Recently, the cryptocurrency market has been unpredictable, and many people are starting to think that this is a strange bull market where no one is making money. Some even complain that this is the hardest bull market to make money in Bitcoin history. As a result, those who used to believe that everything looked promising during a bull market and that every project looked like a bad investment during a bear market are now starting to doubt their decisions and the value of the entire cryptocurrency industry. They believe that the bull market is coming to an end…
01. It has always been difficult to make money in a bull market
Although this bull market may seem strange, it is not surprising considering the many previous bull markets. This point has been analyzed in a previous article titled “Bitcoin Bull Market Logic Quietly Changed, Many Still Can’t Make Money?” The truth is, it has never been easy to make money in any bull market. It’s important to note that those who have made money in previous bull markets were not the ones who jumped on the bandwagon during the bull market. Only those who came in later realized that they were the ones funding the profits of others. The real winners are those who can navigate the ups and downs of the bull and bear markets unscathed. Over the years, many famous speculators have entered the cryptocurrency market, including brilliant Wall Street traders like SBF and “Korean Musk” Do Kwon. They have all encountered setbacks in the cryptocurrency market and have concluded that the most important lesson is the misconception of “cryptocurrency values”.
Many traders, including SBF, have entered the cryptocurrency market not because they recognize the value of Bitcoin and cryptocurrency assets, but because they believe there are many “fools” willing to buy their “air” Bitcoin at a low price. They thought they could take advantage of this highly free market, but they didn’t realize that in this market, the “big fish eat the small fish” fate cannot be avoided. In any industry, those who enter with the mentality of “cutting leeks” and not recognizing the industry’s values are bound to fail. Even if they initially taste success, they will soon be devoured by the market. Perhaps many people have forgotten the original intention of Bitcoin and the cryptocurrency industry, and this distorted value system may lead to serious misjudgments.
02. What went wrong with value projects?
In this bull market, it is clear that many value projects favored by venture capitalists (VCs) and the well-established cryptocurrency value projects such as Ethereum, Layer2, metaverse, and DeFi that have been under development in the cryptocurrency market have not been recognized by the market. Instead, people seem more willing to participate in memes. This raises the question: what went wrong with all these years of “cryptocurrency value projects”?
The market cannot be blamed for not embracing value projects. The problem lies with the value projects themselves. Recently, we have observed that the gas price of Ethereum has dropped to 1, and some Layer2, metaverse, DeFi, and newly listed VC projects have high market capitalizations despite having poor data and low user activity. This high market capitalization combined with poor data gives the impression of an extremely overvalued bubble. Naturally, no one wants to buy in at such high prices, so they prefer to invest in memes with lower market capitalizations and avoid various pump-and-dump schemes.
Many people have been too focused on the surface and neglected the underlying reasons. The valuation of many value projects should not be solely based on active users, as they also carry a total value locked (TVL) of billions or even hundreds of billions of dollars.
Moreover, the prevalent “yield farming” trend in recent years has not only generated a large number of fake users but also made it difficult for new VC projects to be valued and focused on real work. This has become a problem for the entire Web3 industry, as a significant amount of fake traffic and users have manipulated these projects to some extent. Some organizations even take advantage of the market’s unhealthy atmosphere for profit, creating fake “star teams” to deceive VCs and customizing “value projects” for those who participate in “yield farming”. In this kind of value-oriented but distorted VC projects, it is obvious that they are only aiming for short-term gains and will eventually fail.
Therefore, people have realized that both old and new “value projects” have been contaminated, and even a small amount of impurity can ruin the whole project. Hence, not investing in these projects has become the best strategy. However, we should not completely dismiss the projects that adhere to the original values of the cryptocurrency industry. Bitcoin has brought transparency and self-custody to assets, and Ethereum, with Layer2 and other smart contract platforms, has created a “trusted” operating environment for internet applications, pushing the internet from online to on-chain. After going through trials and tribulations, I believe these projects will continue to stand strong in the cryptocurrency market’s continuous self-correction.
03. The logic of a bull market has changed but remains the same
The logic of a bull market has changed, but in reality, it has remained the same. Most altcoins have always been followers of Bitcoin, benefiting from its price surge. Once the price of Bitcoin reaches a high level, it becomes difficult for altcoins to rise as well. People then turn their attention to new and undervalued altcoins, thinking that they have found an “undervalued” opportunity. Driven by FOMO, some funds flow into these altcoins, which have smaller market caps, and even a small amount of investment can result in significant returns. People have gradually realized this new logic of the bull market.
However, this year, in addition to various new and old altcoins, meme projects have also emerged, and the market has discovered that FOMO sentiment can also be channeled into memes. Why waste time on “rat-infested” altcoin traps prepared for retail investors when FOMO sentiment can easily be directed towards memes? As a result, memes have diverted funds that would have otherwise flowed into altcoins. The logic of the bull market has changed, but it has also remained the same.
04. Has the bull market ended? Most people may have lost their direction
There is a lot of confusion and contradiction among many people regarding whether the bull market has ended and whether there will be an altcoin bull market. But let me tell you this, since we already know that for most people, “a bull market does not necessarily mean making money, and a bear market does not necessarily mean losing money,” why should we care so much about whether it is a bull market or not?
Let’s take a look at the price chart of gold over the past 100 years as a historical reference. You will find that Bitcoin, as a digital gold, has many similarities with gold in terms of price trends, apart from some attributes. 1) In the long run, the price trend in the early stages of both assets, regardless of bull or bear, almost becomes a straight line. 2) Both assets experience ups and downs but maintain a long-term upward spiral channel. Therefore, we can draw a probable conclusion that, like gold, the best long-term strategy for Bitcoin would be to buy on dips.
The trend of gold is positively correlated with the scale of US government debt. Represented by the US, the world has long been on the path of creating massive debt through printing money, and the only way to resolve this growing debt is by printing more money…
05. Conclusion
Recently, factors such as the debt settlement in Mentougou and government sell-offs have brought significant negative impacts to the market. However, the good news is that the “sword of Damocles” hanging over the cryptocurrency market has disappeared as well. If we extend the timeline, the bull market will always be there. Therefore, there is no need to worry. Just hold on to the initial values of cryptocurrency and patiently embrace the new era.
