The Hardest Lesson We Learned From the Crypto Market
first level title
Original Author: @0xTodd, Partner at Nothing Research
no other way
The haze of inflation haunts every mainstream country in the world.
The Russian-Ukrainian war, the epidemic, and the disruption of global supply chains... It is undeniable that under the wave of globalization in the past two decades, no country can live happily alone. A large amount of oil and natural gas from Russia, high-quality and cheap industrial products from China, and grain produced by Ukraine as the "granary of Europe"... These necessities of life that were easily available in the past have all been abruptly interrupted.
image description
U.S. inflation hits 40-year high
Before the central banks of various countries, there is probably only one way to raise interest rates, although everyone knows that it will bring depression. However, if interest rates are raised and various assets fall, inflation can be contained.
Especially the United States has the most sensitive sense of smell in this regard. The United States took the lead in raising interest rates, and Europe, and the rest of the world had to follow suit. It's like the last round of a poker game, the last player has raised, even if you don't have any cards in your hand, you have to call.
first level title
cycle theory
I am still bullish on Bitcoin, Ethereum and Crypto for a long time, but the departure of funds is not transferred according to someone's wishes.
image description
Bitcoin super cycle
I am not a fan of super cycle. Because if this is the case-attributing it to a kind of fate is undoubtedly obliterating the efforts of countless builders in the entire crypto industry, which should not be done.
image description
Hype Cycle
Everyone must have seen this curve. It implies the law of the development and evolution of things, especially technology.
In the beginning people always tend to advocate the bubble, because it has never been falsified. And once the development is too fast, a few thunderstorms are inevitable, and another group of people who have not advocated the bubble will try to mock it (just like now!). Then, it is time to slowly build and develop.
Repeatedly, interlocking.
It is very similar to super cycle, but not exactly the same:
The 13-year Bitcoin bull market enlightened the public to the blockchain technology, so in 2015 we had Ethereum.
The bull market in 2017 made everyone aware of the strength of smart contracts, so in 2019 we had DeFi.
The 21-year bull market has made us realize that DeFi and NFT can do so many amazing things, so we are destined to harvest new seeds in the future.
It takes more time for new seeds to germinate.
first level title
most expensive course
As the saying goes: take history as a mirror, you can know the ups and downs. If we want to brew the next bull market, we must understand what we can learn from this collapse, which is also the title of this article.
I think there is only one thing that must be learned:Don't take a moment for eternity.
first level title
Starting from "Income After Sleep"
Before DeFi Summer, we once invested in a token. Then it went to Pancake's Farm, with an APR of 300%+, very comfortable. Later, that pool was listed by alpacas, which can be dug with leverage. After getting leverage, we don’t even need to cash out anymore, we can directly borrow single currency to mine with that Token, and its income can easily reach 10,000%+.
What a concept, as long as I deposit 200,000 US dollars, one year later, I theoretically have 20 million US dollars.
At that moment, the office was boiling. Calculated, even simple CAKE can generate thousands of dollars for me every day after I sleep, not to mention the additional subsidies of leverage and alpaca-I don't seem to need to work at all.
first level title
As in DeFi, so is NFT
Let me talk about another illusion.
If you buy an animal as an avatar, you will not only get an avatar, but soon you will get a dog, then a mutated animal, and then get some tokens that these animals will use, and even get 2 pieces The land where animals will live in the future…
Even better, each of them can be sold. Doing the math, as long as it doesn't take a year, you can earn back your capital with interest.
Will you buy it?
I clearly remember that on the eve of the airdrop, my brother and I were very hesitant, very Fomo, wondering whether we should buy some monkeys. And during the period when the APE was actually airdropped, the price of BAYC itself also increased, and the APE also increased, and Luoxia and Lonely Bird flew together. At that moment, the entire metaverse boiled.
first level title
Even "stablecoins".
The most popular moment of UST is the moment when the market value of UST exceeds that of DAI. At that moment, farmers all over the world were excited.
At that time, although MakerDAO executives believed that their products were better, they could only be slightly sour on Twitter. And this also drew abuse from Luna's fanatical supporters.
UST, a "Stablecoin" with a scale of tens of billions of dollars, is unblocked in more than ten chains, and has liquidity of hundreds of millions of dollars in Curve and Terraswap. For orders of 10 to 20 million US dollars, there will be no slippage at all. What's even stronger is that it can also yield a super stable 20% annualized interest rate.
