds. However, many people do not realize that there are very few undervalued projects in the market.
The reason is simple. There is a lot of money in the market. Some professional teams can find projects that are undervalued. But it is very difficult for ordinary people to find them. So, for me, instead of spending time looking for undervalued projects, it is better to study the bottom of the trend cycle. Every cyclical adjustment of the market will lead to the decline of the currency, and basically no one can escape it. Moreover, in times of panic, the price is wrongly killed. Therefore, spend time on the bottom of the research cycle, so that you can easily buy at a beautiful price.
Taking advantage of information asymmetry is also a way, especially when the market is full of funds, it will take a certain amount of time for new projects on the chain to appear and be discovered.
