"The inaccessibility of gold is based on physics, and the inaccessibility of Bitcoin is based on mathematics. Which one is harder, mathematics or physics? Mathematics will be harder. This is not based on human perception. It's 'fact' (fact), not 'will' (will)."

When it comes to the value difference between gold and Bitcoin, Xu Zhe is quite different from ordinary people who regard Bitcoin as digital gold.

On April 9th, Zhoulibo’s live broadcast room was launched for the first time. Xu Zhe, a financial expert and front-line trader, Mint, an early important participant in the Bitcoin community and the founder of Wonderful Capital, had a dialogue with Yang Zhou, founder and CEO of PayPal Finance, to discuss Bitcoin How to deal with the currency facing huge volatility. Xu Zhe has a column on Zhihu, "There will be no pies in the sky", explaining his understanding of the financial market, analyzing various trading behaviors, and gaining a lot of attention from fans. At the same time, he also has a deep understanding of Bitcoin, and personally participates in mining machine investment, using financial tools to manage mining machine investment income and risks.

In this dialogue, Xu Zhe gave many unique and valuable views on Bitcoin, some of which are listed as follows:

• The plunge of Bitcoin is not because of a change in value fundamentals, but because of the depletion of dollar liquidity and the emergence of a "dollar vacuum."

• The value of Bitcoin is not based on hedging, but on its unique inaccessibility.

• The inaccessibility of gold is based on physics, and the inaccessibility of Bitcoin is based on mathematics. Which one is harder, mathematics or physics? Math will be harder. This is not about things based on human opinions, this is "fact" (fact), not "will" (will).

• The value of Bitcoin does not lie in the consensus, but in the fact that Bitcoin uses some hard things to guarantee its inaccessibility, not that there are many people who believe in them. This is different, one is hard and the other is soft—people's views are easy to change, but the laws of physics and mathematics cannot be changed by people.

• The banker manipulates this matter, and no one’s patience can last more than ten years; the banker exists, but the banker is only in the band to make money from irrational people. It is not that Bitcoin can become the best performer within ten years. root cause of the asset.

• For miners, since they have chosen to operate with heavy assets, cash flow management and risk management are the most important things. This is what determines the miner's life.

• The settlement system under the US dollar-dominated system is not cracked, but has collapsed by less than half, so this may be an opportunity for Bitcoin.

secondary title

Yang Zhou:

Yang Zhou:Teacher Xu Zhe is invited to chat with us about his understanding of the reasons for this Bitcoin plunge.

Xu Zhe:Yang Zhou:

Yang Zhou:Yes, including insurance and options, everything is falling.

Xu Zhe:This is not a big change in the value of the asset itself, but the depletion of the dollar's liquidity. To put it simply, because U.S. stocks are highly derivatives, when U.S. stocks run out of positions, it will require us to make up short positions, otherwise investors will not only liquidate their positions, but also have other incidental legal responsibilities.

At this time, major investors in U.S. stocks all over the world need to turn their cashable assets into U.S. dollar cash as soon as possible.

On that day, you can see that the US dollar interest rate market also had some shocks, and the US dollar index was very high. The U.S. dollar index is formulated based on the exchange rate between the U.S. dollar and other major currencies. If the U.S. dollar index exceeds 100, it means that the global U.S. dollar is returning to the United States. There are two main markets for the U.S. dollar, one is the domestic U.S. dollar market, which the Federal Reserve can directly intervene, and there is also an offshore U.S. dollar market, which is the U.S. dollar market in the Eurozone. Therefore, when we see the sudden explosion of the U.S. dollar index and the rise in the overnight interest rate of the U.S. dollar, it means that the liquidity of the U.S. dollar has occurred in a state similar to a vacuum, including gold, other commodities, and some Bonds, even Treasuries — because Treasuries are basically cash equivalents, sold off that day as well.

It's an incredible thing.

Because since the Federal Reserve has used treasury bonds as the main asset item in its balance sheet, the security of treasury bonds is almost equivalent to cash, so if even treasury bonds are sold off, it can only prove one thing-that is, everyone has all assets. No, just US dollar cash - this is used to cover positions.

