The "Matthew Effect" in the cryptocurrency market is intensifying, what should investors do?

Recently, there has been some bullish news in the encryption market.

Financial technology giant PayPal plans to sell cryptocurrencies directly to its 325 million users, possibly through a built-in wallet function that facilitates users to buy, sell and store cryptocurrencies. (It is reported that PayPal has established a long-term cooperative relationship with Coinbase as early as 2016.)

In addition, Bitcoin ATM company LibertyX announced that it will cooperate with convenience store 7-Eleven, pharmacy chain CVS and RiteAid to launch cash purchase Bitcoin services in 20,000 retail stores in the United States.

Although the expansion of these channels only provides an entrance for cryptocurrency trading, compared to its extensive mainstream social user groups, as long as a small number of them try cryptocurrency services, they will be able to bring a steady stream of growth to the currency circle. Users and Funds.

However, these incremental funds and users are not enough to bring a bull market to the cryptocurrency market. Instead, they help mainstream currencies such as BTC and ETH, and accelerate the demise of altcoins. We look at it from several aspects.

From the perspective of market value, BTC and ETH firmly occupy the top two positions in the encryption market, accounting for more than 75% of the market share, while the other 4000+ currencies account for less than 25%. This is the result of market selection and survival of the fittest, which can reflect the truest value of the project.

From the perspective of promotion and publicity, the yearning promotion of the encryption market, including the laying of Bitcoin ATM machines, the rise of cryptocurrency payment services, the encryption marketing of people in the encryption circle, and the reports of mainstream media, etc., are mostly BTC and ETH , and only these two coins can represent the entire cryptocurrency market. For most users who enter the currency circle, BTC and ETH are also the first two currencies to come into contact with. The first-mover advantage is obvious, and the traffic and capital influx are also the most.

From the user's point of view, the main purpose of investing in the financial market is to make a profit. Buying altcoins is equivalent to buying a lottery ticket, the probability of winning the jackpot is too low. Compared with altcoins, Bitcoin and ETH represent the basic market of the market. The currency prices are stable and less volatile. The probability of profit after buying is much greater than that of altcoins. With the development and expansion of the market, BTC and ETH can obtain relatively stable development and appreciation potential under the dual blessing of their intrinsic value and external economic effects. Which is good and which is bad, you can tell at a glance.

From the perspective of the development of various cryptocurrency derivatives, it started with BTC contracts, and then transitioned to ETH and other mainstream currencies, second- and third-tier currencies, which generally increased the liquidity of tokens and the stability of currency values. But investors who often trade contracts understand that trading depth and liquidity are crucial. BTC has unparalleled high trading depth and liquidity, and ETH also has it. The trading depth of other currencies is too poor. It is not so obvious in the general market. Once encountering a sudden market, you will regret it.

You will find that the original purpose of the exchange to add currency contracts is to provide stronger liquidity for these currencies and facilitate users to choose more (long, short), but in the end, without exception, they tend to move towards the stronger and stronger. The Matthew effect of the strong and the weak is developing in the direction of development. There are fewer and fewer contracts for other currencies, and finally they are concentrated on BTC and ETH.

As for altcoin players, except for a small number who are still living in fantasy, they either embark on a long journey to return after losing money, or have a large number of zeroed chips in their wallets with nowhere to put them, or they are too hurt by altcoins to withdraw from the circle. , The myth of getting rich overnight by ten times, a hundred times and a thousand times is occasionally circulated in the market, but the protagonist of the story has nothing to do with you.

Behind all the noise and farce, as Wall Street analyst Max Keizer said: "The only purpose of altcoins is to take Bitcoin from investors driven by FOMO (fear of missing out)."

To sum up, the cryptocurrency market is gradually being marketized, mainstreamed, and regulated. In this process, BTC and ETH are the easiest to attract new users and new funds. At the same time, with the gradual decline of altcoins, investors are gradually moving away from altcoins and moving closer to mainstream currencies.

Back to the market, after BTC fell rapidly from 9,700 US dollars on Wednesday, the overall rebound was less than expected. It was limited by the pressure of 9,300 US dollars for a short time, and fluctuated within a narrow range of 9,000-9,300 US dollars. At the hourly line level, the MA moving averages are arranged in a short position, and the nearest moving average pressure line is at $9,200 (MA30 moving average). Observe whether the bottom support in the range of 9000-9100 US dollars is reliable within the day, and beware of false pin movements.

Two days on the weekend, the stock market closed, and the currency market was weak due to external influences, mainly due to its own influence. In the absence of further bad news, the market is likely to stop falling and stabilize. Watch whether the 9,200 USD can successfully break through. If it can stand firm at $9,300, the bulls will regain their advantage.

However, judging from the big data of the contract, yesterday afternoon, after the Bitcoin contract was delivered, the total open interest did not rebound as quickly as usual after a short-term sharp drop, which confirms that the overall market trend is weak and the trading atmosphere is not active. In this case, the main operation idea is to wait and see, and it is not recommended to intervene in too many positions.

The main risk point lies in the daily line level. In recent days, the negative line has been closed continuously, falling below the support of the MA60 daily moving average, and the moving average shows signs of going downward. At the same time, the MACD indicator continued to die, and gradually moved closer to the 0-axis from above the 0-axis, and even fell below the 0-axis support for a short time. This means that the bears have a slight advantage, but because the recent trading volume is weak, the decline has not expanded. .

In the follow-up, if the bulls cannot gather an effective counterattack, the short force will be formed. This is not conducive to the trend of the market at the end of the month, and it is not conducive to the overall trend of the next month. We need to beware of the existence of risks.