Summary: In the past year, the price of Bitcoin fell by 65% throughout the year, with the maximum drop of 77%.
What everyone has experienced in 2022 is probably hard to describe in words. Whether it is investment, or the real economy and life, I think it is not an exaggeration to describe it as "miserable", but so what? Optimism is a kind of talent, and it is also the way for currency friends to win in this market. The principle of simplicity and the long-term belief in this circle are the root of profits and losses. In this era of gradual solidification of classes, we must stand on the shoulders of giants. Go forward. First, let us briefly review several major events that occurred in the past year.
In March, Axie Infinity, one of GameFi's most successful projects, was forced to announce that its main network had been hacked, and 173,000 Ethereum and 25 million USDC were stolen, with a total value of US$625 million, the largest and most serious amount in 2022. A hacker attack incident. Rumor has it that the attack on Axie may have been carried out by the North Korean state hacker organization. Hundreds of millions of dollars are hacked in the currency circle every year. Hacker teams are trying to attack all the time, and being attacked has become the direct cause of the bankruptcy of countless project parties. The assets in the currency circle are built on code, which is also the reason why there are more black swans than in other industries. Therefore, do not put your eggs in one basket. It is foolish to all-in a project at any time.
In May, UST, which was at its peak, was de-riveted for the second time, and then the market began to panic sell off. With the death spiral of UST and LUNA, in just two days, the market value of 40 billion US dollars was wiped out. The projects with the top market capitalization can collapse so quickly, which not only accelerates the process of the bear market, but also makes people shy away from projects in the currency circle. At the same time, the future of algorithmic stablecoins is even more bleak. Three Arrows Capital became one of the biggest victims of the LUNA collapse. In fact, many people see the castle in the air of UST. However, through capital operation, the project team has reached the top market value and attracted the participation of a large number of capital. However, no snowflake is innocent in the avalanche. In the end, these participants I also tasted the failure of speculation.
In June, Sanjian Capital, which has been in the currency circle for 10 years and is the leading native crypto capital in the industry and has great influence in the venture capital circle, suffered a thunderstorm. Its net asset value was once as high as 18 billion. After the LUNA storm, the mistakes made by its highly leveraged and high-risk operating model were magnified, and it was ordered to liquidate and ultimately owed US$3.5 billion in foreign debt. Its founder, Su Zhu, is still at large. The direct cause of the bankruptcy of Three Arrows Capital was the collapse of LUNA, but the fundamental reason was still the lack of respect for the currency circle. There is no such thing as "too big to fail" in the currency circle. Anyone who dares to take risks will eventually suffer the consequences.
In August, the Ethereum currency mixing platform Tornado Cash was placed on the sanctions list by the U.S. Treasury Department’s Office of Foreign Assets Control, saying that Tornado Cash had been used to launder more than $7 billion since its inception in 2019. Subsequently, the developer was arrested and Tornado It was banned by multiple protocols and the interactive address was blacklisted. Although Github, Circle, Alchemy, etc. have followed up with sanctions, the front-end and related services that Tornado Cash can operate for users have gradually disappeared, but the contract side cannot be banned. For the crypto world, regulation and blockade are unavoidable shackles. Tornado Cash’s tenacity may become some kind of model for the future, and whether the so-called “decentralization” will evolve into new forms remains to be seen by future generations. Answer.
In September, Ethereum merged successfully, and Ethereum switched from Proof of Work (PoW) to Proof of Stake (PoS). After the upgrade, Ethereum’s Token economics changed dramatically, because the Tokens paid to node validators were less than those paid to The miner's Token and the destruction mechanism exist at the same time. The overall inflation rate of the Ethereum network is close to zero, and deflation may even occur during periods of high destruction. The successful upgrade of Ethereum 2.0 not only inspires the currency circle, but also for Ethereum supporters, any successful upgrade is Ethereum fulfilling the promise of the roadmap, and its dream of "supercomputer" is a step forward. step towards reality.