When everyone needs US dollar cash, it is definitely too late to sell the house on the spot to cover their positions. At this time, what can be instantly turned into dollars, I will throw out what. Both gold and Bitcoin belong to this kind of very liquid assets, so all of them were slaughtered.

The reason why this massacre is so tragic is also because there are more contracts traded in Bitcoin now, and there are also some leverage effects, such as futures, forwards, perpetual swaps, and options that are popular in the market, all have very high leverage effects . In this case, the leverage effect also tramples on each other, which creates a vicious circle.

When the high-leverage Bitcoin long contract is liquidated, the market is selling a large number of Bitcoin, which will detonate the next-level leveraged contract, and then clear other related derivatives. , which then causes a continuous stampede.

Perpetual contracts are now popular in the Bitcoin circle. The perpetual contract is actually a swap swap we call SWAP. SWAP means, I exchange Bitcoin with your US dollar now, and then I exchange it back after 8 hours. If you can’t exchange it after 8 hours, we will increase the interest. But when the whole world is crazily eager for dollars, you can’t exchange them back, so it will cause a shortage of collateral, and then the interest rate will rise. If the interest rate rises, it will trigger arbitrage, and if arbitrage is triggered, it will trigger liquidity. Not enough, right?

At the critical moment, the IT of several bitcoin exchanges did not keep up. Under the impact of relatively large traffic, they stopped trading, suddenly maintained, and then caused the liquidity provided by arbitrage to fail to keep up. That's when the tragedy happened. Therefore, in essence, it is not that there has been a relatively large change in the fundamentals of Bitcoin, but that there is a big problem with the liquidity of USD behind BTC/USD, and because the leverage of derivatives in the currency circle itself is too high ——Because when it was rising all the way up, the optimism of the currency circle towards Bitcoin has reached an outrageous level, and the forward premium of Bitcoin is already very high.

In the bitcoin lending market, such as what PayPal is doing, you use the USDT financing in the bitcoin lending market to deleverage and do long bitcoin, and use leveraged forward contracts, including futures perpetual swaps and off-site swaps If they do, they can both produce a leveraged long bitcoin effect, and the cost of capital between the two will not differ too much, otherwise it will trigger risk-free arbitrage.

Therefore, we can basically infer from the premium rate of the forward contract of the relatively large exchange, that is, how high is the lending rate in the encrypted digital currency market? Such a high premium proves that everyone is willing to pay high interest to deleverage and go long, which is bullish on Bitcoin.

The blind optimism in the market is very high, and it coincides with the promotion of contracts by major exchanges, resulting in an incredible accumulation of leverage. Therefore, the fuse is the vacuum of dollar liquidity, and then the amplifier is the excessive use of leveraged contracts in the currency circle and the blind optimism in the currency circle. The final round of massacre is the selective failure of the servers of the currency exchange .

These three things happen in sequence, and you can see that Bitcoin plummets instantly, which is basically the same thing.

The Fed did not do a good job in the liquidity vacuum of the US dollar, because the Fed also saw at that time that the US dollar vacuum caused global assets to plummet, and then they used more traditional tools. Zero; the other is to choose to expand the balance sheet, re-purchase US treasury bonds and MBS, and then reopen the inter-bank discount window, and let the bank boldly go to financing, which is the Fed's rediscount window, and then the Fed's rediscount window , it is for primary dealers and banks.

At that time, everyone was quite panicked. The Fed directly gave money to primary dealers and banks, and they dared not put money in the market anymore. Because the primary dealer is similar to the bank’s reverse repurchase of treasury bonds on our A shares. Let him earn you an overnight interest, and it is almost zero. Faced with the risk of a fund or dealer’s liquidation, he is not willing to borrow .

Did any of you lend money to a highly leveraged one the day bitcoin crashed in March? None of you should be willing to borrow, it is the same reason. The Federal Reserve was willing to release this money that day, that is, it expanded its balance sheet so much that it provided primary dealers and banks with almost unlimited financing on the discount window. However, primary dealers and banks are unwilling to inject money into the market for funds that are already on the verge of liquidation, so the economic operations of the Federal Reserve that day did not work. This has caused the liquidity of the US dollar to be very tight for a period of time.

