In a recent interview with Golden Finance, I shared some of my views on the cryptocurrency market. The interview covered an analysis of Bitcoin’s recent and future trends, as well as an in-depth discussion of the altcoin market and an outlook for future trends.
For ease of reading, I have condensed the interview content so that you can read all the points in just 5-10 minutes. If you find the content inspiring or helpful, please follow me to get more market analysis and investment insights.
Q1: Looking back at the first half of 2024, which sectors do you think will be the most profitable? How do you see these sectors performing in the second half of the year?
Not in love: In the first half of 2024, I think Bitcoin-related wool-pulling activities and MEME coin fields are the most profitable.
For the second half of the year, I have reservations about the continued strength of Bitcoin Rune Inscriptions. The current round of Bitcoin ecological development is closely related to the net inflow of ETFs, but its core value lies in its status as digital gold and its decentralized characteristics. Bitcoin is not suitable as an efficient public chain, so I think the Bitcoin Rune Inscriptions sector may only be a short-term phenomenon.
As for the logic of liquidity spillover, we can refer to the rapid development of NFT and GameFi in 2021, which is the result of liquidity spillover after the sharp rise in Ethereum prices. When Ethereum holders gain returns through investment, they tend to use part of the funds to buy consumer goods such as NFT, which is a consumption rather than a pure investment behavior.
For other areas of the Bitcoin ecosystem, I think there are still opportunities for development because the market is always chasing new things and capital will flow to new investment trends.
Regarding airdrops, whether it is layer0's zk, blast or other projects, it has always been a relatively stable way of earning money in the cryptocurrency circle. Although the industry may become more and more competitive, I believe that more people will join, because airdrops and user benefits are behaviors recognized by the market and users, and project owners can also gain more traffic and user support in this way.
Finally, MEME coins performed well in this round of financing, with an average increase that is better than other large-cap or VC tokens. Take people as an example, it is combined with the narrative of the US election and has attracted a lot of funds. The more intense the competition between Trump and Biden, the better people may perform. In addition, PEPE, as a MEME coin on the Ethereum native chain, is expected to have a positive impact on its price after the listing of the Ethereum ETF. At the same time, derivatives on the Ethereum chain, such as DeFi infrastructure projects such as GMX and UNI, as well as modular tokens such as TIA and Manta, and its L2 network, are expected to rise. I have shared more detailed related content in the community, and friends who are interested are welcome to follow me and get more information.
In summary, although some areas may face challenges, the market is always full of opportunities, especially in emerging trends and innovative projects. Investors should stay tuned and make wise investment decisions.
Q2: In view of the recent sharp fluctuations in the cryptocurrency market, especially Mt.Gox's plan to compensate approximately 140,000 bitcoins in July, what is your opinion on the market situation?
No love: I think the compensation decision of Mt.Gox in July will have a certain impact on the market and may bring some selling pressure. In trading and secondary markets, we often face a prisoner's dilemma: if no one sells, the price of the asset may continue to rise; but if there is panic selling, the market price will fall.
As for the 140,000 bitcoins to be compensated, I think it is unlikely that they will all flood into the market at once, but it is foreseeable that there will be some selling. However, there is no need to panic about this. The compensation event is actually a one-time release of potential negative factors, and the market is likely to self-repair these selling orders.
In the secondary market, buying and selling is the norm, and we cannot control the trading behavior of others. Therefore, before a deterministic major event occurs, we should control our mentality, manage our positions, and contract leverage, and avoid heavy positions or high leverage transactions at critical moments.
We cannot control the selling pressure in the market, but we can control our own trading decisions. When big events come, protecting our assets is what we should really consider and what we can do. Through rational asset management and risk control, we can better cope with market uncertainties.
Q3: Bitcoin seems to be in consolidation after hitting a record high. What do you think is the reason for its lack of upward momentum? What factors may cause Bitcoin to rise again in the future?
