Learn from history: When will the next bull market start? What new narratives deserve continued attention?

Original title: Echoes of the Past: What the Deja Vu Market Tells Us About the Next Bull Market.

Original author: IGNAS, DeFi researcher

Original compilation: Luccy czgsws, BlockBeats

In the crypto space, there is a popular belief that you need to go through three crypto cycles to be truly successful: the first cycle of taking a big hit and learning important lessons about how crypto works; the second cycle of taking some gains and getting comfortable ; Only in the third cycle can the wealth that can be passed on be obtained. For me personally, this is the second bear market I have experienced, and the third bull market will soon be ushered in.

I feel that the scenes I am currently experiencing are familiar, because I did experience the 2019-2020 bear market cycle. But what I’m talking about is not just the trend of falling prices, but the overall atmosphere: official regulatory suppression, ordinary people gradually becoming indifferent to cryptocurrencies or accusing them of being a fraud, stock funds transfer the benefits of one token to another An in-field fighting mode for tokens. If you joined the cryptocurrency market during or before the last bear market, then you probably feel the same way, this familiarity is a huge advantage, it comes from your past experience in the cryptocurrency market, and can prepare for the next bull market The foundation is laid for the arrival.

Each bull and bear market is slightly different, but the overall picture is similar. This article will discuss when the next round of bull market should start based on my own past experience.

deja vu market

First Bull Market Crash

The feeling of déjà vu usually only lasts a few seconds, but the current cryptocurrency market is creating a sense of déjà vu that can last for years. At the end of 2017, when the BBC article reported that Bitcoin continued to set new historical highs, I started to contact the encryption field with FOMO emotions.

I bought some bitcoins and it didnt take long for the price to double. I felt very excited, I felt very smart, and I entered a new financial field early. This excitement quickly turned into confidence that more money could be made by investing in more new and cheaper tokens. Since the first exchange I used (Bitstamp) didnt list many altcoins, I googled the best altcoin exchanges and found Gateio. I like its legacy UI, I can clearly see all the token symbols and more importantly the logos of the tokens.

I did some research by reading their websites, white papers, all of these projects look revolutionary, decentralized supply chain management, decentralized storage, even decentralized banking! The FOMO sentiment is getting stronger.

I keep throwing more scholarship into these tokens but there are so many types and they all look alike so I decided to choose based on the color of the token logo without doing any detailed investigation, Im paranoid It is believed that red tokens can outperform the market.

Long story short, I ended up losing a lot of money. I dont understand why this is happening? I diversify my portfolio, read the white papers, and trust these projects to deliver on the promises they made when they built their products.

But none of them have been able to build anything substantial, leaving only a website and a white paper.

This is common for newcomers to the crypto space. Greed, naive faith in new ideas, and a lack of knowledge and experience with how the crypto market works led to tragedy. Many people have lost so much that they have given up on the crypto space. However, those who stay and learn from their mistakes have a greater chance of success.

I was equally disappointed, but curious as to what went wrong.

This curiosity is the main motivation for me to continue writing about crypto. While my blog sponsorship may not bring me any money, it keeps me engaged and informed about market trends that really matter. In this article, I will introduce two of these trends.

Second Bull Market Crash

Curiosity and greed are powerful motivators for waking up early. After the bitcoin crash in 2017-2018, I still maintain a strong interest in cryptocurrencies and follow all the news. At the end of 2018, this passion for cryptocurrencies landed me my first job at a Korean CEX, where I spent about 4 years learning how market makers work, analyzing hundreds of tokens, talked to their team, and attended a dozen conferences. But the market was boring and quiet at the time. The relative calm of the market is only one of the similarities with our current market stage. Other similarities include: Regulatory crackdown on ICOs (especially in Asia) Regulatory crackdowns are similar. Cryptocurrency has been called a scam, Ponzi at least 385 times to date. · Waiting for institutional adoption: Institutions start buying bitcoin, similar to spot bitcoin ETFs now (pending approval). · The game takes place among the existing funds on the market, but no new funds enter the market · Waiting for the large-scale adoption of cryptocurrency.

There are more parallels, but it’s not like the last bear market is without narrative in the cryptocurrency space either. There was really nothing to do in the bear market of 2018-2019, there was no DeFi, no NFT, and all my transactions and positions were on CEX. The most interesting was the IEO, and the EOS token sale, which raised a record $4.2 billion and barely came to fruition. Theres very little to get excited about in the market. However things seem to change suddenly, at the beginning of 2020, I discovered a new hot token AMPL (Ampleforth), it completely changed my understanding of token economics, it is the first token with an elastic supply .