Therefore, the price of Bitcoin rebounded relatively slowly. Recently the Federal Reserve fixed this issue, so the price of Bitcoin is backed by cash. Because the Federal Reserve has actually broken some rules now, bypassing the banking system and the system of primary dealers, and directly went to the market to buy US dollar bonds, that is, the Fed’s money was directly created out of nothing and injected into the company’s balance sheet. USD liquidity is restored. Therefore, we can see that the price of Bitcoin has also recovered-you have to buy it with USD, and the BTC/USD index can go up.

Yang Zhou:

Yang Zhou:secondary title

What is the value of Bitcoin

Mi Xiaoping:How do you view Bitcoin's performance in this crisis? From the time of the Bitcoin crash until now, the price has returned to the position almost before the crash, and the speed is also very fast among all investment categories.

Xu Zhe:As an asset, Bitcoin’s performance is actually not very good. In this round, it has basically failed to replace the traditional monetary and financial markets. If we want to evaluate an asset, it is irrational to only use the rise and fall as the basis. The key is to see whether the asset has the role it should play in the process of allocation.

For example, investing in government bonds does not actually expect to make a fortune from government bonds. I'm either betting that interest rates will continue to fall, or I want to get a fixed income. It cannot be said that the yield of national debt is not as good as that of stocks this year, and then the performance of national debt assets is not good, right? This is inappropriate.

We just need to evaluate whether the asset's design is successfully linked to its goals.

Yang Zhou:

Yang Zhou:The Financial Market Research Department of PayPal Finance also studied it. During this period of time, the correlation between Bitcoin and gold-the correlation expressed by the 52-week line, actually reached a record high, and the correlation with gold It has reached more than 49%, and the correlation with SPS has also reached a record high. From a longer-term perspective, Bitcoin's safe-haven attributes have been highlighted.

Of course, because of the liquidity crisis, Bitcoin or the entire market including mainstream safe-haven assets such as treasury bonds and gold fell. As a 7×24-hour transaction, Bitcoin is also a trading asset with no supervision and no circuit breaker mechanism. From my point of view, Bitcoin’s performance is not bad, and it still embodies a hedging attribute.

Xu Zhe:Yang Zhou:

Yang Zhou:From another point of view, the hedging properties of these assets lie in the hedging properties of some geopolitical events, or events such as sovereign credit defaults. However, under the liquidity risk, it seems that there are no assets Can be alone, or that no snowflake is innocent.

Xu Zhe:Yang Zhou:

Yang Zhou:Because Bitcoin's liquidity is particularly good, and in addition, its sensitivity to monetary policy is also particularly high, and then more and more funds will enter the market, or to speculate on these two assets.

Xu Zhe:I have always disagreed. Classifying gold and Bitcoin as safe-haven assets is just everyone's imagination. In risk events, it has not been proven that they are hedging assets. I never regard them as hedging assets. If you look at them as safe-haven assets, they have failed very well.

However, in fact Bitcoin is not a failure. Since it started trading in 10 years, it has never been less than 1 cent, and now it is more than 7,000 US dollars. During these 10 years, it has performed better than any asset, and it does not rely on hedging.

Yang Zhou:

Yang Zhou:Both gold and Bitcoin are consensus assets that do not generate cash flow and have no upward valuation. Is it for this quasi-currency, for this consensus-based trading asset, they are more of a response to human trade activities, to GDP, or to M2?

Xu Zhe:M2 it. Because M2 is actually relatively influenced by the central bank, and it is not really related to the total amount of human economy. Comparing the ratio of China's central bank's M2 to GDP and the ratio of the Federal Reserve's M2 to US GDP, you will find that these two ratios are very different. Also under certain GDP growth conditions, the growth rate of M2 can be much faster than GDP, so it is not appropriate to use M2 as an indicator to measure.

Bitcoin is different from gold, it is not a pure consensus, it has some other things. The inaccessibility of Bitcoin is different from the inaccessibility of gold, and its guarantee mechanism is different. The inaccessibility of gold is due to the fact that elements with a proton number greater than 56 are not easy to precipitate during the planetary-level formation process, and it cannot be formed in a relatively normal environment. Therefore, its inaccessibility lies in the fact that No one can have alchemy.

