Is the market crash a crisis or an opportunity?
From yesterday to today, the market once again ushered in a wave of sharp drops, this time including the mainstream currencies Bitcoin and Ethereum were not spared.
As of writing, Bitcoin has fallen to around $10,400, within easy reach of the $10,000 mark; Ethereum has fallen to around $340, just one step away from $300. And all kinds of DeFi tokens are even worse. YFI has fallen to 25,000 US dollars, and it has fallen by about 40% from the high of 40,000 US dollars. The most legendary project has fallen so badly, let alone other DeFi tokens.
The media has various interpretations of this, some say it is affected by the upcoming outbreak of the second new crown epidemic in Europe, some say that the regulators are preparing to take action to control the recent DeFi boom, and some are related to the recent new The avalanche agreement, in my opinion, these reasons are far-fetched, and they are not the root cause.
For the negative market situation, we only need to pay attention to one point:Has the fundamentals of the market deteriorated fundamentally.If the fundamentals of the market have not deteriorated fundamentally, then the market decline is a normal callback, and there is no need to worry too much. This kind of callback is a good time for us to deploy high-quality projects.
In terms of mainstream currencies, it is clear that neither Bitcoin nor Ethereum has any substantial bad news. Not only is there no bad news, but there is one piece of good news:
According to data from the Bitcoin blockchain explorer, the mining difficulty level of Bitcoin set a new record at 5:55 am UTC on September 20, reaching 19.314T. Bitcoin (BTC) difficulty has risen by 40% since January 2020.
We all know that Bitcoin has not had any particularly exciting market this year, which shows that Bitcoin miners have not reduced their enthusiasm for mining because of the sluggish market, but continue to invest in mining.
Miners are not worried, and ordinary investors have no reason to worry.
In terms of DeFi, I mentioned in an earlier article that the real crisis of DeFi is the subprime mortgage crisis like that in 2008. As long as that crisis does not happen, we don’t have to worry about the fundamentals of DeFi at all.
There is no problem with the fundamentals of DeFi, so will the current price of DeFi be inflated? My criterion for judging is still market capitalization.
In the article "DeFi: A Comprehensive Testing Field for Various Digital Currencies" on September 9, I once wrote: "The market acceptance of BCH, BSV, Litecoin and Ripple is unknowingly dissipating, and Subtly swallowed by Ethereum DeFi."
BSV was still in the top ten at that time, and now it has been thrown out of the top ten. The remaining BCH, Litecoin, and Ripple have limited value and prospects in my opinion. Their stories have already been told, and they will be thrown out of the top ten sooner or later. And it is likely that this round of DeFi tokens will replace them in the top ten rankings.
After this period of development, it is clear that at least three areas in DeFi have become the infrastructure of the blockchain public chain: decentralized exchanges, lending, and asset synthesis.
Typical projects in these three fields, Uniswap, Aave, and SNX, currently rank 38th, 31st, and 42nd in total circulation market capitalization. The tokens of infrastructure projects have not even entered the top 20. This situation is abnormal, so I don’t think there are many bubbles in their token prices, and the same is true for other well-known DeFi projects.
If the current sluggish market continues for a period of time, I believe that a large number of investors will abandon the messy imitation market, re-understand the value of these well-known project tokens, and refocus funds on these projects.
So what should we ordinary investors do in the current market?
1. Ethereum is still within $400, you can continue to invest in Ethereum.
2. The amount of funds is sufficient, and the ratio of Bitcoin and Ethereum is more than 50%. You can use the excess funds to allocate some well-known DeFi project tokens and buy them in the form of fixed investment in installments.I think the following projects are well qualified: Compound, MakerDAO, Uniswap, Balancer, Curve, YFI, AMPL, SNX, Aave, UMA.
