A few thoughts on the 519 plunge

The plunge on May 19 is undoubtedly the focus of many media attention in the past two days. Many media, including many of our readers, have talked about the reasons for the slump, and one of them believes that the slump may be caused by the expectation of the Federal Reserve raising interest rates in advance.

The expectation of the Fed raising interest rates ahead of schedule comes from the minutes of a Fed meeting that was released recently. In this minutes, some Fed officials mentioned that it will be necessary to discuss raising interest rates at some point in the future. After the minutes were released, US stocks and commodities ushered in a sharp drop. We ushered in more than 40% on May 19 plummeted.

If the Fed really raises interest rates, all investment markets linked to the US dollar (including digital currencies) in the world are very likely to usher in an adjustment or even a bear market, but the key point is when will the Fed raise interest rates?

According to public information, the Federal Reserve now has two reference criteria for deciding whether to raise interest rates:One is to see whether inflation exceeds 2% for a period of time; the other is to see whether the unemployment rate in the United States is under control (that is, whether the economy is improving).

Only when these two criteria are met will the Fed have a great chance of raising interest rates.

According to the current data, although there are signs of rising inflation, the unemployment rate has not improved much, so I still think that even if interest rates are raised, it will not come so soon.

Taking a step back, if the Federal Reserve really raises interest rates unexpectedly for various reasons, it will take some time for the effect of the rate hike to be transmitted to the investment market.

So overall,Regardless of whether the Fed raises interest rates this year, I think there is a high probability that there will be no major changes in market liquidity before the end of this year, that is, the market is still abundant in funds.

Under such circumstances, abundant funds will definitely not lie in banks with interest rates close to zero, but will definitely look for investment targets everywhere. However, the only investment targets that can be seen in the market are: the stock market, commodities, precious metals, and digital currencies. And these markets are not cheap right now. Even if funds withdraw from a certain market for a short time, where can it go? I guess it will come back to the market again eventually.

This is my basic idea for judging the overall market trend.

Of course, the market trend is definitely not something that people can predict 100%, so in the process of moving forward, we still need to keep an eye on the changes of various factors and adjust our strategies at any time according to the situation.

But so far, I think our strategy remains the same. Because the fundamental factors have not changed so far, we still have to treat other market fluctuations including this sharp drop as calmly as possible.

A reader mentioned in his message that based on his many years of experience and experience in the financial market, he had an intuition that the bull market was not over yet. I also have this intuition, so when we encounter an unexpected situation like 519, we should first calmly analyze various objective factors, and then ask our own intuition. If the basic judgments from the two perspectives are consistent, then there is no need to be too nervous .

This intuition of the financial market is not some mysterious inspiration, but accumulated in the process of the market. After a long time, I have experienced more accidents and absorbed more lessons. Slowly, painful memories will appear in my mind, and the torture and devastation I have experienced can be endured again.

Today, I read some thoughts of Bao Erye about the 519 crash, talking about the five bulls and bears he experienced and the moments of despair. He is glad that he gritted his teeth and survived those moments when life was worse than death, and he is grateful that it is because of those hardships that he has today's wealth.

I think this should be the ordeal that every digital currency investor must go through before reaping wealth.

This is not our end, the vicissitudes of the second half are still waiting for us.