Bitcoin is not equally accessible. The inaccessibility of Bitcoin lies in the irreversibility of the hash algorithm. Therefore, if it is insisted that Bitcoin and gold are both out of consensus, I think it would be better to say that they both have found a relatively hard attribute that is not easy to obtain, one is based on physics, and the other is based on mathematics.

Do you want to say which is harder, mathematics or physics? I think the mathematics will be harder, that is, the irreversibility of the hash algorithm is less likely than the fact that humans may change the number of protons. This is not about things based on human perceptions, this is "fact" (fact), not "will" (will).

secondary title

Yang Zhou:

Yang Zhou:As a very niche product, Bitcoin is still highly volatile. How to make miners or mine owners deal with the high volatility risk of Bitcoin, are there any suggestions on options or other methods?

Xu Zhe:Regarding the use of options to manage Bitcoin price risk, I have been doing this for more than half a year.

We can understand mining pools as producers. We also often do this in traditional finance. Copper mines, aluminum mines, nickel mines, and oil fields including crude oil all use options when managing price risks. For the production side, the method of selling call options is generally used to enhance its income.

For example, crude oil, if the production cost of an oil field is $30 a barrel, and if the current price is above $35, he may short a $40 put option. If the price does not reach $40 per barrel, its option fee is free income, and if it does, it will be delivered at a price of $40.

If crude oil has fallen so badly now that it is only in the twenties a barrel, some of the options he sold at the beginning for $40 are all his income. This fund has accumulated a lot over time.

I just transplanted this idea to Bitcoin mining. I also bought a batch of mining machines and placed them in a friend's mining pool for hosting, and then I took some short positions of call options. In the end, I found that after deducting the electricity fee, the income of options is higher than the income of mining machines, so I have some protection for my own safety, so I am already very satisfied.

Then my friends in the mining pool asked me, can I promote this service to other miners, so that other miners can also enjoy additional benefits. I also agree. Later, Bitcoin rose all the way to 11,000. Since I was a short position, when Bitcoin rose, the options and futures accounts were floating losses. Overall, if the price is denominated in US dollars, the miners' income is much better than that without hedging. However, the miners are not satisfied, because the miners are superstitious about the halving market, thinking that the price of Bitcoin will definitely skyrocket. Therefore, many people later said, "Let's not do this anymore, it will affect my fortune." Later, some miners withdrew their short positions, and after a sharp drop in Bitcoin, it was difficult for miners to pay their electricity bills.

Therefore, I think that miners, as heavy asset investors, should not ignore risks too much. This is what I have always said: if you want to buy some bitcoins for long-term investment, you can ignore price fluctuations, and as long as we don’t have leverage, we won’t lose our positions. However, as a role with a relatively heavy fixed investment, miners still have cash flow expenditures, and electricity charges are denominated in fiat currency, so it is necessary to manage the fluctuation risk of BTC against fiat currency.

The reason why mining is profitable is to exchange the risk of fixed investment that is not easy to withdraw. Mining does not generate income out of thin air, it has a compensatory effect. Any enterprise that relies heavily on assets as its business model has a need for liquidity risk management. Many miners do not have this awareness. He is simply optimistic about Bitcoin, and then mining has the benefits of Bitcoin, so he enters the market, but he does not manage the risk of liquidity, which is wrong.

Mi Xiaoping:Many miners may not be very good at using these tools for hedging. In addition, some risks can actually be avoided in terms of model selection, machine iteration, and the conversion of wet and dry water. What can miners do to deal with such fluctuations?

Mint:Regarding the uncertainty of the halving, miners actually need some coping strategies.

First of all, you can iterate on this model. If it is 60W/T, it may be relatively dangerous after halving, so everyone can iterate the mining machine into a newer model, for example, on the premise of doing their best. It doesn’t necessarily have to be S19 or M30, which is relatively expensive, but try to be as close as possible, and I think it is a safer threshold within 50W. This is the first point, try to iterate your own models as much as possible, provided that you do not have enough good electrical resources.

Another way for ordinary miners is to use some financial strategies to ensure their own cash flow income at a certain stage. As Mr. Xu said just now, you can use options to do some hedging. Looking at it now, miners have two methods that are more financial. One is hedging. When the entire market is expected to fall sharply or slightly, they can choose to sell the coins in advance and exchange them for cash flow. This is to ensure that miners have a stable and sufficient cash flow.

