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Why is this wave of bull market so brutal? What strength is supporting



At the end of last year, because the bull market rose too fast, I lost a little position. But I soon realized that I was wrong, and never dared to get off the car easily.

This wave of bull market is so ferocious that it is unbelievable.

1. The total market value of the currency circle has exceeded 2 trillion US dollars, and at the end of last year, it was still around 500 billion US dollars, and the market value has increased by 4 times in less than half a year.

2. The duration is long, and there are almost no decent callbacks. The overall unilateral rise lasted for more than half a year.

3. There is no explanatory logic for the rise of most coins, that is, they rise without reason.

I just thought, what is the force driving the currency market to be so high-profile?

First of all, I think it is due to the quantitative easing of central banks around the world.

At the beginning of this year, various financial analysts gave data. Last year, the liability side of the global central mother’s balance sheet increased by 20 trillion US dollars. This is the global central bank directly injecting 20 trillion US dollars of liquidity into the market. After the currency multiplier effect, how much money there is in the final market is a huge number. Covid19 is of course the culprit, as if the whole world understands that central banks adopt quantitative easing policies in the face of disaster.

JPMorgan Chase: Bearish stock market is the trend of the moment, but this view does not hold water: On February 22, JPMorgan strategist Mislav Matejka and his team said that pessimistic expectations that the economic slowdown will drag down the stock market are the trend of the moment , but this view is wrong, "We believe that everyone should ignore the popular and widespread 'economic slowdown' view and continue to be bullish on the banking, mining, energy, insurance, auto, travel and telecommunications sectors." They pointed out that in the past In six months, contrary to pessimistic expectations, internal factors have become more favorable again. Given that financing conditions remain extremely favorable, with a very buoyant labor market, low levels of consumer indebtedness, strong corporate cash flows and solid bank balance sheets, it would be wrong to predict a recession. (Golden Ten) [2022/2/22 10:06:47]

In the capital market, not only the currency circle is rising, but stocks and real estate are also rising. Our cost of living is also rising.

However, the earliest positioning of the currency circle was to fight against inflation, so in this round of water release, the currency circle received relatively more water.

Secondly, I think it is due to the evolution of the AMM algorithm in Ethereum.

Jack Ma: Both the manufacturing and service industries are inseparable from the development of the financial industry. The core of all this depends on technologies such as blockchain: On September 15, the 2020 Online Smart Expo opened in Chongqing. At the opening ceremony and Big Data Intelligence Summit, Jack Ma delivered a video speech. Ma Yun said that because of digital technology, many jobs in the future manufacturing industry will definitely be replaced by machines. It is not the manufacturing industry that will create jobs in the future, but the service industry of the digital economy. Both the manufacturing industry and the service industry are inseparable from the development of the financial industry. The new financial system is to let money find companies and find good companies. The core of all this is to rely on intelligence, big data, cloud computing and regional blockchain. (Released in Chongqing) [2020/9/15]

Dex with the AMM algorithm mechanism represented by uniswap has accumulated a very solid spot depth in LPtoken.

For example, the liquidity of the ETH-usdt trading pair in uniswap is as high as hundreds of millions of dollars in spot depth. To affect the price of ETH, you need real ETH coins to smash and real Usdt to pull the market. A few years ago, the pricing power of the price was in the exchange, and the exchange could influence the price through "counterfeit currency". There is a natural difference between the two ways of affecting prices, and the AMM mechanism makes it almost impossible to manipulate prices.

Analysis | The increase of sniffing nodes and the iteration of the recognition algorithm can improve the recognition rate. It is not easy for individual attackers to do this: Regarding the article published by Ivan Bogatyy, a researcher of the blockchain investment fund Dragonfly Capital, on the privacy flaws of the Mimblewimble protocol,

The following is the opinion of Beijing chain security expert Hardman:

1 MimbleWimble hides the address and amount for users by hiding the transaction amount and avoiding the use of publicly visible addresses. At present, the main currency used is Grin currency.

2 The MimbleWimble protocol is effective in obfuscating and protecting the transfer amount, and it cannot be identified and attacked at present.

