A reader left a message asking the following question:

"Brother Dao, there is one thing I don't understand. The key to your analysis of the bull market is that the Fed has not yet raised interest rates. I agree with this very much. As long as the water is still released, part of it will inevitably flow to the cryptocurrency market, but you also mentioned before that "this The forecast for a bull market is probably at the beginning of next year at the latest.” So, can it be understood that the Fed will raise interest rates at the beginning of next year at the latest? Or am I misunderstanding the above sentence?”

Let me use this question to share with you my general prediction at the end of last year when the current bull market just started.

I judge the trend of a market mainly depends on the external financial environment and the internal trend of the market itself, and the same is true for the encrypted asset market.

Before judging the current round of the market, we can first review the trend of the last round of bull market.

In the last bull market, which was 2017, the entire encrypted asset market was still in a very early stage of development. The most important feature was that the encrypted asset itself had almost no ecology, and there was only one application for all: that is ICO currency issuance. In addition, Most projects tell a story.

In terms of attitudes towards encrypted assets, all mainstream investment institutions, regardless of their size, are almost dismissive. Even Grayscale, which seems to be a benchmark encrypted asset fund, had only developed for a few years at that time. Size or influence is almost negligible.

In this case, the funds driving the development of encrypted assets mainly come from retail investors, and the funds or liquidity of retail investors are not greatly affected by the macro-financial environment or economic trends.

There is a real-life case of this in our real life: a province with a relatively backward economy in the southwest of my country was once a big MLM province, and the enthusiasm, proportion and amount of residents participating in MLM far exceeded other developed provinces. This is typical, showing that the amount of funds that residents can use through various means has no direct relationship with the development of the economy.

Since the funds mainly come from retail investors, in 2017, we hardly need to pay much attention to macro-finance and economy, let alone events such as the so-called Fed rate hike or rate cut. At that time, the trend of the market was almost the law of the market itself at work.

So we have seen a complete trend. From that complete trend, I roughly concluded the following rules:

1. It takes about a year for the market to go from rising to peaking.

2. The increase in the second half of the bull market will be much higher than that in the first half.

3. In the second half of the bull market, retail investors flocked into the market.

4. Senior players published a public article warning of a bubble but were ridiculed by the market.

5. In the second half of the bull market, my inner emotions began to be extremely disturbed.

Among them, 3, 4, and 5 are the laws that I have also seen in the bull market of other traditional investment markets, and they have been fulfilled almost every time.

Therefore, at the end of 2020, I estimate that the above-mentioned laws in this round of bull market may still appear. But there is one thing that I hadn't thought of before: that is, institutional investors, especially Wall Street financial institutions, began to enter, not only entering but also entering so fiercely.

Once institutional investors enter, the direction of the market is not determined by retail investors but by institutional investors.

The funds and liquidity of institutional investors are greatly affected by the macro-financial environment. At this time, we must pay close attention to the financial policies of financial institutions, especially the Federal Reserve.

MicroStrategy’s recent issuance of junk bond financing to purchase Bitcoin is a typical example of taking advantage of the current low interest rate financial environment for financing. It is impossible for MicroStrategy to do this once the Fed raises interest rates.

Therefore, if the Fed's financial policy remains unchanged throughout 2021 and beyond, the funding side of institutional investors will remain accommodative. Then in this case, we can focus on the internal laws of the market itself when we consider the current round of market trends.

Once we focus on the internal laws of the market itself, I can use past experience to judge the general trend of the market --------- the five points of law I summarized above.

Therefore, the focus of my attention on the Fed's policy is not whether he will raise interest rates, but when he will raise interest rates if he really wants to raise interest rates. As long as interest rates are not raised before the end of 2021 or, more optimistically, the beginning of 2022, the Fed's policies will not affect the overall environment of this round of bull market, and we only need to focus on the market itself.

Going back to the reader’s message above, what I meant by judging the trend of this round of bull market at the end of last year to the end of this year or the beginning of next year is that as long as the Fed’s policies do not affect macro-finance and liquidity during this period, then relying on the encrypted asset market The trend of the past few bull markets will probably last for one year.

If the market can really go out of my prediction and reach its peak by the end of this year or early next year, I will sell my chips and wait for the bear market to come.

Since the 519 crash occurred, on the surface, the currency price has been greatly affected, but the above five laws that have been fulfilled in the past, especially the three rules 3, 4, and 5, which have been repeatedly fulfilled in other traditional investment markets, were before the 519 crash. I don't see either, it's hard to convince me that the market has entered a bear market.

Of course, my judgment may be wrong, so the worst plan I have said very early on is to take another 4 years with the chips. In other fields, it is impossible for 4 years to bring about any changes to ordinary migrant workers; but in this field, I believe that waiting for another 4 years is completely worth it.