Since March and April this year, many people seem to have slowly fallen into a state of bull market pessimism, that is, they believe (or hear others say) that we are still experiencing a bull market, but their mentality is completely that of a bear market.
In some of our previous articles, we have mentioned that the market is unpredictable. No one knows how the market will move in the future, but we will continue to be optimistic and believe that there may still be new opportunities in late 2024 or the first quarter of 2025. Let's first look at the overall performance in September, because new trend changes may occur in September.
Then, with the start of the school year on September 1, the children happily returned to school to study and live. Some partners in the crypto field seemed to be even sadder, because they finally waited until September 1, but did not see any obvious changes in the market. If someone views and understands the market in this way, it is not recommended to do any trading operations. Before doing a good job of self-risk management, all transactions may lead to your direct losses, and not doing anything is the best operation.
If you have experienced the bull market in 2021, many things should still be vivid in your mind. The last bull market started in March 2020 and lasted until November 2021. The total market value of the crypto market increased by more than 2,500%. As shown in the figure below.
Technically, the crypto market peaked in November 2021, but May 2022 was the darkest moment for the market, because of the collapse of LUNA and UST, followed by a series of chain reactions, such as the closure or bankruptcy of 3AC (the largest venture capital firm in the crypto market at the time), Celsius, and FTX Exchange. Many retail investors who entered the market during the last bull market probably experienced the so-called high risks of the crypto market during that period. I remember that many people on the Internet were shouting: Cryptocurrency is a scam. Of course, I have heard this statement many times before.
But it is undeniable that the bull market in 2021 is indeed a relatively large-scale bull market. The most obvious personal feelings I have are: people who have never talked about crypto partners before have also started to talk about cryptocurrencies in their circle of friends (there were a lot of new retail investors who came into contact with cryptocurrencies in the last round, and it is estimated that many current retail investors also entered the market during that period), many celebrities (such as Musk, etc.) have also begun to publicly and intensively discuss cryptocurrencies on social platforms, and some institutions have also begun to officially enter the field of cryptocurrency (even China's Meitu Xiuxiu also purchased BTC and ETH at the time)...
At that time, I remember that many altcoins had achieved a growth of more than 50-100 times. Of course, there were also some that performed slightly worse, such as some old coins that performed well in the bull market of 2017, but performed poorly in the bull market of 2021. Coins such as XRP, XLM, BCH, NEO, EOS, and ZEC, which performed very well in 2017, actually failed to break through the previous highs in the bull market of 2021. Therefore, the so-called speculation on new rather than old is also accepted by more and more people.
However, there are some exceptions, such as BNB, ADA, ETC, DOGE and other old currencies, which have performed very well. Not only did they break through the previous highs in the 2021 bull market, but they also had a greater increase. Especially DOGE, under Musk's continued strong support, it has become one of the brightest cubs in the 2021 bull market and quickly became popular. The price soared from around US$0.002 to around US$0.63. As shown in the figure below.
If we look back at the last bull market, we can actually find that BTC started to rise roughly from the low of 2020, and at that time, the price performance of most altcoins was not as good as BTC. It was not until the beginning of 2021 that altcoins suddenly took off. Therefore, there is also a more popular saying that before each round of bull market officially begins, BTC (including ETH) will first have a take-off process and stage. During this process, BTC.D will rise, and the growth of altcoins will lag behind. After BTC.D reaches a certain position (65-70%), altcoins will explode, and then funds will begin to enter rotation, and various altcoins will begin to soar. As shown in the figure below.
There is also a very popular saying: History doesn't repeat itself, but it often rhymes.
Therefore, many people hope that the new round of bull market can continue to follow the script that people expected. However, historical data or historical experience can only be used as an auxiliary reference. We also need to consider many comprehensive factors (such as the difference between the macroeconomic environment at that time and the current macroeconomic environment). Even so, the market trend is still unpredictable.
When it comes to the big bull market, if you have experienced the last cycle, you should also know that the cycle of the big bull market is actually very short. Especially for altcoins, the main surge may only occur in such a short few months. In the last round of bull market, the big bull market mainly went through two stages, one from January to May 2021, and then from August to November (the 519 incident happened in the middle, you can Google it for details). At that time, the feeling given to people at that time was that "all the coins are flying together" and "only rising but not falling". It seemed that as long as you bought and bought in Binance with your eyes closed, you could make money. During this period, the choice of currency was not even that important. It seemed that you could basically make quick money by going long on any token.
For example, SUSHI increased 6 times in one month, AAVE increased 6 times in one month, HOT increased 35 times in two months, JOE increased 60 times in just two weeks, BNB increased 8 times in 20 days, and DOGE increased 10 times in one day...
For example, the FDV of the so-called king project FIL at that time reached 400 billion US dollars, and the FDV of ICP just listed reached 250 billion US dollars...
