There is less than a week left before the #Bitcoin halving. Since the beginning of the month, I have repeatedly emphasized in my own learning community "Web3 Hongru Forum" that Bitcoin ecological assets will be the focus of this month. Facts have also verified my judgment. Whether it is Runestone/Pups and other Rune protocol-related assets or Puppets/Wizards and other Bitcoin NFT-related assets, including assets on the RGB++ protocol #Seal and its Layer2 project #Ckb , as well as the Merlin Layer2 ecosystem that has always been popular, BRC420 protocol-related assets such as blue boxes/music boxes, etc., have all created impressive market performances in the recent period. The crypto market was affected by the possible war factors and the risk aversion sentiment that eventually triggered a round of callbacks in the past two days. The first-generation Bitcoin assets that were highly expected at the end of last year, #Ordi on BRC20, and #Sats
It was even cut in half directly
On the contrary, some NFT/NFT-like assets did not fluctuate much
Just based on the performance of various asset categories in the Bitcoin ecosystem at this stage
Let's interpret the impact of liquidity on the short-term market price and the final trend
1. The duality of image and currency of BTC Layer1 assets
As an important concept in this round of narrative, the image mentioned here is not actually NFT in the strict sense, but more of a reference to its liquidity
For example, I have always emphasized that asset features such as "inscription = Token + NFT" are emerging in the token standard led by BRC20 in the Bitcoin ecosystem
Coincidentally, in the Ethereum ecosystem, we also saw the concept of "image-to-currency swap" in the token standard led by ERC-404, which also gave NFT assets higher liquidity
Everyone is NFT without listing on the exchange
Everyone is FT on the exchange
Regardless of DE X or CEX
The liquidity is completely different
2. Comparative study with the real estate market/stock market
●In the NFT market, all assets are bid in the "Dutch auction" way
Because there is a lack of market makers, the natural liquidity is poor
Each of your counterparties can be said to be real trading parties
This is a bit similar to the real estate market
After the primary issuance, the project party (GOV) completely handed over the secondary market to the market
If money is needed, just circle another piece of land and issue a new plate
There is not much motivation to repurchase
After all, the cost of demolition is high...
●In the FT market, whether it is CEX or DEX
Orderbook mechanism/AMM mechanism introduces market makers
So the natural liquidity is better.
In many cases, your counterparty is actually the main force.
This is a bit similar to the stock market.
The project party (Co) will repurchase in the secondary market after the primary issuance.
Of course, this old project must be popular.
Because the popularity is the trading volume.
However, there are still big differences between the real estate market and the NFT market, including the stock market and the FT market.
For real estate, we can judge its fundamentals by population/location/commercial activities. For stocks, we can judge its fundamentals by revenue/profit/industry prospects.
The cryptocurrency market has not yet seen such a basis for judgment.
The popularity of various memes and meme coins has also made the inside and outside The industry is all confused
The comparison here is based only on its liquidity
We will not discuss the intrinsic value
3. Liquidity is a double-edged sword
After talking about the comparative study, let's get back to the topic
The impact of liquidity on asset performance
Directly conclude:
FT assets listed on exchanges are susceptible to short-term positive/negative effects
The volatility is greater and of course the ceiling is higher
NFT assets not listed on exchanges are not susceptible to short-term positive/negative effects
The volatility is lower and of course the ceiling is lower
In fact, we can see this from the recent performance of Bitcoin ecosystem assets
Layer1 assets listed on exchanges: Ordi/Sats
Due to the impact of risk aversion, it plummeted directly
Layer1 assets that are not listed on the exchange: Runestone/Pups/Puppets/Wizards
are not very volatile
This is actually easy to understand
Because liquidity is relatively poor
So when the market panic comes, it is impossible to sell in time
Just passively hold it...
This may be what we often say
Ordinary people only make money by buying houses
I have never heard of making money by speculating in stocks
Its largely depends on whether everyone can hold it
However, liquidity is actually very important for an asset
If you want to really break through the market value ceiling, you must increase the volume
This can be seen from the performance of BAYC
As a star NFT representative in the last round of the market
Its total market value peaked at only 4 billion US dollars
It may not even be enough to be in the TOP100 in the FT market
Let's make a not very appropriate comparison
NFT project ≈ China's top luxury residential community
FT project ≈ China's top listed company
Its imagination space is completely different
The main difference lies in the number of market participants
In simple terms: "Do retail investors have a chance to buy?"
From this round, the ceiling of pure NFT projects
May be limited at the moment of mint completion
Not likely to become the focus of the market
This may also be the reason why some high-quality NFT projects have frequently broken their issue prices recently
At the same time, it has created the popularity of the "picture coin concept"
Only those assets with duality have the opportunity to be listed on the exchange
From a small circle to a wider world step by step
So how are your holdings?