For veteran miners, this halving may be both a risk and an opportunity. I was in the currency circle for 13 years, and I transitioned to the mining industry in 19 years. I actually have a lot of experience in the upstream and downstream resources of the entire mining circle. Now we can see that there are more and more institutions with their own power stations, and they may also be more and more interested in mining. Well, mining has now slowly become a resource-based industry. For such large miners with resources, they can actually purchase some machines with high power consumption before and after the halving, because the price of these machines must be relatively cheap, so they can replace some of their own resources.

For the small and medium-sized miners who are new to the market, in fact, while stabilizing the cash flow, it is good to store up your own coins. It is still in a bear market stage, and the long-term income of mining is faster than the return cycle of some real industries. For example, the payback period for investing in mines will not exceed two years, so for those who are more cautious miners, they can choose to start after the halving. The possible risk in the early stage of halving is relatively high.

I have gone through two and a half cycles since I started my career, and I am currently going through my third cycle. From my experience, Bitcoin must have its own value support in the long run. While stabilizing cash flow, everyone can actually hold the currency for a little longer.

Mi Xiaoping:Yang Zhou:

Yang Zhou:In fact, I don't have much mining experience, I have more financial understanding. Just like Mr. Xu said just now, in the rising market, miners start to get excited, and then panic when it falls.

In the past, more native miners may have come from other industries, but as the price of Bitcoin is getting higher and higher, many miners have begun to specialize. Will some miners be willing to choose some products that are option combinations for its entire production and Such a risky hedge for bitcoin sales?

Mint:Miners have a demand for this, and if you use options for hedging, its income will definitely increase relatively, and then you can also hedge some of your own risks. Some people in the industry have proposed some solutions in this direction before, but a large-scale and systematic operation method has not yet been formed. Therefore, if we can find a good solution, it can actually bring miners Nice perk.

Mi Xiaoping:Next, let’s talk about after halving, will it bring some new impacts to the ecology of miners, and to the entire industry?

Mint:Let’s talk about it in several aspects, one is mining machine manufacturers, the other is the development of mining farms, and then we can look at the impact of derivatives and some policy dividends.

According to our observation, the weight of mining machine manufacturers in the market may decline. Because the chip industry has reached a technical bottleneck, probably between 5nm and 7nm, it is estimated that the next generation of mining machines will be this kind of chip, and the corresponding running time will be longer and longer. Models like the S9 probably last about 4 years in the market. In the future, for example, 5nm and 7nm mining machines may remain in the market for a longer period of time.

Now that the chip technology has reached the point where there is no way to improve it, the possible development direction of mining machine manufacturers is, for example, for Bitcoin mining machines, it may be the optimization of power battery energy consumption and other aspects. In the later stage, it may develop towards various software services.

The other is the altcoin mining machine, which has always been an aspect of competition among mining machine manufacturers. For example, some relatively popular small mining coins have been launched recently. This is also some aspect of the future layout of mining machine manufacturers. I think mining machine manufacturers will only develop from these two aspects.

For mines, some resource structure adjustments are already underway. The owners of large mines are basically deeply tied to power resources. In the future, I think there will be oligarchs in the mines. The oligarchs have the right to speak in the hydropower industry and will be in the hands of such organizations. Recently, we have also seen that more and more institutions with such resources are more inclined to deeply participate in mining themselves, because they can replace resources.

In terms of policy dividends, we can also see that last year, some places in Sichuan encouraged big data and cloud computing companies to settle in through the form of policy industrial parks. For example, the government of Ganzi Prefecture in Sichuan has listed an industrial park to promote big data and cloud computing. In fact, it is to eliminate the problem of excess energy of the local state government, that is, to "remove water".

"Dewatering" means that if the local hydropower resources are in the high water season, there are actually many that cannot be consumed. After the electricity is generated, there will not be so many enterprises to consume electricity, and if these resources do not generate electricity, they will not It is a waste of resources, so they strongly encourage cloud computing and mining industries to settle in industrial parks. Here are some policy bonuses. Although the current economy is not as good as before, the policy stimulus of these local governments is more helpful, because the mining industry can also bring some benefits to the local area.