In November, unsuspecting investors began to withdraw funds from FTX. In just one weekend, users of the trading platform withdrew approximately US$6 billion. Fud’s trigger was a report revealing problems with Alameda Research’s balance sheet, followed by Binance CEO CZ expressing concern and plans to sell off FTT. After the run broke out, FTX CEO SBF admitted the fact of misappropriating user funds, with a funding gap of tens of billions of dollars. A few days later, this top three exchange filed for bankruptcy, and the native token FTT fell from more than 20 US dollars to 2 USD. In addition to FTX, there are countless exchanges that have run away this year, such as ZB, Hoo, Hotbit, BitCoke, etc. This situation will occur in every round of bear market. For users, their funds should be placed in the top exchanges or cold storage as much as possible. Wallet, in addition, the behavior of soliciting savings at high interest rates requires special vigilance.
Under the background of the bear market, what is happening in the currency circle is more sad than happy. No matter project parties, exchanges or investors, few are immune. What is intriguing is that the ensuing of various black swans and the decline of the current currency circle are rarely at the same frequency as the Federal Reserve's interest rate hike.
In the early morning of December 15th, Beijing time, the Federal Reserve announced a 50 basis point interest rate hike. Since the Federal Reserve raised interest rates for the first time on March 17, it has raised interest rates seven times throughout 2022, with a total of 425 basis points of interest rate increases. The federal funds rate has risen to 4.25%-4.5 %, the highest level since December 2007. Before this round of interest rate hikes, the Federal Reserve maintained a low interest rate of 0.25% for 2 years. The continuous release of funds has created a phenomenon of global risk asset prices hitting new highs. The currency circle also staged a vigorous bull market. The last round of bear market The lowest point was more than 3,000, the highest point was 68,000, and the maximum increase was about 20 times.
Since its creation on January 3, 2009, Bitcoin has experienced three complete bear and bull cycles. Only the latest one has shown a correlation with the Federal Reserve interest rate and US stocks. The highest total market value of Bitcoin has exceeded one trillion U.S. dollars. The entry of financial institutions, chaebols, and Wall Street capital has become the best explanation for the linkage trend.
Since this time it is linked to the US dollar interest rate, we might as well continue to look at this. The following Federal Reserve interest rate meeting times: 2023-2-2, 2023-3-16, 2023-5-4, 2023-6-15, 2023-7-27, 2023-9-21, 2023-11-2 , 2023-12-14, a total of 8 times throughout the year. According to current market expectations, interest rates will generally stop raising interest rates in the first half of the year, that is, after 3-4 more meeting decisions, and shift to an interest rate cutting cycle. According to this rhythm, the pessimistic bear market is expected to end in the first half of 2023, and the market will trigger a rebound.
Bitcoin has its own cycle, and halving every four years coincides with the bull-bear trend. The peak prices of the first three bull markets were in December 2013 ($1,160), December 2017 ($19,900), and November 2021 ( $68,900). If Bitcoin's four-year inherent cycle is followed, the peak of the next bull market will appear at the end of 2025. Let’s look at the bear market again. During the period 2017-2021, the bottom was reached twice in December 2018 and March 2020 respectively; during the period 2013-2017, the bottom was reached twice in January 2015 and August 2015 respectively. These two rounds of bear markets What they have in common is that they all hit their first low one year after the peak of the previous bull market.
No matter from the perspective of the strength of the US dollar or the inherent cycle of the currency circle, the current price of the 16,000 pie is at the bottom range, and is even infinitely close to the lowest price. In terms of market sentiment, we are currently in a pessimistic and deep bear market. Buying when no one cares is the best explanation for the current operation.
Every time there is a bull-bear transition, the market will experience a major shakeup. One general will succeed and thousands will die. Behind the success of Bitcoin is the sacrifice of countless copycats in exchange for themselves. Although there will be star projects with hundreds of times and thousands of times in the bull market, don’t forget that these coins were not famous before. Only Bitcoin, Ethereum, etc. were seen by the market and increased by dozens of times. Bitcoin has been running for 14 years and is already a battle-hardened veteran. After the successful upgrade of Ethereum 2.0, it continues to develop step by step according to the road map. Let’s give a price target. In the next round, the peak value of Bitcoin will exceed 100,000 US dollars, and Ethereum will exceed 10,000 US dollars. So, if you want to explore some potential tracks on the basis of beta returns, what are them?