The AMPL smart contract automatically increases or decreases the total supply based on the target price (between $1.06 and $0.96), a process known as “rebasing.” If the price exceeds $1.06, then at 2am, the protocol will automatically issue more AMPL to bring the price down to the target level. If the price drops below $0.96, the protocol will destroy excess tokens. This means that instead of owning a certain amount of AMPL, you own a certain percentage of the supply. Investors will see their AMPL tokens increase or decrease, unlike any other currency.

It was new and exciting, and I made money doing it. I dont quite get the gist of it (mostly guessing what other people did during the token rebase), but Id love to see the number of AMPL tokens in the wallet grow. At the time, it was a new hot concept, and very rare.

Soon after, more and more new hot concepts began to appear, the most exciting one is BAL and COMP token liquidity mining, which reward protocol users with free tokens in proportion, and the amount of reward depends on how much you deposit into the smart contract. The amount entered.

This is an amazing time, and exactly when you should be paying attention!

Because every now and then an innovative token model emerges that changes the trajectory of the industry. The ingenuity of the new token economics drives the industry forward and could spark a new bull market.

Why are they giving out tokens for free? It was really confusing at first when you either needed to buy new tokens in an ICO/IEO or do millions of tasks to get a $5 airdrop. The craziest thing is the issuance of Yearn Finance YFI tokens. I earn free YFI at 1000% + APY just by depositing my stablecoins into Curve.

Things are getting crazier with SushiSwap liquidity mining going on. The mechanism is to deposit ETH/USDT to earn SUSHI, or buy SUSHI and deposit it into the ETH/SUSHI LP farm to earn more SUSHI.

This Poo l2 token mechanism is a real Ponzi scheme because the price of SUSHI will only increase when more people join. Dozens of Poo l2 mining come online crash every day. The game theory of winning the game is simple: enter the market earlier than others, mine as many tokens as possible, and sell tokens when the newly added funds are less than the token issuance + exit funds. Ultimately, the increasing number of new mines also diminishes the amount of attention paid to them and the amount of ETH/USDT invested. They all crashed when token prices dropped, causing APY to drop and subsequently TVL to go where yields were higher. However, this debacle is an important lesson and a pattern that keeps repeating in the crypto space, which ultimately offers the best chance for the crypto space, as long as you know when to exit.

How Bull Markets Start and End

SecretsOfCrypto summarizes in Road to the Altcoin how funds enter the cryptocurrency ecosystem through Bitcoin and gradually flow to altcoins.

I think there is another key element to the bull story: innovative money printing.

By “money printing” here I don’t mean the printing of money by central banks, although this does benefit the price of cryptocurrencies, but I mean the inherent money printing machine of cryptocurrencies. In the cryptocurrency space, we would say that we hate money printing by central governments because it dilutes the purchasing power of fiat currencies, increases inequality, and ultimately leads to currency collapse.

However, the cryptocurrency industry is best at printing money, and it gets easier with every bull run. In fact, it took several years after Bitcoin was first launched to create a new competitor.

Litecoin was the first altcoin, launched in 2011, followed by Ethereum in 2015. In the following years, Bitcoin forks such as BCH and BSV also appeared one after another. This is the original Layer 1 Seaon. These Bitcoin forks also allow OG Money Printers to receive new tokens as BTC holders, and you will make a profit if you sell them on the day of release.

However, issuing a new token is costly as these PoW miners require electricity to maintain network security. Issuing new coins has become easier and cheaper thanks to ERC 20 tokens backed by Ethereum smart contracts. Anyone can now issue tokens at low cost, and thousands of new tokens have been launched with just one website, white paper, and major promises.

However, the biggest impact of Ethereum and ERC 20 is not technical, but social. Before ERC 20, tokens were primarily viewed as currencies for payment or storage of value, but with the advent of ERC 20, tokenization has become all possible. As cryptocurrency prices rise, so do the use cases for cryptocurrencies.

Then, all of a sudden, the price plummeted.

The crash happened because the money flowing into the cryptocurrency system could not support the exponential growth of new tokens being launched every day, we printed too many tokens to meet the demand. As the number of tokens in circulation increases, attention becomes distracted, leading to confusion as to where to invest. In DeFi Summer, a similar pattern emerged again. During this time, the protocol distributes free tokens to liquidity providers or users via airdrops, which all say the airdrops are meant to bring the protocol into line with the decentralized ethos of cryptocurrencies.