3 The overall concealment effect of the protocol on the sender and receiver is not as good as that of Monero and ZCash, but we believe that this reflects the capability boundary embodied by the technical characteristics of this algorithm, rather than a "loophole".

4 In terms of actual operation, to identify the sender and receiver of MimbleWimble, it is necessary to add sniffing nodes to the token network using MimbleWimble and use an accurate identification algorithm.

5 The increase of sniffing nodes and the iteration of the recognition algorithm can improve the recognition rate, which is a technical problem and a cost problem, and it is not easy for individual attackers to do this. [2019/11/19]

Because AMM needs real currency to control the price drop, this makes the power of short selling lose a leg. In the stock market, there are naked short operations, which allow you to sell stocks without actually borrowing the stocks. With the AMM algorithm, naked short coins become almost impossible, unless there is a "naked multi-coin" opponent. The robot that moves bricks between cex and dex will make all bare spaces need real coins to endorse.

Voice | Gu Yanxi: The growth of Bitcoin in the past period is mainly due to the digital assets generated by various ICOs: Gu Yanxi, founder of CBX Research Institute, said that since March 2017, Bitcoin has regained its share of encrypted digital assets. 70% of the total assets. Some related thoughts on this.

1, The growth of Bitcoin in the past period is mainly due to the digital assets generated by various ICOs.

2, In the foreseeable future, it is impossible for more new types of digital assets to enter the market. Bitcoin cannot possibly grow for the same reason.

3, In the foreseeable future, the price of Bitcoin is mainly determined by market speculation. Institutional investors trading on CME and Bakkt will be the main force in determining the price of Bitcoin.

4. Speculators only care about the various factors that lead to price changes, regardless of whether the underlying is soybeans or gold. Given that the total amount of Bitcoin is limited and the output is getting less and less, its transaction price changes should be more similar to gold. [2019/9/6]

But on the contrary, under the AMM algorithm, Tether can "naked more", that is, issuers of usdt stablecoins such as Tether can release water out of thin air. I'm just reasoning here, I don't know whether Tether will actually release the water. But if you consider the algorithmic stablecoin market, like the recently popular Feicoin, you can probably feel how eager the market is to create "legal currency" out of thin air. Every time Tether prints Usdt, the WeChat groups in various currency circles are overjoyed.

Chen Weixing: Li Xiaolai made me feel nauseous in this industry: On the evening of the 13th, Chen Weixing posted another article in Moments, saying that Li Xiaolai owed 30,000 bitcoins, which was completely true, and that his image of "the richest man in bitcoin" was fictitious. He said that he and Li Xiaolai did not have any direct personal conflict of interest, it was completely a conflict of values, and it even meant that Li Xiaolai made him want to vomit in this industry. The following is part of the original text of Chen Weixing’s circle of friends: Li Xiaolai and I have privately communicated several times about how to stop private placement funds and a large proportion of free coins, and do some positive things together, but were ignored; I paid 30,000 bitcoins, and verbally promised that it would be able to guarantee the bottom of the bitcoin; it expired in September last year, and was asked to postpone the repayment by one year; the next September is the due repayment time; this is a well-known thing for industry veterans, I'm not lying; Li Xiaolai and I don't have any direct personal conflict of interest, it's completely a conflict of values, which makes me want to vomit in this industry; I personally have no desire and no need to mess with this hot shit, and I don't need to rely on him To create momentum for myself; my appeal is clear, that is, I hope that the bigwigs in this industry can form a consensus on "no corruption". Now that you have done it, you will never be discouraged! [2018/6/14]

In the AMM algorithm, because in a pair (such as ETH against usdt), if you want to buy more ETH, you can find a way to fabricate usdt, and if you want to short ETH, you cannot release water on ETH.

Because chains like bsc and heco are backed by centralized exchanges, with uniswap competitors like Pancake and mdex, other coins (such as BTC, LTC, BCH and other non-smart contract coins) can also be easily migrated to AMM According to the mechanism, this allows most of the mainstream coins to enjoy the treatment of only naked long, not naked short.

The third bull market support may be a type of loan contract such as compound.

