Crypto market cycle: stagnation, foam, crisis and breakthroughs

Author: YBB Capital Researcher AC-Core

TLDR

• Unlike the bull market promoted in the previous round of macroeconomic prosperity, this round of encryption markets are mainly affected by macroeconomic uncertainty.

• ETF is just a “slow release of ibuprofen”, and the trend of cryptocurrencies following the US stock market has become a constraints for the growth potential of the industry.

• At present, it is just a Bitcoin bull market. The cottage coins have not yet improved. The main reasons include insufficient industry innovation, insufficient liquidity, and unreasonable valuations of the first -level market. As a result, the capital momentum is insufficient and it is difficult to achieve capacity.

• Repeating the old narrative cannot maintain market value, and as traditional institutions such as Belle are entering the field and the industry lacks innovation, internal competition seems inevitable.

Can one or four years of reduction of half a cycle be the key to the bull market?

1.1 The starting point of this round of bull market is completely different

Bitcoin happens to be born in the background of the economic crisis, and it may be to resist the excessive issuance and currency intervention policy of national legal currency.Looking back on its development process, before Bitcoin was completely banned in China in 2021, it is undeniable that China is the main driving force for the industry’s growth, and its mining business once accounted for two -thirds of the global total.At the same time, with the promotion of real estate and the Internet, the overall economy has gone through significant growth.Until 2021, the overall macroeconomic environment was positive, and central banks from various countries continued to inject liquidity into the market, promoting investors’ optimism.However, after 2020, the cooling of the real estate industry and the slowdown of the overall economy have exhausted the liquidity of certain markets.

From an innovative perspective, DEFI Summer stimulated the Ethereum’s internal economic cycle and became the main driving force for its explosive growth.Subsequently, NFT, Meme, Gamefi, etc. continued to attract a large amount of resource inflows, and even caused a digital collection boom.The rise in market value has driven the industry’s expansion.However,This time, most of the industry’s innovation is a replica of the old concept. Perhaps the bull market has not yet arrived, because the new narrative has not had a significant impact.

If reviewing from early 2019 to early 2021, the beginning of the bull market, the price of Bitcoin was between $ 4,000 and $ 10,000, and Ethereum was between US $ 130 and $ 330.The overall scale of the encrypted market is relatively small, and the growth space is sufficient.However, according to CompanieSmarketCap, Bitcoin’s current market value is 10th in the world, second only to Facebook, second only to Facebook, second only, second only to Facebook.Compared with the market value of Apple, Bitcoin has a growth potential of about three times, which is about 15 times compared with the gold market value.The growth prospect this time is smaller than the previous cycle.

The growth of a half -driven may be the last chapter of this story.The periodic growth of the cryptocurrency market is always closely related to the macroeconomic.Since the Bitcoin creation in 2009, if it is not injecting regularly to stimulate the economy, its market value of more than $ 1 trillion or more will not be realized.The only constant thing in the financial market is changes. Even if you try to keep your position, you don’t know how deep the recession will.

Source: CompaniesMarketCap

1.2 Where is the positioning and future growth potential of Bitcoin?

Is Bitcoin’s risk aversion status only recognized in the cryptocurrency field?

To this day, the US dollar is still controlled by the pricing power, and gold is regarded as a “shelter” of risk aversion and value preservation. In history, every major crisis will reach a new high.The first gold rose began in the Bretton Forest system after World War II, and the US dollar was decoupled from gold. Promoting factors include geopolitical tension and inflation.The second rose began in 2005. The price of gold soared all the way. After the sub -loan crisis broke out, a large number of investment capital flooded to the golden risk. Eventually, after the Libyan War in 2011, geopolitics once again became the main factor.The third rising turning point appeared in 2018. The global new crown epidemic and central bank liquidity injection are the main promoted factor and local geopolitical conflicts.Gold has always been the first choice of risk aversion. The loose and geopolitical factors of the United States are the main forces to promote the rise in gold prices.

