Some thoughts on the current market

Recently, I have been thinking a lot, and the span is relatively large, but I feel that it is more or less meaningful, so I will share it all.

The views may not be correct, please point out or communicate

1. The current situation and impact of the market

I personally think that the current market situation is in the stage of the circle in Figure 1, that is, the big correction stage before the real bull market comes

Why do we say this? Let's take a brief review.

The market's heat rebound is due to the emergence of a series of Bitcoin asset protocols such as Ordinals, BRC-20, Atomicals, etc. that appeared last year, and the subsequent eye-catching price performance. Then, after nearly a year of hype and fermentation, the trend gradually slowed down and repeatedly went sideways.

And Meme followed closely, took over the baton of the Bitcoin ecosystem, and once again raised the market's heat performance. During this period, there were also good news at the macro level, such as the approval of BTC ETF and the United States no longer continuing to raise interest rates.

I personally think that the current correction phase started in March and April this year. After experiencing the Bitcoin ecosystem and the flying Meme, we need to realize that they are essentially a stage of speculating on new assets (currently without much underlying value support), and the real take-off of the market should be sufficient liquidity and new funds continue to flow in.

However, the inflow of stablecoins has almost zero growth since the Bitcoin halving

Before the Bitcoin (BTC) halving on April 20, there was about $42 billion in capital inflow (liquidity) in the cryptocurrency market this year, but since the halving, the capital inflow of stablecoins has almost zero growth, and the leverage of Bitcoin futures has also been greatly reduced.

According to data from DefiLlama (Figure 2), the total market value of stablecoins has turned to an upward trend since November last year, reaching $156.6 billion on the day of the halving on April 20. Although the market value of stablecoins subsequently hit a stage high of $160 billion, it has indeed stagnated in recent weeks.

This also means that the recent changes in the market are actually just internal circulation, that is, funds flowed from market A to market B, and did not bring new capital increments.

Therefore, we need to observe and judge the changes in the market in the future, that is, the entry of new funds and sufficient liquidity. I think it mainly depends on the following two aspects:

1. Narratives are implemented/killer applications that are actually implemented appear: At this stage, various narratives are in a theoretical stage. They are either not falsified or are still in the early stages. There are no projects that have really been implemented and solved the major pain points of the market. Here you can refer to the DEX, Lending, Perp, etc. that appeared in the previous cycle DeFi Summer, which solved the transaction pain points on the chain.

2. Changes at the macro level: interest rate cuts, general elections, etc.

2. How to grasp the market rhythm

We can find that many projects in this cycle will basically start TGE in the second half of the year. In theory, I personally think that the best two TGE times should be in the two stages shown in the figure below:

1. The market correction is basically completed and starts to rise: TGE at this stage, the chips are cheap at this time, and the subsequent rise is expected to be large. This choice is more suitable for projects that require long-term development. The payback period will be slower, but the income is stable and controllable.

2. The bull market is coming, various assets are flying around, and users start fomo: At this stage of TGE, there is a high probability that TGE can be achieved, that is, payback, and the market is hot. This option is more suitable for short-term fomo/Ponzi-oriented projects, with a fast payback period, uncontrollable returns but a relatively high winning rate.

Finally, you must also want to ask, when is the right time to buy at the bottom?

It is not convenient to answer this question here. If you want to know, you can click on the avatar to see the information and find me.

#大盘走势 #5月市场关键事件 $BTC