For some Korean companies, even if they work hard for a whole year, they still can't earn 20%, so it's better to save the money here, safe and sound.
One of the statements I hear the most is that the UST is "too big to fail", although it seems to have some problems.
But is it permanent?
When Luna fell from 120 to 0.00012, some people were still betting that it would return to anchor, but there was no going back. Countless people lost their money for it, and people discovered that this "anchor" did not exist at all.
image description
Curve AMM curve
And once it leaves the core range, as long as a little panicked capital flees, it is enough to bring the AMM curve back to the prototype and accelerate the crash.
first level title
dominoes
If it's just a strong medicine to get rid of Luna's sores from crypto, then that's all. However, what Luna brings to the entire industry is much more than that.
As a former top 5 cryptocurrency, Luna has spread its tentacles to every corner. And its demise is bringing a series of tragedies. What has already happened, there are two very direct consequences:
1. Weakened liquidity
Several super-large crypto market makers, who were important maintainers of crypto market liquidity in the past, have been seriously injured.
Whether it is investing in Luna, lending money to Luna, providing liquidity to UST, or a farmer of UST (except betting ETH to borrow UST), without exception, all of them suffered heavy losses.
Just like in the game, the crystals in my hometown are almost gone, and no one is going to guard the outer tower anymore. You can clearly feel that after the Luna crash, the liquidity of the entire Crypto has been much weaker.
2.Forced to sell
Top institutions, including Celsius and 3AC, have established a good reputation and reputation for a long time, and they also have a lot of liabilities (whether from LPs, friends or users), which is a normal business expansion behavior. In terms of their size, when the liquidity is normal, it is probably no problem to pay back the money slowly.
I believe that the moment they get the money, both parties are very satisfied.
However, the good times are not permanent either.
Cryptocurrencies are now on a downward spiral amid a rate hike cycle. As collateral shrinks, these institutions are left with fewer options. Selling your remaining chips to stop losses is one of the few choices. But today's weak market simply cannot support such a large amount of selling.
secondary title
yet to happen
In addition to these two immediate factors, there is another one that will probably happen soon.
3. A new round of regulation
In the face of the complaints of Celsius retail investors and the blood and tears of Luna investors, it is hard to imagine that regulation will not catch up.
At this moment, it is impossible for Crypto to cut seats with Luna. Because the general public in the outside world will not make any subdivisions at all. When the supervision needs material, the cases of Luna and Celsius are handed over, and even 3AC, a wave of strong supervision against Crypto is completely expected.
In any case, the advocates of Luna, which were crowded with people back then, are not innocent snowflakes in the current BTC avalanche. How loud the propaganda was at the time, the heavy shackles will be exchanged in the future.
write at the end
write at the end
Before, a friend on Twitter said that he came from Zhihu with me, and he was really touched. In the past, these articles of mine were published on Zhihu. After all, Jianzhong Internet allowed me to talk about crypto at that time.
At that time, I had a "yearly update" strategy, updating my understanding of the entire big market and my portfolio every year. The suggestion in 19 years is mainly to invest in BTC regularly, and the suggestion in 20 years is to switch some positions to ETH. Haha, but the article at that time was somewhat immature, so I won’t put the link here, if you are really interested, you can go to Zhihu to look it up.
If you let me talk about the current strategy, it may still be based on waiting for the opportunity.
My current main positions are BTC, USDC/USDT, and some small coins and PFP. At this point, there is not much room for panic sell mainstream, but there is still a lot of room for alts downward.
image description
About bargain hunting
image description
ETH/USD
$800 was one of the starting points of the last bull market, and stETH should indeed have some additional discounts. Long-termists will definitely be able to wait until the day when stETH is converted into real ETH.
I am very optimistic about the future technical route of Ethereum, the combination of PoS ETH+Rollup. Based on this route, real web3.0 applications can also run on Ethereum at ultra-low cost and enjoy the security of Ethereum without having to consider high handling fees. The environmental protection and inflation problems of Ethereum will also be solved because of PoS.
image description
Meme of Bitcoin
Finally, at this moment, if this is your first bear market, don't get too upset. The war will pass, the epidemic will end, inflation will subside, and water release is still an eternal theme. Every minute and every second in a bear market is a good opportunity to build and learn, because this dark moment is also not permanent.