But after the market experienced a brief climax, and with the subsequent LUNA collapse, many people's dreams of getting rich were instantly extinguished, and people around them gradually stopped discussing cryptocurrencies, and many people chose to leave this field. And it was from that time that I slowly had the initial idea of being a self-media, but I didn't put it into practice at the beginning, and I just wrote casually when I had time. It was not until July 2022 that I officially registered and opened "Hua Li Hua Wai". It was also from that stage that I also started a new round of fixed investment plans, allocating 20 months of funds (accounting for 80% of the total position) to start monthly fixed investment in Bitcoin. These plans have also been shared in previous articles of Hua Li Hua Wai.
In the first half of the year when I started working as a self-media, due to personal time and energy issues, my update status was relatively poor and I could not guarantee the frequency of updates. It was not until the beginning of 2023 that the updates of Hualihuawai entered a normal state. Now looking back, it was also during that period (January 2023) that Bitcoin began to break the bottom line, and the market at that time seemed to have no much attention.
In this way, half a year has passed in a flash, until June 2023, when it seems that the market sentiment has changed again. In June 2023, it was reported that BlackRock (BlackRock, the world's largest asset management company) applied for a Bitcoin spot ETF. The following picture is a screenshot of the report at that time.
Although the call for spot ETFs had been around for several years, it was not until BlackRock officially entered the market that things seemed to be different. This was not only a catalyst for the market, but also a source of potential new funds, and the beginning of the official public entry of large institutions. Once the spot ETF was approved, it also indicated that the way major institutions viewed and participated in Bitcoin would also undergo a paradigm shift.
Then, half a year passed, and 2024 soon arrived. On January 10, the Bitcoin spot ETF was officially approved and launched. This was also considered by many people at the time to be a new history and milestone in the encryption field.
Later, to the surprise of many, there was a huge demand after the ETF was approved, for example, IBIT (the BTC ETF launched by BlackRock) broke the $10 billion mark in just seven weeks.
And with the combined superposition of various events such as the approval of ETFs and Bitcoin halving, Bitcoin also broke through the ATH for the first time in March this year, reaching $73,000. Because it has only been half a year, it is estimated that many people still remember it vividly. I remember that many people believed that with the rise in Bitcoin prices, altcoins would definitely usher in a new round of skyrocketing, just like the last bull market. So, looking back, we will also find that many people also started to buy a large number of altcoins during that period, and some even fully invested in altcoins or directly exchanged Bitcoin for altcoins...
In several previous articles of Hualihuawai, we actually maintained the same point of view: we still believe that there will be a new altcoin season, but it does not mean that all altcoins have a chance, because there are so many new projects born in this round (it can be described as massive), and the current core problem of the market is still concentrated on liquidity (too many new projects and insufficient liquidity, resulting in greater dispersion of altcoins than in previous cycles).
In addition, this bull market is significantly different from the previous one in other aspects, such as:
- The main driving force of this cycle is actually the Bitcoin ETF. This is the main difference from the bull market in 2021. The main driving force of the previous bull market was macro conditions (including global money printing due to the epidemic).
- The liquidity of this cycle has changed radically. In the last bull market, it was a typical sector rotation, that is, after Bitcoin rose, Ethereum rose, and then the altcoin sectors of various concepts rose in rotation. But this rule does not seem to be so effective in this bull market, because most of the new liquidity (note that it is new liquidity here) has flowed to ETFs, and it seems that it has not flowed directly into altcoins (alternatives), which has greatly changed the market development dynamics of this cycle.
- Retail investors in this cycle seem to have become more cautious. In other words, retail investors no longer have that much money to speculate in cryptocurrencies. The number of new investors is too small (and many new investors go directly to MemeCoin casinos to get killed), and many sectors of the crypto market seem to have become a PVP game between old investors. With the end of the COVID-19 pandemic, the economy seems to have fallen into a new deadlock. Let’s not talk about the distant future, but just feel the situation around us. For example, it is obvious that starting from around 2022, more and more offline shopping malls/stores seem to be closing down, and the number of unemployed people seems to be increasing (it is becoming increasingly difficult to find a job)... This reality may also make more people cautious and careful about investing (investment mentality or investment belief).
- This cycle feels weak in innovation. The last bull market had DeFi, GameFi, Metaverse, and NFT, while this bull market has high FDV, VC gathering, no mutual takeover, and MemeCoin. Although the emergence of Bitcoin ecology (such as inscriptions, runes, etc.) has brought a short-term climax to the market, it has not achieved the expected effect of the big bull market. The result is that the entire market narrative has become more, the tokens have become more, the gameplay has become more, the choices have become more, and the scams have become more... This has further led to a slower growth in wealth for holders of coins, an increase in the risk of frequent transactions, and the shortcut of "getting rich by speculating in coins" has become increasingly difficult to take.
In short, each cycle will have different changes. Some things may be the same, and this part belongs to the specific law that history will repeat itself. But some things may not be the same, and this part is the variable of the market.
