Market Observation | This bull market is different from the past, your trading strategy needs adjustment.

日月小楚

24-02-28 14:00

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Original author: Ri Yue Xiao Chu, encryption KOL

For the upcoming bull market, there are three major differences compared to historical bull markets. Based on these differences, our trading strategy also needs to be adjusted.

1) Different capital sizes, the current total market value of encryption is 2 trillion, and the price of BTC is 50,000. At the beginning of 2020, the price of BTC was only 10,000.

2) There are different opinions on the consensus of the bull market. Before the last bull market, there were reports of cryptocurrency going to zero in the beginning of 18, 19, and 20, and I have personally seen many people leave the industry. However, in this cycle, even in the year of the big drop in 22, most people will believe that the next bull market will come.

3) Different market sizes;

The above three differences are obvious, which can be used to deduce the differences in this bull market.

1 Increase in market professionalism and number of professional secondary institutions

Due to the increase in the size of funds in the secondary market, the professionalism of the market will definitely increase significantly. Specialized secondary fund institutions will increase accordingly. The simplest reason is that when your funds are 100K, you can research on your own. When your funds reach 10M, you will need a professional research team to operate. In addition, there are funds that specialize in the secondary market. Overall, these funds have professional teams, strong funds, and abundant resources. As a retail investor, it is not advisable to compete with them. In the past 2 years, predicting the trend of BTC has become more difficult due to the increase in powerful institutions, which has turned into a confrontation between large institutions.

So what should we do as investors in the cryptocurrency industry?

1) The accuracy of some existing skills will decrease, which is an inevitable result of the increased professionalism of the market.

2) Consider entering the core circle of professional organizations and networking through relationships and connections.

3) If you cannot find an institution, team up with other capable individuals to conduct research together.

4) In trading, one can take advantage of the disadvantages that professional institutions have.

For example, the speed of investment decision-making is slower than that of individuals, which leads to a slower response to new projects and new hotspots compared to individuals.

The investment targets of institutions are limited because institutions all follow a mainstream investment logic, and some investment sectors do not conform to the trading logic. The most obvious example is inscriptions. In the future, opportunities for explosive wealth may be greater in similar tracks to inscriptions.

2 Deepen some projects or ecosystems

Assuming that a project requires a certain amount of funding to operate at a certain market value (such as 1 billion US dollars in circulation), this bull market means that the amount of funds in the market has increased by dozens of times, which means that opportunities have also increased by dozens of times. Of course, the actual situation is worse than ideal because high-value projects need to be removed. However, compared with the previous bull market, there are still many more opportunities. That is to say, in this bull market, a good project or public chain with a few institutions and some community users who are optimistic about it can become a project with a not low market value.

At the same time, it also means that a project does not need to be favored by many people, or even in a situation where it is not favored, there is no problem. Because it only needs recognition from a small proportion of institutions, large investors, and retail investors in the market, it will still have a considerable market value.

Take this round of market trends as an example, Mingwen may have the largest increase, followed by the Sol ecosystem. However, apart from the general market trend, many coins still have very good gains, and many coins are even unheard of. Not to mention, some new projects that go online can benefit a group of people. For example, Pixel, Dym, and so on.

However, don't get too excited. Although there are more opportunities, there are also more institutions and professional teams. Therefore, good projects will attract a lot of attention. So in this bull market, you are still just scratching the surface or following the trend. You may only be able to eat what they have left over, and sometimes you may not even get a bite.

Therefore, the best way to maximize profits is to focus on cultivating good projects. Due to the large amount of market funds, better projects will have decent returns in the future. However, it is important to ensure that you get on board early.

3 Valuation premium is obvious, and undervalued projects are very few

In this bull market, it is already evident that many projects that have gone live have very high market values. This is a natural manifestation of a market with abundant funds. However, what many people have not realized is that there are very few undervalued projects in the market.

The reason is simple: there is a lot of money and people in the market. Some professional teams can discover undervalued projects. However, it is very difficult for ordinary people to find them. Therefore, for me, instead of spending time looking for undervalued projects, it is better to study the bottom of the trend cycle. Every cyclical adjustment in the market will cause the currency to fall, and basically no one can escape. Moreover, during the panic, prices are often wrongly killed. Therefore, if you spend time studying the bottom of the cycle, you are more likely to buy at a beautiful price.

Using information asymmetry is also a way, especially when market funds are abundant. Those new projects on the chain will also need some time from appearing to being discovered.