The derivatives industry, like PayPal, has developed very rapidly in the past year. In fact, it has something to do with the development of the mining industry. The mining industry requires very professional services for financial derivatives. Therefore, the overall market space is still quite large.

secondary title

Re-understanding of the halving event

Mi Xiaoping:2020 may be the year to witness history. What does Mr. Xu Zhe think of the halving market?

Xu Zhe:The halving does not write off the supply of bitcoins, the halving just means that the number of mining rewards per block is halved, but the supply of bitcoins is still growing. It cannot be said that the halving, the growth rate of Bitcoin supply has slowed down, and it is unscientific to think that the price of Bitcoin will rise. We look at supply and demand. If the demand is not rising and the supply is still rising, but the growth rate of the supply has slowed down, it is absolutely unreasonable for you to say that this thing will definitely rise.

You can’t just think that the halving will definitely increase this time just because the previous halvings have all increased. This is also unscientific. Nor is it sensible to trust your financial future to such inferences.

Looking at the future value trend of Bitcoin, from the perspective of supply and demand, we now know that its supply growth rate is slowing down, but it is still continuously supplying, and then it depends on its demand side, which is more important . So, we still have to go back to the supply and demand of Bitcoin.

The halving of Bitcoin means that the growth rate of supply has slowed down. Has its demand increased? It depends on who is using Bitcoin. Speculation does not generate real demand. If the futures are one long and one short, there will be no increment and no real demand. So some things may improve liquidity and increase transaction volume, but they cannot change the real supply and demand relationship.

We still have to see who is using Bitcoin? Who needs Bitcoin? We bought so many machines for mining with real money, and then used real money to buy electricity to maintain the computing power system, so that it can run, so that this bookkeeping system can be used. So, who is using this bookkeeping system? According to my observations, there are indeed people who are using this bookkeeping system, and they are the group of people left behind by traditional finance: one is the group of people who don’t want to be known by the government, and the other is kicked out by the dollar system Normal transactions in those countries.

Iranians do use cryptocurrencies in China for cross-border trade settlements, and they don’t do any strange business. They are all normal daily necessities transactions. Then, they do use cryptocurrencies for settlement. This is what he really needs. However, unfortunately, under the circumstances of the epidemic, all countries are facing the problem of economic recession.

The price of Bitcoin has fallen from the previous five figures to six or seven thousand. Part of the reason is real, that is, the total amount of trade recorded and cleared with Bitcoin is also declining. This is essentially the Fisher formula. We can deduce it backwards, that is, the total amount of money multiplied by the flow rate is equal to the price of the liquidated currency multiplied by the total amount. When the supply of money changes insignificantly, the quantity and total value of commodities used for liquidation decline, and the flow rate does not change much, the total market value of our currency will be affected, and It is weakened. So we can only say that our supply has slowed down, and the growth rate of supply has indeed slowed down. However, it does not mean that Bitcoin will skyrocket, so everyone must understand it.

Just mentioned mining. I originally majored in computer science. I used to say that 7 nanometers is the limit, because if it is smaller, it will encounter the influence of quantum characteristics. The circuit is so small that a single electron passes through, and there will be a principle of uncertainty. TSMC said that they are working on 5nm, but this matter is actually uncertain. Don't be too confident, that is to say, it will end at 7 nanometers. What if someone else's smaller nanometer breakthrough comes out?

There is also a problem that is not only about the chip becoming smaller. Back then we all thought that integrated circuits could only be made smaller and smaller, and when they got smaller and smaller, several key technologies came out to improve the computing power of the chip, including the replacement of several instruction sets, There are some CPU level optimizations. There may be multiple ways to improve efficiency, and we should not only consider it from this direction. Of course, the attribute of quantum is very hard, and there is no way to surpass it to this level.

As far as the algorithm of mining and the logic of rewards are concerned, very market-oriented mining will definitely not be without benefits, but the benefits of mining will definitely converge. The halving event does not actually change this dynamic, so when Satoshi Nakamoto designed this reward system, he knew the market well.