As of the Thursday, September 12, Beijing time, spot gold closed up 1.84%to $ 2558.07/ounce, a closing price of a new high.Spot silver rose 4.19%to $ 29.8792/ounce. COMEX Gold Futures rose 1.78%to $ 2587.6/ounce, which also reached a new high (data source: forward -looking research newspaper).The saying that Bitcoin, like gold, seems to have been exposed, and gold has risen and Bitcoin has not followed up. On the contrary, the price trend of Bitcoin is very consistent with the trend of U.S. stocks.

The greatest value of Bitcoin: the tools for resisting economic sanctions and lack of trust in fiat currency

In the context of economic globalization, countries are eager to carry out international transactions, international reserves and international settlement, but this desire is hindered by the “impossible triangle” of currency sovereignty, capital flow, and fixed exchange rate.From the “Currency War”, it can be seen that banknotes themselves have no value, and their value is completely derived from national credit. Whoever has the right to issue currency can effectively bypass the country’s legal framework.Maintaining its huge credit support for a long time.Economic globalization itself contains contradictions that are difficult to resolve between global currency leading positions and national interests. For example, Salvador promotes Bitcoin through the “double fiat currency” nationwide and weakens the influence of the US dollar; Russia hasStarting to allow residents to trade cryptocurrencies and use it for trade settlement to avoid sanctions.

The dilemma of Bitcoin: Its value comes from hedging of the risk of fiat currency trust, but its rising momentum still depends on the policy of strong country, the use of monopoly capital, and macroeconomic conditions.

Second, ETF can only relieve short -term pain rather than cure methods

2.1 The post -ETF era of cryptocurrencies: failed to resist power against power

Source: Guardian News

Bitcoin was born in the context of the economic crisis. The unique attributes of blockchain can withstand the excessive issuance of sovereign currency and the intervention of monetary policy.Anti -authoritative, freedom, and decentralization were our beliefs and slogans.In the industry, various “players” have speculation. The dream of wealthy overnight seems to be the main driving force for industry growth.But in the final analysis, the Bitcoin ETF is only one -time, inevitable stimulus.

We once resisted the authority of authority, and now become hope for authority.It seems that in our encrypted utopia, we only care about profits and don’t care about the direction.The market is constantly cheering for good news around ETF, hoping to have more opportunities to bring capital and exit as liquidity.The community, which has resisted authority, is now gradually providing its labor results to the same authority.

Bellaide, Pioneer Group, and Daofu Bank are companies that dominate the world, and now Black are now obtaining control of Bitcoin.

Who is the most powerful company in the world?Apple, Tesla, Google, Amazon, Microsoft?Actually, none of them.The real answer is the above -mentioned global asset management giants. Bellaide has maintained the title of the world’s largest asset management company for 14 consecutive years from 2009 to 2023.

The direct impact of the post -ETF era is that the price will be more in line with the traditional financial market.Only those who hold the most tokens have the greatest influence, and the United States is gradually obtaining ideological control of the encryption industry.According to the report of QCP Capital on September 10, 2024, the macroeconomic uncertainty continues to dominate the crypto market. The 30 -day correlation between Bitcoin and MSCI World Stock Index reached 0.6, the highest level in the past two years.

There is no doubt that the encryption industry has sprouted earlier in China, but now the “big player” has changed, and more professional players are on the road.In the future, not only the selection and industry focus of brand IP, but also strong transactions and execution capabilities.The Matthew effect will penetrate into every corner of the industry, and the encrypted world is steadily evolving to the “Wall Street” transaction complexity.

2.2 Metaphor of Gold Rush Hot

Looking back at California’s gold rushing fever more than a hundred years ago, hundreds of thousands of people poured into California from all over the world for the dream of wealthy overnight, but most people returned empty -handed, and some even killed it.Li Wei Strauss has taken a different approach to use a large amount of golden golden hot canvas to make the durable pants worn by gold rush workers because of its practicality and popularity. After that, he improved this kind of pants.The founder of blue jeans and founded the global Levis brand.

