What is this market hyping (is MKR sustainable?)

What is going on in this market?

Are you speculating on value expectations? Are you speculating on technical expectations? Or are you simply speculating on new coins?

I saw someone in a group chat this morning saying, "MakerDao has already been listed in the last round of currencies. It is actually very difficult to hype it up in this round. It is difficult to have a big increase. This market is about hyping new ones, not old ones."

We often mention that this market is about speculation on new things rather than old things. Therefore, I would like to briefly talk about this topic today.

Let's take a look at the stock market. Who do you think is the most popular company this year? It has to be Nvidia. Why? AI is very popular this year. The world is developing its own big models. The launch of ChatGPT has boosted the entire AI industry.

In the past, there was the Hundred Regiments Campaign, and now there is the Hundred Model Campaign. Not only is the world at war, but so is the country.

Therefore, we have seen a huge demand for GPUs, the raw materials for AI, which has led to the market pricing of Nvidia's stock, and as a result, the stock has broken its previous high early (the previous high in November 21). Microsoft also broke its previous high in the past month because it got on the AI ​​express train early and is also a major investor in openAI.

In the stock market, we often use PE to estimate whether a company's stock price is overvalued or undervalued. But if you look at Nvidia's stock now, if you look at it from the PE point of view, it has actually been overvalued a long time ago (TTM is already 243), and if you look at it from a technical perspective, it has also been deviating for a long time.

Why does this happen?

In fact, the core is still to speculate on the present and expectations?

The market believes that AI is a new technological revolution and a new future, and all companies should be empowered by AI, etc. Therefore, we see that the world is discussing AI and chatGPT.

If the last round of Nvidia's stock price rise is seen as the demand for it from the Bitcoin mining industry, then this round is indeed the demand for it from AI. In other words, the last round was a narrative of the mining industry, and this round is a narrative of AI.

So let’s go back to the original discussion, will MakerDao be hyped even more?

From the perspective of the old and the new, MakerDAO is indeed a product of the last round of DeFi, and it is also a currency that has seen a sharp increase in the last round. But can it still be hyped up in this round?

I think whether it can continue to be hyped up does not depend on whether the protocol or the coin is new or old, but on whether there is a new narrative. Recently, we have seen that MakerDAO has risen more than double in the short term. The core reason is that it is being hyped up as the leading representative of the RWA track.

If it is simply viewed as DeFi lending, then all lending activities should be greatly hyped, but this is not the case.

Therefore, I believe that the key to whether to speculate on the new rather than the old lies in whether there is the empowerment of the new narrative, rather than the newness or oldness of the agreement itself.

But then again, for most protocols (coins), it is difficult to have a second explosion of new narratives (just look at the replacement of the old and new top 20 cryptocurrencies by market capitalization), and most of them were hyped up the first time.

In other words, if no new narrative emerges later for these protocols or coins, they will still follow the market and may even lag behind it.

For example, let’s take FIL, which is well known to everyone. The last round of hype was actually about expectations for the storage track. But later it was found that the expectations were not met because it was not as widely used as everyone thought, so it fell from the altar (of course, it was also inseparable from the bear market).

This round, a new narrative of fvm started this year, and public chains began to be built. As we said yesterday, this narrative is still within the framework of layer1. At present, the layer1 track is already a red ocean market, and because of the large-scale launch of layer2, I think there is less and less room.

If the layer 1 public chain wants to be hyped, it can only make a fuss about the ecology. In other words, if it wants to be hyped next, the possible point is to attract more ecology to launch filecoin because of storage + public chain, which will lead to more file tokens being consumed, making file tokens more scarce, double turbine, etc. Then can the ecology take off? Or after it takes off, can it be sustained?

So let's go back to the MakerDao mentioned at the beginning of today. Can it be hyped up again? The key is whether the RWA track can really run out and whether it can really be hyped up.

Note: The currency has risen sharply recently, so the short-term risk is high, so please remain cautious.