What is the core of changing the trend of this round of bull market?

Yesterday, the entire market suddenly plummeted, and almost all mainstream digital currencies plummeted by 20% to 30%.

The market has done a lot of analysis on this sudden plunge, mainly including the following interpretations:

For example, the deputy governor of the People's Bank of China and the former governor of the People's Bank of China said that digital currency should be strengthened and that digital currency must serve the real industry; another example is the extremely negative attitude of certain countries (Turkey, India) towards digital currency; and Rumors about coinbase executives dumping stock and more.

If these factors are really the culprits of this plunge, then in my opinion, there is nothing terrible about this plunge, and the plunge will not affect the current bull market trend in the slightest. Because the outbreak of short-term events is only an accidental event, it is not a fundamental force to change the trend of the bull market.

So what is the fundamental force that changes the trend of the bull market? I think there are generally two types:One is that the capital has begun to tighten in an all-round way; the other is that the market itself has already contained a huge bubble, and the market has become extremely irrational.

The first force is induced by the Fed's interest rate hike. Obviously, this has not happened yet, so we can rule out this factor. But the second situation is still far from my feeling, and the market is far from being as crazy as imagined.

In an article at the end of last year, I reviewed the trend of the last round of bull market. In that round of bull market, there were at least 5 callbacks of more than 20%, and there were many callbacks of less than 20%. Therefore, just based on empirical data, the number of callbacks like the current one is not too many but too few in this bull market, so the market trend is still healthy.

Furthermore, I once shared with you the example of cooking dumplings. The callback in the bull market is not only not harmful, but beneficial. It is more conducive to the continued rise of the market outlook and the accumulation of upward momentum.

So there is nothing wrong with a big drop like this one, we just take it as the market stops to rest and wipe off its sweat during the rush.

When we talk about market trends, many media or analysis articles always like to say that a certain plunge or rise is caused by a certain group or a certain institution or the joint operation of several institutions, so whenever there is a sharp rise or fall in the market, The media always like to find the "black hand" behind this.

I don’t quite agree with this kind of view. I believe that there are indeed individual forces in the market that are relatively strong, but I think it is difficult for individual forces to influence the market trend in the current market. The short-term market trend is often an irregular Brownian movement.

Therefore, when we encounter such a major market adjustment, we only need to see whether these possible adjustment factors will fundamentally change the trend. If not, we will continue to maintain the existing strategy.

Furthermore, I mentioned two forces that may fundamentally change the market trend, but it will take a process from quantitative to qualitative change for these two forces to really have an effect in the market.

And this process, we can perceive it from clear event reports (such as the Fed’s interest rate hike) or personal experience, and even if the force has already appeared, its effect will not appear immediately, so even if this kind of force really works Or when it will have an effect, we can control it.

For us ordinary investors, the most important thing in the face of such a sharp drop is to calm ourselves down, not to lose the bargaining chips in our hands because of panic, let alone speculate on the next trend of the market at this time, and increase leverage to do more short. "Heaven commits evil, but it can still be violated, self-inflicted evil, you can't live." What often kills us is not the market but our own showmanship.