Interestingly, Bitcoin’s POW mining and POS pledge of Ethereum are amazing similar to this.POW’s mining boom made the “Gold Rush” walking with the mining machine, and POS pledge let them regard capital as a tool.However, behind this mining boom, the miners chased their dreams of getting rich, while Liwei Strauss was holding the capital of the miners.The global encryption market of 24/7 provides countless opportunities for these “gold rushers”, but also greatly fluctuates the market.With high risk accompanied by high returns, profits and risks continue to test the courage and diligence of everyone.

Fast -pace, uninterrupted transactions, and violent fluctuations have both seductive traps and endless trading opportunities. This is the charm of cryptocurrencies.The combination of strong financial attributes and low thresholds makes cryptocurrencies a natural high -quality gold mine.We used to cheer for ETF and look forward to bringing more external capital, but the reality is that ETF is opening the door for more “Levis” characters.

More “Leeve Strauss” will enter the cryptocurrency market

The launch of ETF can not only introduce external capital as “exit liquidity”, but also attract traders who hedge risks.The biggest innovation of the blockchain so far is to put the financial chain and establish a “self -sufficient economic cycle” within the encryption market, effectively preventing the direct intervention of strong entities and “Old Money”.However, in the post -ETF era of the encrypted market, to some extent, the comprehensive financial derivatives have been handed over to these forces, which further attracts more arbitrage and large capital, which will squeeze the limited market profit margin.

Third, the first -level market is difficult to break through

Low -level market liquidity, high FDV

Compared with the past, tokens issued by the first -level market generally showed high FDVs (completely diluted valuations) and low liquidity.According to the report data of Binance’s “Observation and Thinking of High Valuations and Low Llerance tokens”, the ratio of the market value (MC) of tokens issued in 2024 is the lowest in recent years.This shows that in the future, a large number of tokens have not been unlocked. By 2024, the FDV of the issued tokens has been close to the FDV of all token in 2023.

Image source:@TheDefivillain, CoinMarketcap and Binance Research Institute. The data was released on April 14, 2024

In a lack of liquidity, tokens will continue to unlock after TGE, which will cause huge selling pressure.But did the VC really earn this round?uncertain.In most cases, compliant and supervised project financing requires at least one year’s locking period before unlocking and issuing tokens.In the case of high FDV and low liquidity, the project may encounter token unlocking and cause price plunge. Although small VCs may still be sold in the secondary market or pre -sale on the spot.

As shown in the figure below, the circulation supply rate of these tokens is less than 20%, and the minimum is only 6%, highlighting the severe reality of high FDV.

Image source: CoinMarketcap and Binance Research Institute, data release date: May 14, 2024

Obviously, the momentum of capital -driven is currently invalid.In addition to the above factors, there are other objective factors that lead to low liquidity and high FDV:

• The market is broken, and there are too many competitors:In the previous round of cycles, domestic and foreign capital jointly speculated Defi and Layer-1 chain.However, in this round of cycle, funds and participants are too scattered in multiple narratives, West and Eastern Capital often do not take over the other party’s projects.This causes the number of buyers to not be enough to meet the number of sellers.

• There is no cottage bull market, lack of speculation:EVM -based chain -based infrastructure has matured, and funds and projects are competing in the same direction.”Ethereum Killer” did not take out anything new.In addition, in the market without a copycat bull market, when a project is successful in a specific field, the imitation project will soon appear, becoming the next underestimated opportunity.

• Evil the simple things and turn complex things into narrative:Pseudo -innovation that complicates simple things can be seen everywhere.The concept of re -packaging is often just to sell greater dreams to the market.

• Matthew effect is everywhere:The development of the encryption industry has been developed for more than 16 years, and the monopoly interests are basically solidified at the top.Whether it is technology, project or capital, the stronger the strong, the weaker the weak.Those who survived have strengthened their control of narrative.

• Challenge of sustainable growth:The lack of innovation and liquidity is the most urgent challenge facing the current market.