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The end of a bull market?

There is such a question on Zhihu. After the little bee answered it, some currency friends commented that "now the bull market has reached the late stage."

Chatting with a currency friend, he also said that he felt that there was not much room for BTC.

So is this the end of the bull market?

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Macro environment

Macro environment

Keywords: dollar

The current macro environment is significantly different from January 2018. After all, there is an epidemic and the dollar with unlimited quantitative easing.

Obviously, the current epidemic situation in Europe and the United States has not improved significantly, and it will still take some time for the vaccine to be normal, so this quantitative easing will continue.

Even if the vaccine is popularized, it will still take a cycle for the economy to recover from restart, so a lot of dollars are still needed to stimulate the economy.

This is the difference between now and 4 years ago. The BTC price we see is a nominal price in U.S. dollars. If the impact of U.S. inflation is removed, the current growth of BTC is not as exaggerated as we see on the surface.

Under the US dollar that continues to inflate, BTC, as a relatively scarce asset, should still be one of the options for hedging.

Here is a set of US stimulus package proposals:

Therefore, among these stimulus funds, the funds flowing into the currency market should not flow out. So do you still think it is the end of the bull market?

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micro environment

Keywords: grayscale

This is the method of observing the trading volume of Little Bee, which divides the trading volume (in fact, the transaction value) by the market value, which can remove the price impact and the change of the total amount of Bitcoin.

Comparing the trading volume during the decline in 2018 and the current decline, it is obvious that the current trading volume is large. This shows that at the beginning of 2018, when the price of BTC fell, few people bought it, so the price drop of BTC was accompanied by a relatively small number of BTC transactions. Now, there are people who buy it, so there is a large number of transactions.

Part of the power of this purchase comes from Grayscale.

Let's take a look, this is Grayscale's recent increase in positions. Except for ETH and ETC, almost all grayscales are increasing their positions.

Grayscale’s BTC holdings have increased again today. This should be the BTC purchased yesterday.

According to Grayscale’s fourth quarter report, more than 90% of Grayscale’s trust funds were sold to institutional investors.

Although Little Bee does not agree with Grayscale’s vision of selecting coins, I believe that Grayscale and these investor institutions that buy cryptocurrencies through Grayscale still have certain judgments on the market and the macro environment.

Therefore, it should not be oxtail now.

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Macro environment

Macro environment

Keywords: real economy

Obviously, vaccines are no longer a fantasy, and vaccines in the United States and China have begun. With the gradual popularization of vaccines, the real economy of the United States will gradually recover.

For ordinary people, on the way away from the epidemic, ordinary people will gradually regain their original lifestyle and consumption will gradually recover. For enterprises, they also need to restart production.

Therefore, the real economy may have a stronger gold-absorbing force than the currency market.

Note that the real economy does not absorb money from the currency market. As mentioned in the previous section, the US dollar injection in the US stimulus bill is still accelerating, so the source of gold for the real economy is the new US dollar generated by quantitative easing.

There are two stages here:

The second stage: After the end of retaliatory consumption and the initial capital investment for enterprises to restart production, the economy will enter a relatively flat stage of development. Funds flow to the real economy, stock market and currency market in a relatively balanced manner. At this time, BTC may enter a slow bull phase.

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micro environment

Keywords: moving average

Let’s take a look at the medium and long-term trend of BTC in the micro environment:

On the daily line, the price remains near the 7-day moving average, but is still far above the 25-day and 60-day moving average.

In the 3-day K-line and weekly line, the price is much higher than the 21-day and 7-week moving average.

first level title

write at the end

write at the end

Based on the above analysis, the unreliable guess of Little Bee is:

The market in 2021 will have 3 stages:

In the first stage, BTC fluctuates and consolidates, and there may even be a callback after a rapid rise, and there may be several rounds of consolidation. There is a certain possibility that there will be a relatively large correction around the Spring Festival, but it should not fall as much as it did on March 12, 2020.

In the second stage, as the US economy recovers, BTC may enter a round of slow bulls.

In the third stage, BTC turns from a slow bull to a mad bull.

The little bee guesses that this process is actually a bit similar to the market in 2020, but it is not entirely due to historical reasons. As analyzed earlier, it doesn’t look like a oxtail now, and it doesn’t look like it will rise sharply. In addition, the restart of the real economy will prevent hot money from flowing into the currency market, and even cause certain funds to flow out of the currency market, so the next step should be consolidation.

Let's put it this way, if the bull market is really over, then the currency price will fall relatively quickly, and we will not be given such sufficient time for us to ship. Even if the bull market is still there, after the consolidation, the trend of slow bulls first and then mad bulls is more in line with the law.

Li Qiyuan raised a possibility that this round may be a bull market:

If it were a two-headed bull market, the current position we are in may be here:

If Little Bee’s guess is correct, then there is a high probability that the first half of the year will be a process from consolidation to slow growth, so in the next consolidation and slow growth, Little Bee thinks that altcoins led by ETH may have some opportunities. The little bee is still the same sentence, it is unreasonable for ETH not to break the previous high. Today's instant up and down is not really breaking the previous high. Only the bull market where BTC breaks the previous high is too lonely.

Therefore, the little bee will buy some ETH while insisting on keeping the BTC position unchanged. In addition to this, there are three sections that Little Bee thinks will have opportunities:

One is the mainstream Defi of Ethereum. After all, Defi is the closest application type to money. Ethereum defi is the closest application type to ETH. The ones that are too counterfeit will not work, the mainstream ones, preferably not mined coins, such as UNI, MKR, etc. At present, Little Bee has not bought any Defi currency, because the funds are relatively limited, and I don't want to allocate too many currencies.

The second is Layer 2. Little Bee is most optimistic about this type of project. On the one hand, Defi is now the mainstream and rising, and there is no counterfeit dance, which shows that the madness of Defi has passed. On the contrary, we all know which one is the leader in Layer 2, so Layer 2 may have a certain chance. Because Little Bee doesn't know much about Layer 2, it only configures matic for the time being, because it has studied a coin last year and feels that the technology is good, and Binance has also invested.

The third is anonymous coins, which Little Bee is not optimistic about. There are regulatory risks in the short term. In the long run, no mainstream country will allow such a currency to exist under supervision. But recently, bigwigs have expressed their optimism for this audit-resistant anonymous currency, and Grayscale has also heavily invested in ZEC, so there may be opportunities in 2021. Little Bee will never buy anonymous coins. Little Bee believes that anonymous coins will have tenacious vitality and will definitely live forever, but their growth will be limited. After all, when it is excluded from all regulated exchanges, it will Will stay away from the mainstream investment market. If you are not optimistic about the currency in the long term, the little bee will not take this risk in the short term.