Original writer: Uncle Jian
「Is encryption over? Have you made money in this bull market?」
Before talking about this round of market conditions, let us review the rules of the last bull market and the A-share bull market
The generally accepted speculation logic for A-shares in the bull market is that brokerages are the first to pull the trigger, followed by high-quality blue chips such as insurance and real estate, steel, coal and non-ferrous metals, and finally theme stocks. Crazy cows, flooded with water, frantically looking for low-value depressions, making plays with themes, and small tickets flying around. At the end of the bull market, you need to find connections to open an account. Students no longer want to go to class, migrant workers don’t want to go to work, and security guards and aunts start to share their stock trading experiences. Listed companies are crazy about increasing and reducing their holdings, and investors have no brainers to take over, and after the carnival, there is only a piece of chicken feathers left... The narrative of Defi Summer started, and TVL doubled, driving Uni and Aave to rise crazily. Then Btc and Eth ushered in a unilateral rise. During this period, almost all themes and narratives started a round of rise, ranging from several times. , ten times or even hundreds of times stronger. In the middle and late stages of the bull market, the crypto market ushered in the rise of the Meme sector, the most representative of which were Doge and Shib. After the rise of Meme ended, new narratives such as Axs and Sand represented by blockchain games and Metaverse exploded, and the market After the crazy hype, the market was adjusted by various factors and never looked back.
However, with the rapid development and iteration of blockchain, three years have passed, and we have more narratives and tracks, such as Ethereum second layer, re-pledge, and inscription runes. Stone, AI, etc., these narratives will eventually replace the old narratives of the last bull market, so from the perspective of subject matter, it is impossible to summarize the rules and what stage of the current market development it has reached and what cycle it is in. Here We can summarize the rules through market value. Core assets (i.e. BTC and ETH) - High market capitalization — Mid market capitalization — Low market capitalization — Meme — NFT / Others
2. Changes and differences in this bull market
# Do you feel that the financial efficiency is insufficient, and the track sector that you are optimistic about has a big correction accidentally?
Value coins cannot outperform MEME coins? Earnings are not as fast as speculation?
GameFi’s data continues to hit new highs and financing continues, but it can’t become a hit?
The most direct feeling given by this round of bull market is that the liquidity of funds is insufficient, the money-making effect is poor, and there is no state of a hundred flowers blooming. The adoption of ETF has injected super liquidity into BTC. However, this Liquidity cannot spread to different tracks and sectors. Although there are expectations for the Federal Reserve to cut interest rates, there is still no guarantee that the interest rate cut that the market has been waiting for will significantly improve the current situation of the crypto market. We need to know that the funds flowing out of the interest rate cut may not be injected into the crypto market immediately. They may also fill the liquidity of the stock market and real estate market first, and then wait until the liquidity in these markets overflows. will flow into the encryption market.
Therefore, in the case of insufficient capital liquidity and the adoption of ETFs, there will be an extreme situation in which core assets rise, other market values remain unchanged or even fall, while MEME is affected by The emotional impact of short-term hot money has ushered in a rise. But this kind of rise in the Meme sector is not a long-term sustainable rise. Sometimes it can only last for a few days or even a few hours. This is also a manifestation of insufficient funds.
Why does this kind of insufficient funds occur? The fundamental reason is that the flow and transmission of funds have undergone structural changes. The funds injected by ETF can only be transmitted to BTC and ETH, but cannot overflow like a reservoir.
We can understand that the current encryption market is a reservoir. Different sectors and tracks are all a reservoir, and there is only a reservoir on the upper level. Only when the water is filled will it overflow to the next layer. Based on the time points of the last bull market, we can simply analyze the different states of capital flow in the market. Only when market funds can no longer choose or are saturated in the current field, the market will look for lower values and seek more opportunities at the next level, and the downward movement of funds is mostly forced or forced. This is the case when market funds are saturated. Because each time you go down a level, it means that the money-making effect of the current level becomes weaker, and the risks involved will gradually increase.
Let us take the recent zk as an example. How many people’s three years of hard work have been reversed. This is also a manifestation of insufficient funds, that is, the current first-level airdrop market cannot accommodate so many people. In the final analysis, when the current liquidity and funds in the secondary market are not abundant, many people come from the secondary market to the primary market to seek opportunities, but many people have never thought that there is no secondary market. What is the significance of the primary market in taking over the market? It is extremely difficult for retail investors to make money in the primary market. Short-selling is no match for professional studios, and it is easy to be witched. It can be said that it is difficult for ordinary people to survive in the current primary market, and it is already a technological battlefield.
Secondly, the continuous listing of tokens with sky-high market values has further squeezed liquidity, from the previous BB and Not to the recent io and zk, including the future Blast , its high valuation squeezed the upside space from the very beginning. After new coins are listed, funds will more or less choose to flow into these coins, thus further squeezing the liquidity of altcoins. In fact, judging from the performance of the first day of the recent listing of new coins, we can see that the market is now too short of money, and the opening price is lower than expected. There are even situations where Not bought on the same day can earn 50%, which shows that the market is generally Doubts about the current value of new coins.
According to the report of Binance Research in May 2024 "Observation on the Current Situation of High Valuation and Low Circulation Tokens" and Thoughts" We can find that its current MC/FDV is the lowest in the past three years, and its FDV of tokens issued in the first five months of this year is close to the total for the whole year of 2023. Binance said that if the token wants to maintain its current price in the future, it will need $80 billion in liquidity.
When demand remains unchanged, low circulation can easily drive up currency prices in the short term, thus pushing up FDV. Take zk, which was launched yesterday, as an example. Its market value is close to US$1 billion, but this is still a large amount of unlocked money. Is its valuation a bit too "high"?
Who is benefiting from such a high FDV?
From the perspective of the project side, high FDV may drive the increase in market value and increase potential profit opportunities in the future
From the VC From an exchange's perspective, the potential high valuation driven by high FDV represents VC performance and indicators
From an exchange's perspective, high FDV does not affect the exchange itself
From the perspective of retail investors, high FDV generally means that the project will continue to operate for a long time and the possibility of running away is low. However, this has further led to retail investors being unwilling to buy tokens with high FDV, and instead turning to more interesting Meme tokens in full circulation, such as Not, which is a good example.
So we have fallen into a bull market where we don’t take orders from each other, That is, retail investors don’t take orders from VC Coin, the reason is the sky-high unlocking caused by high FDV. Institutions do not accept Meme coins. Its low value and violent fluctuations lead institutions to believe that there is no investment value. As a result, everyone plays their own game, and the market cannot form a unified consensus.
The current market fundamentals have changed compared with previous years, and the investment logic used before also needs to be Adjustments and changes, We believe that insufficient funds and high valuations and low circulation are the core reasons for the poor profit-making effect of this bull market, resulting in poor performance from the secondary market to the primary market. Good, the witch situation and studio clusters in the primary market are superimposed, and the money-making effect is further reduced.
We cannot give an accurate answer to determine where the current encryption market has gone, nor do we know whether BTC will really exceed 100,000. However, the market problems we have rationally analyzed are the ones that need to be solved most at the moment. Perhaps only after the market gradually solves and changes these problems can the real crypto bull market come.
Article source: https://jianshu.ghost.io/shudu0618/
参考资料：https://public.bnbstatic.com/static/files/research/low-float-and-high-fdv-how-did-we-get-here-cn.pdf
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