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What is the core of changing the trend of this round of bull market?



Yesterday, the entire market suddenly plummeted, and almost all mainstream digital currencies plummeted by 20% to 30%.

The market has done a lot of analysis on this sudden plunge, mainly including the following interpretations:

For example, the deputy governor of the People's Bank of China and the former governor of the People's Bank of China said that digital currency should be strengthened and that digital currency must serve the real industry; another example is the extremely negative attitude of certain countries (Turkey, India) towards digital currency; and Rumors about coinbase executives dumping stock and more.

If these factors are really the culprits of this plunge, then in my opinion, there is nothing terrible about this plunge, and the plunge will not affect the current bull market trend in the slightest. Because the outbreak of short-term events is only an accidental event, it is not a fundamental force to change the trend of the bull market.

Report: Coronavirus Relief Payments Haven’t Caused Major Changes in Japanese Crypto Investor Behavior: In April, the Japanese government began distributing 100,000 yen ($930) per household. In his latest report, Yuya Hasegawa, a market analyst at crypto exchange Bitbank, noted that overall, the coronavirus relief payments have not caused a major change in the behavior of Japanese crypto investors. Deposits of 100,000 yen by investors in their 40s rose more than 36%, surpassing deposits by investors in their 20s for the first time in two months. Investors in their 50s saw a 100,000-yen deposit increase by more than 35%. But Hasegawa said the changes were too small to significantly alter investor behavior overall. (Cointelegraph)[2020/7/23]

So what is the fundamental force that changes the trend of the bull market? In my opinion, there are generally two types: one is that funds have begun to tighten in an all-round way; the other is that the market itself has already contained a huge bubble, and the market has become extremely irrational.

Voice | Chairman of the Board of Directors of Haier Group: How to use blockchain to change the future of the enterprise: Zhang Ruimin, Chairman of the Board of Directors and CEO of Haier Group, proposed in a recent event that products will be replaced by scenarios, and industries will be covered by ecology. Haier uses the blockchain as a carrier and uses distributed ledgers to share data resources based on the Internet of Things. On the one hand, it continuously optimizes user experience, and on the other hand, all ecological stakeholders get value-added and win-win for all parties. Based on its own advantages, Haier has launched explorations in three directions in the blockchain field: first, to participate in the formulation of blockchain standards with first-mover advantages; second, to empower the industrial ecology with extension effects; Chain thinking, change the organizational structure. (IT168) [2019/11/19]

The first force is induced by the Fed's interest rate hike. Obviously, this has not happened yet, so we can rule out this factor. But the second situation is still far from my feeling, and the market is far from being as crazy as imagined.

Voice | Circle CEO: US cryptocurrency policy needs to change: Circle CEO Jeremy Allaire published an article on Medium today saying that Poloniex, its cryptocurrency exchange, announced last Thursday that it plans to stop providing 9 tokens to US users . The company is very frustrated that these steps need to be taken, but U.S. regulators have recently widely recognized that crypto assets may be considered securities. The company believes they should not be considered securities, but need to ensure compliance with U.S. law. Innovators are constantly changing the possibilities of crypto and blockchain technology. Unfortunately, regulation has failed to keep up. The company believes that digital assets are a fundamental new type of financial instrument, categorized simply as securities, commodities or currencies. Depending on context and use, many digital assets occupy one, two, or all three classification characteristics. Without Congressional action, the SEC would have to rely on 85-year-old laws and 73-year-old court cases to develop guidance on which digital assets may be considered securities, and these laws are not enough to address encryption. Innovation happens fast and global competition is fierce. Circle is urging lawmakers to take action to allow crypto and blockchain technology to thrive. [2019/5/21]

In an article at the end of last year, I reviewed the trend of the last round of bull market. In that round of bull market, there were at least 5 callbacks of more than 20%, and there were many callbacks of less than 20%. Therefore, just based on empirical data, the number of callbacks like the current one is not too many but too few in this bull market, so the market trend is still healthy.

Furthermore, I once shared with you the example of cooking dumplings. The callback in the bull market is not only not harmful, but beneficial. It is more conducive to the continued rise of the market outlook and the accumulation of upward momentum.

So there is nothing wrong with a big drop like this one, we just take it as the market stops to rest and wipe off its sweat during the rush.

When we talk about market trends, many media or analysis articles always like to say that a certain plunge or rise is caused by a certain group or a certain institution or the joint operation of several institutions, so whenever there is a sharp rise or fall in the market, The media always like to find the "black hand" behind this.

I don’t quite agree with this kind of view. I believe that there are indeed individual forces in the market that are relatively strong, but I think it is difficult for individual forces to influence the market trend in the current market. The short-term market trend is often an irregular Brownian movement.

Therefore, when we encounter such a major market adjustment, we only need to see whether these possible adjustment factors will fundamentally change the trend. If not, we will continue to maintain the existing strategy.

Furthermore, I mentioned two forces that may fundamentally change the market trend, but it will take a process from quantitative to qualitative change for these two forces to really have an effect in the market.

And this process, we can perceive it from clear event reports (such as the Fed’s interest rate hike) or personal experience, and even if the force has already appeared, its effect will not appear immediately, so even if this kind of force really works Or when it will have an effect, we can control it.

For us ordinary investors, the most important thing in the face of such a sharp drop is to calm ourselves down, not to lose the bargaining chips in our hands because of panic, let alone speculate on the next trend of the market at this time, and increase leverage to do more short. "Heaven commits evil, but it can still be violated, self-inflicted evil, you can't live." What often kills us is not the market but our own showmanship.


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