Public chain: The Ethereum ecosystem has completely exploded after the DeFi summer, but for infrastructure, public chains still have valuable space and narrative foundation. This round, under the leadership of Ethereum, BSC followed closely, and then many public chains such as Matic and Avax became popular in the bull market through ecological construction. Now that L2 development is in full swing, there is no doubt that in the next round, public chains will continue to make a fuss about the ecology. Among them, Atom's technology allows project parties to "build a chain with one click" and has already been demonstrated in projects such as Terra and dYdX (not migrated); Near, known as the killer of Ethereum, has yet to improve its ecology; Dot, which has high hopes, can Will it lead to technological breakthroughs? In addition to these public chains that have already been demonstrated, in the next stage, light payment public chains such as games, metaverse, and social networking are the new blue ocean.
Stablecoins: Starting from TEDA’s USDT, stablecoins have experienced considerable development. After Binance vigorously developed BUSD, the current stablecoin market is occupied by the three giants USDT+USDC+BUSD, with a total market value of more than 100 billion. It is worth noting that these stablecoins are issued by centralized institutions. The over-collateralized stablecoin Dai only has a market value of 5 billion, and the proportion of Ethereum in the collateral is getting smaller and smaller. The currency circle has always hoped to have its own stablecoin. The repeated failures of algorithmic stablecoins are the best proof. If an epoch-making product can appear in this field, its market value will exceed 10 billion. In addition to the proven layout projects, the new stablecoin track project deserves special attention.
DEX: The success of UniSwap and GMX is the best illustration. Relying on its trading business, Binance has gradually developed into a giant company. CZ has become the richest man in the currency circle, and trading services are a rarely proven successful business model. The thunderstorm of FTX has dealt a painful blow to the currency circle. Although investors cannot do without the services of CEX, the cake of the trading market will definitely be further eroded by DEX. The market share and market value of decentralized exchanges will continue to increase, including spot and derivatives transactions.
DeFi: The engine of the last bull market was DeFi. After several years of hard work, it took a lot of hard work to create a DeFi summer. Despite this, the current infrastructure around the DeFi sector is not rich enough. There are still many ways to learn from traditional financial methods. Public chains are naturally born for finance. There will definitely be a new "summer" in the DeFi sector. Pay attention to composable protocols. and innovative agreements.
NFT: Things are rare and valuable. The "uniqueness" of NFT meets the psychological needs of human beings to collect and show off, and new projects will emerge as the times require. The biggest problem with NFT is liquidity. Focus on projects that focus on liquidity. Celebrity blessing and rarity will continue to be the key to the value of NFT. The second half of the last bull market was dominated by NFT, and there is a high probability that there will be phenomenal projects in the next bull market.
Web3: The infrastructure around Web3 has not yet been perfected. At present, domain names have taken the lead, and wallets or new forms of infrastructure will become the first projects to benefit. As a field that has not yet exploded, it is not clear in what form Web3 will debut, but this sector will definitely be hyped, and it is recommended to lay out some Web3 concept projects.
GameFi: Games and economic models cannot be effectively combined. Several "successful" games are also the effect of the economic model, or the nature of the game. Whether a real 3A masterpiece can be popular in the currency circle still needs market verification. However, GameFi usually starts with a small amount of money and an understanding of the game, so it is suitable for using small to win big, and games are not necessarily good for people in the currency circle, and there are many arbitrage opportunities.
In a bear market, how should we plan? Looking back on today in the bull market a few years later, will you regret that the decision was not implemented in place? Taking history as a guide, we can know from ancient times to the present that the four-year cycle of Bitcoin is the consensus, and it is also what the history of the past 14 years has told us. But standing at this intersection again, will you have the doubt that "this time is different"? A new journey has begun, and grandpa will continue to walk with you and fight side by side on the road of cryptocurrency.