Don't love: First of all, Bitcoin has been rising for nearly 7 consecutive months since January this year. The market has its own natural laws, with ups and downs. The recent decline is a normal release of bearish sentiment and part of the market adjustment. As the uncle in "Flowers" said, investment must learn to face losses, which is a test of mentality control. We enter the market to make profits, but we must also accept the gains and losses in the process. We are all ordinary people, even geniuses can make mistakes. Therefore, adjusting the mentality, managing positions, and clarifying the market direction are the key to investment. For investors who need further guidance, please follow my YT or X to get content on trading hotspots, trends, and mentality management.
As for the reasons why Bitcoin lacks upward momentum, macro factors play an important role. The Federal Reserve has not yet started to cut interest rates. In a high-interest environment, there is less hot money in the market, and high inflation has increased the cost of living, resulting in insufficient buying power in the secondary market. At the same time, the high interest rates of U.S. Treasuries have attracted funds, and many people are satisfied with an annualized return of 4-5%, which is enough to outperform inflation and reduce the pursuit of higher-risk investments. Once the Federal Reserve cuts interest rates, it is expected that U.S. Treasury yields will fall, and funds will flow out to find higher-yield investment opportunities, which may enhance the buying power of Bitcoin.
Looking ahead, Bitcoin's resurgence may be related to the following key narratives and timings. The first is the US election, and Trump's support for cryptocurrencies may have a positive impact on the market. Regardless of the election results, the cryptocurrency market may become active as a result. Another certain factor is the interest rate cut, which will stimulate capital inflows into the secondary market, including US stocks and the cryptocurrency market, bringing new upward momentum to Bitcoin.
Q4: Although the top cryptocurrencies have not fallen back to the level of April this year, the prices of many blue-chip altcoins are close to the points at the beginning of last year's bull market, and the confidence in the altcoin market seems to be unusually low. What do you think is the reason behind this phenomenon? What do you think about the prospects of altcoins?
Dislike: The top altcoins in this round, such as Pepe, People, Floki, etc., are all newer tokens launched between 2022 and 2024. In contrast, the blue-chip altcoins in the previous bull market, such as Shiba and Doge, did not perform well in this round despite their large market capitalization.
The reasons for this phenomenon may include market sector rotation and macroeconomic factors. For example, in the last bull market, Tesla in the US stock market and Doge in the cryptocurrency market benefited from market popularity and celebrity effects, while this round of US stock and cryptocurrency markets are more focused on the AI sector, such as NVIDIA's strong performance. In addition, the monster stocks in the US stock market, such as GameStop, attracted a lot of funds, affecting the flow and popularity of altcoins.
From the perspective of investment strategy, there is an opportunity cost in the market. If the value of the assets held by investors falls while the prices of other assets rise, then holding on means losing potential gains. Therefore, it is wise to adjust positions in a timely manner and turn to assets with greater potential.
I remain optimistic about the future of altcoins. Despite market volatility, I believe that choosing the top fresh MEME coins on each public chain is key. Fresh tokens are more likely to attract new users because they are novel and not widely held. In addition, the performance of MEME coins is closely related to the performance of their native chain assets. For example, MEME coins on Solana, such as Bonk and Wif, have seen a recent pullback, but I am still optimistic about Solana's long-term potential.
Q5: What do you think are the main risks and opportunities facing the cryptocurrency market in the second half of the year?
Bu Ai: I think the risks of the cryptocurrency market in the second half of the year may mainly come from geopolitical conflicts and fluctuations in the US stock market. Historical experience shows that wars and conflicts often have an impact on the market, and the cryptocurrency market is no exception. Although we hope for world peace, the occurrence of political events often affects our investment positions first. Therefore, this is one of the risks that Bitcoin and other cryptocurrencies may face.
In terms of opportunities, I am optimistic about the cryptocurrency market in the second half of the year. In particular, the approval of the Ethereum spot ETF, although not yet available, is expected to be launched in the summer, from July to September. Once it is available, I believe it will have a positive impact on the entire Ethereum ecosystem and its second-layer network, triggering a market rally. I have elaborated on this in detail in my previous X, and you are welcome to follow my X for more information.