At present, it seems that more and more people are beginning to lose their basic belief in investment. I remember that in 2021, many people still believed in long-term investment and were full of confidence and excitement that blockchain (including encryption) technology could change the world. Now, many people have begun to get tired of this statement. Recently, I have heard more voices that blockchain is a scam and cryptocurrency is a scam.
So, is blockchain (including the crypto space) really a scam?
What others think is their freedom. At least I don’t think so, otherwise I wouldn’t have persisted from 2017 to now. If you also think that blockchain is a scam, then just choose to quit now. I will definitely not say anything. I respect everyone’s choice and freedom.
In this field, many people are connected by currency. If the bond is shallow, they will part ways; if the bond is deep, they will stay together. It is actually that simple. What is complicated is not this world, nor a certain field, but the human heart.
Everyone's existence is actually participating in a big game of life, which is composed of different small games. Different games naturally have different ways of playing and rules. A few people come online with armor and advanced equipment, while some people only have the most basic time (lifespan) when they go online. For most ordinary people, the opportunity to participate in the game is never fair, but the ability to seize opportunities depends on oneself.
Let's go back to the crypto market. Looking back from an overall perspective, the main narratives of the last bull market include DeFi (representative projects such as AAVE, SNX, SUSHI, etc.), Layer1 (representative projects such as LUNA, SOL, AVAX, FTM, ADA, BNB, etc.), Metaverse (representative projects such as SAND, MANA, GALA, etc.), MemeCoin (representative projects such as DOGE, SAFEMOON, AKITA, FLOKI, SHIB, etc.), NFT (representative projects such as CryptoPunks, Bored Apes, etc.).
It is no exaggeration to say that the crypto market is actually a game of narrative, that is, a game in which people (funds) rotate from one narrative to another. In this process, perhaps only a very few people can seize all the rotation opportunities or new narrative opportunities.
But if we follow historical experience, we can divide the bull market into the first half and the second half, and we can actually summarize some basic rules. For example, in the first half of the bull market, narrative projects with good fundamentals tend to have good price performance, but in the second half, the rotation will become more unpredictable. In the case of extreme FOMO in the market, those things with higher risks, higher return opportunities, or even no value (that is, no actual value can be seen in the short term, such as the Metaverse and NFT small pictures in the previous cycle) will be welcomed (hyped) by people (funds), and the market speculation will reach a stage-by-stage height, and then in the huge rise, it will usher in a huge decline and begin to enter a new round of bear market cycle.
Let's go back to the present. At least from my personal point of view, the current market has not seen the frenzy stage of the second half. Therefore, we still believe that the bull market is still there. If we have to make another guess (note that it is just a guess, not an investment suggestion), then we might as well make such an assumption: later (I don't know the specific time point and cannot accurately predict it) if BTC continues to break through the previous high, then the market will officially enter the frenzy stage of the second half, and some altcoins (we are unlikely to see a simultaneous rise of tens of thousands of coins, which has been specifically analyzed and sorted out in previous articles on the topic of altcoins) will have the opportunity to surge, but the time it takes for this process to occur will also be relatively short.
In other words, if you are still paying attention to altcoins, it is best to continue to pay attention to the trend of Bitcoin, because whether Bitcoin can break through the previous high next is crucial to the overall trend of altcoins. If Bitcoin can break through $73,000 next (for example, before the end of the year or the first quarter of next year), it will inevitably rekindle people's interest and hope in the market. Maybe we can see new opportunities and usher in a short bull market. The market is more often a manifestation of emotions. The reason is so simple, because human nature is like this. And the market often arises in despair, breaks out in disagreement, and ends in madness.
From the perspective of time, more than 80% of the returns often occur in the last 20% of a cycle. Whether you can survive this 80% of time depends on the individual, and whether you can control your emotions and exit effectively in the last 20% of time also depends on the individual.
In recent days, I have also found that many analysts on the Internet believe that Bitcoin will fall to $40,000 or even lower. Even so, what does it matter? Anyway, for me personally, I will definitely continue to wait patiently, as I wrote in a previous article of Hualihuawai: At most, I can hold it for a few more years until the next bull market, which basically has no impact on me. As shown in the figure below.
A person's position management determines his mentality, and his mentality determines whether he can stay in this field for a long time. Learn to be friends with time, and don't flutter around in the long river of time. Often, those who know how to swim are the ones who drown in the end.
This is where we share the content for this issue. You can view more articles on the homepage of Hualihuawai.
Disclaimer: The above content is only a personal point of view and analysis, and is only used for learning records and communication, and does not constitute any investment advice. The encryption field is an extremely high-risk market. In addition to various forms of phishing attacks and pig-killing schemes, many projects also have the risk of returning to zero at any time. Please treat it rationally, do not touch it if you do not understand it, and be responsible for yourself.
