The financial market was wailing, and global assets plummeted in panic. Buffett, the stock god, said that he had never seen such a scene in his 89 years of life. Against the backdrop of the macro economy, the Bitcoin halving market also braked, causing a stampede-style plunge.
In the previous article, I mentioned the idea of halving the market. Halving is a clear card that everyone knows. All players fill up their leverage and wait for pennies, but wealth does not appear out of thin air, it is just transferred. Why should the new funds carry the sedan chair for everyone? This is just a game of drumming and passing flowers in the circle. In the end, it was concluded that only by breaking the halving expectations and letting most people stop fantasizing can the real halving market be ushered in.
In addition, in the recent bitcoin price trend, a new variable has appeared, or this factor has always been there, that is, the macroeconomic cycle has a major impact on the encryption market. Like all risky assets, bitcoin is all liquidated under the crisis .
1. Bitcoin "digital gold" is a false proposition
The slogan of "the central bank hoards gold, and the rivers and lakes hoard bitcoins" has been circulating in the circle. The characteristics of bitcoin such as limited total amount, decentralization, and global consensus are consistent with the characteristics of gold. It has always been known as the Internet version of "digital gold". Because of this binding relationship, Bitcoin seems to have the same hedging properties as gold, at least many people in the circle believe this.
But recently, with the spread of panic in the global economy, under the positive expectations of halving and large-scale release of water, Bitcoin still experienced a panic-stricken plunge, and Bitcoin’s hedging attributes were counterfeited. The impact of the environment has been ruthlessly abandoned like other risky assets.
According to data provided by LongHash, from the entire history of Bitcoin, the price has a high correlation with the Dow. From 2010 to March 2020, the Pearson correlation coefficient between the two exceeded 0.84, which is a strong positive correlation. In other words, the overall trend of Bitcoin is roughly the same as that of the stock market. Furthermore, once a financial crisis occurs, it is difficult for Bitcoin to survive alone, let alone a hedge.
Bitcoin does not have the property of hedging, and there are three specific reasons:
1. The market value of Bitcoin is too small, and the entry of large funds can cause large fluctuations, and it is difficult to highlight the risk-avoiding attribute. From another perspective, once Bitcoin becomes a safe-haven asset, its market value will be far more than hundreds of billions of dollars.
2. Compared with Bitcoin, there are gold and US dollars in the traditional market, and there are a large number of stable coins in the encrypted market. The stability of these assets is far better than Bitcoin.
3. It does not meet the definition of safe-haven assets at all. Bitcoin is a purely high-risk asset. The purpose of hedging is to preserve value, and investors in the encryption market are looking forward to getting rich.
2. Is the halving market completely terminated?
We always hear such a sentence, every time Bitcoin is halved, the supply is decreasing, and it is highly consistent with the bull-bear cycle, halving is equal to the big bull market, which is a once-in-a-lifetime wealth opportunity for ordinary people.
We mentioned at the beginning that halving is a clear card. When everyone knows the heavy position, who will pay for everyone to carry the sedan chair? Only by shattering the halving frenzy can we provide more impetus for the subsequent halving. To be cruel, the halving market cannot make everyone make money, and there is no market in the world that allows most people in the market to make money and succeed leave.
The decline of Bitcoin this time also illustrates this point, and also reflects the bloody cruelty of the capital market. So, will the Bitcoin halving market reappear in the future?
History repeats itself, but not simply. Many people think that the halving expectation has been completely digested by the market, and the halving market has come to an end. This obviously overestimates the effectiveness of the market. From the previous two halving prices, it is not difficult to find that the two big Bitcoin prices did not appear before the halving. Before the halving, it was just a small peak. It started about half a year or a year after the halving and peaked more than a year later.
Of course, there is another point of view in the market. The first two halvings just happened to hit the upsurge of "digital gold" and "ICO", so it gave the market an illusion that halving is equal to a bull market. There is no problem with this logic. The promotion of the big market cannot be driven by halving alone, but is determined by the relationship between supply and demand. This bull market needs a new story, a new story that is far crazier than "ICO".
This can only be verified by time.
3. How to face the next bleak currency circle?
Bitcoin’s sharp drop today has broken the original trend. It will take a long time to establish a new trend. The market’s despair has reached its peak. It is a question that every person in the currency circle has to face.
Maybe everyone hopes to have a taste of chicken soup at this time, and hope that a certain boss can predict the next market. Here I need to warn every investor in the currency circle:
1. The operation of the financial market is in an uncertain state, and no one knows the future trend of prices.
2. It is impossible for any theory or model to deduce the future price of Bitcoin.
3. Always keep the above two points in mind.
The nature of the world is disordered and uncertain, and Bitcoin cannot escape this law, just like what big V and analysts predicted this plunge.
Since the future is unpredictable, what else can we do?
1. Give up belief and believe in facts
Don't talk about shitty beliefs, your only purpose in the currency circle is to make money. The word belief is the most frequent word in the currency circle. After the early bitcoin investors realized the freedom of wealth, it gave everyone an illusion that as long as you have faith, as long as you hold the currency and do not move, you can walk on the road to wealth freedom.
The successful people in the early currency circle are only the products of staged opportunities. As the biggest beneficiaries, they will of course actively promote the spread of beliefs, but don’t forget that today’s Bitcoin market is a bloody capital market. Most people invest in a certain currency, and then talk about a long love with this project, automatically shielding the risks of the project, and only accepting positive signals.
Remember, you come to the currency circle to make money, not to buy faith.
2. In the long run, this plunge is just a small ripple
We have experienced the huge volatility of Bitcoin too much, and there is no need to have extreme thoughts about "Is Bitcoin a scam" because of this time. Judging from the historical trajectory of Bitcoin price development, this plunge can only be regarded as a small ripple in a big wave.
So, why panic.
3. Crisis is a big reshuffle
How should the word crisis be interpreted? Dangerous means danger, machine means opportunity.
We often hear "how to deal with a crisis". Fundamentally speaking, it is impossible to prepare in advance. When a crisis comes, what is more important is how we correctly understand the crisis. Every crisis is bound to breed a bigger Opportunity, as the saying goes, if you make a big breakthrough and make great efforts, you will come to the end.
The same is true every time Bitcoin plummets, coupled with the blessing of the global economic crisis, this is a disaster for most people, but it is an opportunity for discerning investors. Usually those with debt and leverage will die first, and then the assets of those dead debtors will be bought at low prices, and those who survive will become stronger and stronger.
Of course, the premise of all this is that you can survive to the end.
