This round of bull market is still uncertain. The key is to see the external and internal factors that will affect this round of the bull market in the future.

Author: Mu Mu

This year is another four-year cycle of the Bitcoin halving in the cryptocurrency market. However, most people don't seem to be very happy, and some may even be in a state of loss. Those who are used to "waiting for the boat at the same place" have found that this bull market is obviously "unexpected" and, with the fluctuation and even downturn of the market, some people are starting to feel a sense of frustration, and are restless about the question of whether "the bull market is still here."

Why is this bull market so different

In the past more than 10 years of the cryptocurrency market, including the current market, there have been four cycles of bull and bear markets. This bull market seems to be very different from the previous bull markets, and those who have experienced the previous three bull markets should be able to find some clues:

1) Similarities and differences in the bull and bear market cycles

a. Similarities

Bitcoin is still the narrative and consensus of "digital gold";

The Bitcoin halving has always been the catalyst for a major market and is highly consistent with the bull and bear market cycles;

During the bull market, almost all projects can have good market performance, and many people make money.

b. Differences

The main narratives are different: digital gold, smart contracts, DeFi, GameFi, and other decentralized applications are landing and booming;

As time goes on, there are more new narratives, more institutions, and continuous improvement of infrastructure;

The size of the cryptocurrency assets is getting larger, and the volatility of Bitcoin is gradually decreasing.

2) Obvious anomalies in this bull market

In addition to the expected changes such as the maturity of the industry, more narratives, more institutions, and improved infrastructure, we have found "no cross-trading," "almost no sector rotation," and a proliferation of memes, and even the previous star of the bull market, Ethereum, is "not doing well"…

In fact, the changes that are difficult to understand in this round include "no cross-trading," "almost no sector rotation," and the proliferation of memes. This is also because the significant participation of institutional capital has changed the grassroots play of the cryptocurrency industry in the past. The influence of capital is increasing, and with the listing of Bitcoin spot ETFs, capital is flowing in faster. This has left the old players at a loss, feeling at a loss for a moment. The expectation that institutional investors will lead the projects is not as fair as playing memes by themselves. In addition, institutional funds are more rational and favor new narratives such as Bitcoin and AI, DePIN, which has caused the old narratives and projects that no one was paying attention to become neglected.

Institutions have more say, and it is difficult for retail investors to influence the market. With more narratives, institutions may not necessarily reach a consensus, and there are even factions among different institutions. The Chinese community focuses on the Bitcoin ecosystem, while the Western community is laying out AI and DePIN.

As for Ethereum, it was definitely the most dazzling star in addition to Bitcoin in the previous two bull markets, but now it is a bit cold. Part of the reason comes from the diversion of new narratives away from Ethereum itself, and another part comes from the new capital's preference for Bitcoin, resulting in Ethereum's current dilemma. Of course, in this special situation, Ethereum may also be undervalued, and specific details can be found in the previous article "Is Ethereum Undervalued?" (http://mp.weixin.qq.com/s?_biz=MzUyNzE4MDM2MA==&mid=2247524514&idx=1&sn=0f2de1ebaeb72478fc03debf5aff7e33&chksm=fa015785cd76de93c32effb9e6b2c69d995a06f7a4dcc717f7706d0f9515d6bf5a1ac997e0df&scene=21#wechatredirect). We will wait and see if it can be valued under this special circumstance.

In fact, the impact of the Bitcoin halving on the cryptocurrency market is gradually diminishing, and each bull market is directly caused by external factors and new narratives, rather than simply repeating history. So whether this round of the bull market is still here or not, the key still depends on the external and internal factors that will affect this round of the bull market in the future…

The real external and internal factors that will affect this round of the bull market

1) External factors: The mainstreaming of cryptocurrency assets caters to the external environment

In recent years, it is not difficult to find that Bitcoin and cryptocurrency assets are increasingly influenced by the external environment, with the most significant impact being the policies of the Federal Reserve. Behind almost every market surge and pullback, these major external factors are at play.

The Federal Reserve's interest rate hikes will cause a large amount of global capital to flow back to the United States, leading to a rise in the US dollar and a decline in the prices of major commodities, precious metals, and the foreign exchange market. Conversely, when the Federal Reserve cuts interest rates, the US dollar exchange rate decreases, which is beneficial for boosting the performance of major commodities. After the end of the Federal Reserve's interest rate hike, interest rates and exchange rates decline, and the liquidity of the US dollar gradually recovers, bringing rebound momentum to the market. Due to the international status of the US dollar, the global economy will be correspondingly affected.

Bitcoin priced in US dollars is gradually moving from the original cryptocurrency circle into the mainstream asset category. Now, Bitcoin is no longer a niche digital asset that can be driven by a group of enthusiasts during the "grassroots" period. The increasingly mainstream Bitcoin is more influenced by the rhythm of the major external factors such as the Federal Reserve's interest rate hikes and cuts.

2) Internal factors: New narratives are the real engine of the bull market

In fact, each bull market is able to resonate with the halving because it is a very good opportunity in the cryptocurrency industry. Before and after the halving, the cryptocurrency community often becomes more active due to strong expectations, and institutions and innovative developers follow the halving cycle to lay out, resonating with the community, and achieving twice the result with half the effort.

At the same time, the active cryptocurrency industry, coupled with the soaring cryptocurrency market, continues to attract more new builders during this period. In fact, the reason why more and more people have been able to gather together to conduct "large-scale human society" experiments like Bitcoin is because of consensus, and consensus requires a main narrative to provide support, just like the new narratives behind the previous few rounds of cryptocurrency bull markets.

Behind the new narratives are the new "highlights" of blockchain and Web3 that have been explored and discovered by the cryptocurrency community, including KOLs and innovative entrepreneurs, as well as more and more solutions. They not only solve the problems of high fees and low efficiency in blockchain, but also solve the landing problems of encrypted applications such as DeFi and GameFi, bringing funds and a continuous stream of new users to the entire cryptocurrency industry. Of course, innovation will not stagnate, and the emergence of more new narratives is empowering the cryptocurrency industry, bringing stronger momentum and becoming the source of intrinsic value in the cryptocurrency industry, driving the market higher.

Is the bull market still here?

First of all, we need to adjust our mindset. Whether the bull market is here or not is actually not important, because whether it's a bull market or a bear market, there are people losing money. The bull market, with its various slogans and exciting narratives, is more likely to make people rush in with their heads hot, resulting in being trapped at the peak and suffering even greater losses. For more people, the bull market is just the beginning of losing money.

Additionally, "stop predicting" is indeed a mature attitude in investment. Mature investors typically focus on fundamental analysis, asset allocation, risk management, and long-term investment planning, rather than trying to find short-term profit opportunities in every market fluctuation. They understand the uncertainty and volatility of the market and accept this uncertainty, so they tend to adopt a stable, long-term investment approach.

Both the internal and external factors of this round of market trends indicate that there is likely to be a follow-up. Currently, it is clear that the printing presses of countries around the world are unlikely to stop for a long time. As long as the printing presses keep running, cryptocurrency assets led by Bitcoin will always be an important part of many asset allocation portfolios. In the future of AI, Web3, and the metaverse, cryptocurrency assets will also undoubtedly take center stage.

Conclusion

The cryptocurrency industry is changing every day, and we must look at it with a developmental perspective. It is difficult to predict future market trends because of the high short-term uncertainty in the overall environment. Therefore, there is no need to be too enthusiastic about "predicting." What we can do is to stay focused on new developments, grasp industry trends, and find new opportunities. Temporary fluctuations may cause confusion and anxiety, but if we extend the timeline, the future of cryptocurrency is still clearly visible.

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