At present, compound and aave hold a total of 17 billion US dollars in TVL, and the venus on the bsc chain and the channels on the heco chain have locked up tens of billions of dollars in assets. This locks in huge liquidity.

The most important thing is that the lending agreement is a leverage machine, and the locked currency is mainly used to borrow usdt and other stable currencies. The popularity of lending contracts has brought huge leverage to the currency circle.

This is different from the borrowing and lending of the previous centralized exchanges. The collateral in the centralized exchanges is not guaranteed to be locked.

How good is compound? My feeling is that if you have thousands of ETH, you can live by borrowing usdt money with almost no need to sell by relying on the loan contract alone. Because there is almost no interest on borrowing u. Lending contracts eliminate a lot of sell demand. This is the same as the house before the subprime mortgage crisis in the United States in 2008. As long as the house price keeps rising, you can live by living on the house.

With a complete lending agreement, the concept of currency as a store of value is complete. The so-called "storage" value is like a tank, which can store water, scoop some water out for drinking, or add water to it. ETH is an effective value storage tool. Anyway, I don’t want to sell my ETH. Why should I sell such a useful thing?

The support of the fourth bull market is the development of the entire ecology of DeFi, making the currency a thing that can generate cash flow.

Just like farming, currency is the land, if you have land, you can cultivate it, and you will get a harvest. No wonder all kinds of things in defi are called farms.

When the currency can continue to create cash flow, the desire to sell drops a lot. Just like Buffett does not sell the stocks of those good companies, let these companies make money for him.

There are many scenarios in defi, which are actually the same as the previous round of ICO. It is a zero-sum game, or even a negative-sum game. But at least two scenarios are positive-sum games.

One is lptoken mining represented by uniswap. lptoken provides risk-taking liquidity, users pay handling fees to trade, and lptoken receives handling fees. This closed loop creates a win-win situation and creates a very good decentralized trading place for the entire ecology. Trading is one of the bottom-level needs of the capital market.

The other is the lending agreement represented by compound. Borrowing is one of the lowest needs of finance. Just look at how many commercial banks are near your home to know how positive this loan agreement is.

There is a clear positive-sum game in the currency circle, creating a clear win-win business situation, which is amazing.

Will the bull market last forever? Will the so-called eternal bull market exist?

Certainly not, there is no such thing as eternal, I don't add the prefix "I think" to this answer.

Now the overall increase in the market value of the currency circle still depends on "Ponzi". I am not derogatory here, it is neutral, just like social security is also a kind of Ponzi in essence. What is described here is that the power to maintain the overall system comes from the system outside, not inside the system. The rise in the market value of the currency circle requires fresh investors and funds to enter the market.

The internal cost of the currency circle is quite high now. Now recruiting a programmer feels that the level is very average, and the monthly salary is 40,000.

Mining is the most powerful tool for the currency circle to mobilize the masses to join. Now the mining circle has fired up graphics cards and hard drives to the point where other industries have collapsed. The game circle has begun to hate the currency circle. In the process of mobilizing people to join the industry, the mining circle is also the most serious blood draw to the currency circle. Graphics cards and hard drives are bought by selling coins. The crazier the mining circle, the higher the cost of the currency circle.

The PoC mining industry as a whole is still in the process of speculation. I feel that the PoC mining circle will be the biggest weight to overwhelm the bull market in the currency circle. The PoW mining industry represented by Bitcoin mining finally achieves mutual success with the consensus of value storage and decentralized currency. Everyone will use computing power to measure the quality of the currency, and the currency price will drive the growth of the mining industry. The PoC mining industry has not yet seen such a positive interaction with the currency price in a short period of time. It is more about the cost of the industry than the value expression.

When the industry's operating costs increase, and the industry's increase in attracting foreign investment, the former exceeds the latter, troubles come. The speed of foreign investment may come to a hard stop, but the operating costs of the industry cannot be reduced instantly. It takes time to fire people, and the psychological pressure brought about by the sunk cost of mining cannot instantly make us give up our investment in the mining industry.

The endless new concepts in the currency circle also consume huge costs in the circle.

God, can you tell me when this tipping point will come?


OKX Official
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