If there is no profit in mining, gradually some mining machines will withdraw. After the mining machine exits and the difficulty of mining decreases, the mining machine will benefit. However, if the mining income is high, it will cause an influx of funds. Once the influx of funds is caused, the mining income will be gone. Regardless of whether it is halved or not, or even suddenly reduced to 1/4 next month, the dynamic balance of the mining industry still exists. Therefore, the original design of this system was not to make mining people rich, nor was it to make mining useless. The design of this system is to allow mining to maintain the security of Bitcoin. This is the purpose of design, and it is indeed achieved.

For all those who invest in Bitcoin, it is to lower their expectations, and don't imagine the halving as a savior, as an opportunity to make a fortune. For miners, since they have chosen to operate with heavy assets, cash flow management and risk management are the most important things. This is what determines the miner's life.

Instead of choosing whether to hedge, you should immediately study how to hedge. After so many years, I am actually very surprised that everyone in the currency circle has not done this. I was very surprised when I saw that the miners were basically in a state of streaking. They bought a mining machine, turned it on, and then waited for the price of the currency to rise to make a fortune. This is the state of streaking.

Most of them are in us so everyone must pay attention. There are also speculators who are so crazy to push up the leverage to this level. In the currency circle, sometimes risk-free arbitrage can obtain high returns. I am quite surprised by this. Look at the premium of Bitcoin futures and the current price of Bitcoin. In fact, I buy Bitcoin spot and then short Bitcoin In the case of currency futures, the risk-free return I can obtain on the USD basis is much higher than the risk-free interest rate of the US dollar on the market.

This event was considered financially impossible, but it just happened. What does this prove? It proves that the fanaticism and irrationality of investors in the Bitcoin market far exceed any place in the financial market in the world. Therefore, everyone should pay attention to this, that is, Bitcoin is a good thing, and its value continues to grow as the demand for clearing outside the US dollar trading system increases.

I also want to refute the view that the rise of Bitcoin is completely a conspiracy by the dealer or a manipulation, and it is a scam. The banker manipulated this matter, and no one’s patience can last more than ten years. This thing has changed from less than a dollar to only a few cents, or even a penny, to the current six or seven thousand dollars. I can bear you like this.

Bankers exist, but they are only taking money from irrational people in the wave band, which is not the fundamental reason why Bitcoin can become the best-performing asset within ten years.

Therefore, everyone should be more rational. As a non-heavy asset-heavy, ordinary Bitcoin investor, he should focus on its long-term value and study the liquidation of all non-US dollar banking systems in the world. What is the total amount of this demand? Evaluate? Is the market in an irrational frenzy right now?

For miners, they have already chosen the asset-heavy method to obtain a certain profit space. You must know that for you, you are different from ordinary investors, and your liquidity risk management is fatal to you. Things, you don’t have the ability to advance, attack, retreat, or defend. If you are difficult to leave, you must be inside. Your mining machine has become a fixed asset investment.

And don't think that mining is something that can definitely make a fortune, because the mining system itself is designed to be used in a dynamic balance of the market-mining must be profitable, but it doesn't mean that there is no profit at any time. At the same time, mining will not allow your income to grow infinitely, it will be adjusted dynamically.

Don’t be pessimistic about the halving. It seems that after the halving, there is nothing to do with mining, which is not the case. Because the design of this mechanism is a dynamic balance, even if the halving continues, there will often still be profit margins in this industry, and then there will not be much profit margins, because its entry threshold is not high, everyone If you buy a mining machine and host it in the mine, and then join a mining pool, you can participate in it, so it is a very market-oriented thing. It is not like the Federal Reserve, which only provides direct liquidity injection and currency creation to primary dealers, member banks, and shareholder banks. We ordinary people cannot participate in the process of minting US dollars, but Bitcoin is a An open system, where everyone can participate, means that it will definitely reach the market cost.

Miners should not be too fanatical or pessimistic, and should do a good job in risk management.

Friends who invest in Bitcoin, including long-term investors, don’t be too optimistic or pessimistic. Don’t think that the halving market is the savior when Bitcoin rises, and don’t think that falling to 3,800 will never end, and your faith will be shattered. If you keep wandering between ecstasy and disillusionment, your wealth will be looted back and forth.

Everyone should look at the halving calmly and objectively. If there is no halving, the upper limit of the total amount of Bitcoin will be uncontrollable. It is the situation where the upper limit is converged to a geometric sequence by constant halving. Therefore, halving is a very common and normal thing, don’t over exaggerate its significance. Here's my take on the halving.

Mi Xiaoping:Yang Zhou:

Yang Zhou:The mining industry is becoming specialized and institutionalized, and there will be a lot of risk control and liquidity control, as well as the use of more derivatives. I personally think that the volatility of Bitcoin will gradually decrease, and the price will still rise after halving. Although it is a bit like Mr. Xu Zhe said, I personally prefer this point of view, because this is a very good story, which will attract more people to come in and increase the demand for Bitcoin.

Mint:I think that after the halving, there may be a small rise in a short period of time, and then there will be a big drop, such a market. After predicting that the halving will not lead to a big rise, in fact, many miners and investors in the industry will have a little lack of confidence, which will cause a wave of decline. In the end, the market will definitely be dynamically balanced, and the long-term trend is to rise slowly.

I am now paying more attention to the views of miners. Although miners have little influence on market prices, the confidence of big miners in this industry and some views on the mining industry can affect some spot prices to a certain extent. Therefore, I judge that after the halving, if the mining industry does not have a clear directional indication, there may be a round of decline, and then it will eventually stabilize slowly and then rise slowly.

Xu Zhe:There are many factors that affect the future price of Bitcoin. In the long run, it depends on the total amount of liquidation in the non-US currency system. I am optimistic, because in the most recent form, deglobalization has inevitably begun. Once the globalization led by the United States goes in the opposite direction, the demand for global liquidation in the non-dollar system will increase sharply in the future, but because the epidemic has greatly changed the direction of human history, the probability of the future human economy going to the Great Depression is also very high. big. The two phases cancel each other out, and it's still hard to judge which one is stronger.

In general, first of all, the U.S. dollar system is now facing a big challenge. The balance sheet of the Federal Reserve has grown from 4 trillion U.S. dollars to 6 trillion U.S. dollars, just like Bitcoin originally provided 21 million. It is a big problem to suddenly say that 30 million is now available.

Another is that the total amount of U.S. debt has soared. After the end of the Bretton Woods system, the current dollar currency system is only 50 years old. 50 years is actually relatively short. Many people criticize Bitcoin, that is, it is not like legal currency in this place, and it is not like legal currency in that place, so it is not a currency. This is ridiculous. Because the current monetary system has actually been in operation for 50 years, and it has not operated very well, so this system is now facing a big challenge.

And even if the system is fine, non-dollar forces are also growing, which means that deglobalization, which was dominated by Trump from the beginning, has inevitably begun, and the epidemic is actually accelerating.

If you are concerned about international current affairs, Trump made it clear that during this epidemic, medicines, ventilators, masks and other medical supplies, including raw materials for medicines, all rely on made in China. This just proves that China joined the WTO in the past What a wrong decision to globalize the supply chain, so it is a very obvious trend that the world should go to China and de-globalize. Moreover, the United States and other countries have already started to do it.

Looking at both sides, the clearing system under the US dollar-dominated system has not cracked, but has collapsed by less than half, so this may be an opportunity for Bitcoin. However, bitcoin is only one of the options for global non-dollar currency settlement. Among so many options in the future, it is difficult to determine that Bitcoin must win. Personally, I'm long on the bet.

Bitcoin has hope in asset allocation, and I think there is no problem with allocation. But if you ask me to guarantee, "Bitcoin must replace the current currency trading system", I don't have such a strong belief. This is the truth. Therefore, the future price of Bitcoin depends on several factors.

Judging from the general trend, now may be an era when the sky is dead and the sky is standing. However, is it the Yellow Turbans who have the last laugh? Or Sima Yi? Don't be too confident. Everyone should be cautious in asset allocation. Bitcoin is a very promising candidate, but you say it will be the king in the future, not necessarily!

In fact, when Bitcoin came out, it was shocking. No one has ever thought of using this method for currency settlement, and it is not guaranteed that another genius across the ages will come up with a better method than Bitcoin in the next few years. This is all unknown, because human beings are developing faster and faster, so it is very possible that a clearing system that is better than Bitcoin and does not rely on the central counterparty system suddenly appears in the future.

We cannot rule out the possibility, this is my view on the future price of Bitcoin.