Back in 2017 during the ICO bust, it seemed like everything needed a token to function. Now, in the DeFi space, the agreement needs a token for governance, we are still mainly at this stage, but the disappointment of DeFi governance is rapidly increasing. However, the real motivation behind these tokens is to activate liquidity. Without liquidity, protocols like Aave, Uniswap or Curve have no value. Just like in 2017, DeFi collapsed because more tokens were issued every day than money entered the system.

The story is different, but the root cause of the crash is the same. Interestingly, NFT also experienced a crash for the same reason. Crypto Punks and BAYC FOMO those who missed the opportunity, leading to the birth of new NFTs, and when the inflation of new NFTs could not maintain the price level, the market eventually collapsed. Currently, only a handful of NFT series have managed to survive, which makes me feel that the NFT market may be nearing a bottom.

New Bull Market: New Story, Same Mechanics

A brief recap of SecretsOfCryptos Road to Altcoin Season states that the bull market starts with new fiat money coming into Bitcoin and then gradually flows to lower market cap tokens.

But I think the money-making opportunities in the bull market will begin before new money enters the system, through innovative leverage and recycling of existing crypto capital.

A prime example is the DeFi craze: DeFi tokens were on the rise long before Ethereum and Bitcoin skyrocketed. Natives of the crypto industry are depositing Ethereum, stablecoins to acquire brand new tokens that are telling the story of a new financial system. Some are dumping these tokens, but many believe the story and hold on to DeFi tokens.

The DeFi preheating bull market bubble and the wealth generated from it are enough to attract newbies into the crypto system and buy Ethereum and Bitcoin. Of course, the low interest rate environment has had a much bigger impact than our relatively modest money printing, more on that later.

What interests me the most is that before the DeFi boom, the infrastructure of DeFi has actually been built, but before liquidity mining became a hot spot, few people cared about DeFi.

We are currently in a similar pre-DeFi bull market season, setting the stage for innovative money printing and compelling narratives, with some top opportunities potentially creating larger echo bubbles than some of the short-term narratives we have seen during this bear market .

Each innovation deserves its own article, and I will briefly describe their importance to echofoam money printing.

re-pledge

EigenLayer is at the forefront of this narrative. In simple terms, Ethereums security can protect multiple networks at the same time by allowing Ethereum holders to re-stake their ETH. However, this comes with a higher risk, and to compensate, holders who re-stake can receive a higher reward in the form of a new altcoin that promises to change the world we live in.

Many mining Ponzi economic strategies will be invented, each more creative, as a way to prevent you from selling your tokens, our focus is on finding those tokens that create a flywheel effect that enables decentralized applications (dApp) adoption can grow with token inflation. Staders rsETH is a liquid re-staking token.

However, restaking is a much larger narrative beyond the scope of Ethereum. Cosmos first introduced the concept of copy security, where ATOM stakers rent their security to other blockchains, the first being Neutron. I expect more blockchains will embrace the idea of ​​re-staking, just as they pursued liquidity mining rewards during the DeFi summer. Our mission is to understand how re-hyping works because after the Echo Bubble started, time is money.

Bitcoin Ecological DeFi

This is a brand new narrative, little known even among EVM DeFi enthusiasts.

Im optimistic about the potential for Ordinal and Inscriptions to thrive, but currently they dont have the Ponzi token economics to sustain inflation of new token issuances in the market.

Bitcoin Ordinals are the basic units of Bitcoin, satoshis or sats that have been minted and incorporated with unique information. Therefore, the satoshi can become unique and have the same identity as the underlying NFT.

However, I believe things will change, and Ordinal and Inscriptions illustrate the strong demand in the Bitcoin ecosystem for non-fungible tokens (NFTs) and decentralized finance (DeFi) as they become more deeply integrated with Bitcoin and have more functionality. A strong platform, Stacks is well suited to meet this need.

Source: Stacks

Stacks is a Bitcoin smart contract layer on which DeFi applications execute and are settled in Bitcoin, and Stacks is preparing for the important launch of sBTC. sBTC is a decentralized Bitcoin peg system that facilitates BTC transfers between Bitcoin and Stacks. BTC sent to Stacks becomes sBTC at a 1:1 ratio. Exchanging it back for BTC has trust assumptions, making it trust-minimizing, but not trustless. Unlike wBTC or RBTC, sBTC avoids the use of centralized custodians and instead uses an open user network, improving Bitcoin liquidity for DeFi and NFT on Stacks. I am optimistic about Stacks because Bitcoin will soon enter the Stacks ecosystem, but there are not many places to invest yet, and capital and attention will be focused on the first few applications online. One of them is Alex. ALEX is expanding its lead in Stacks DeFi with an emphasis on cryptocurrency trading and lending, settled in Bitcoin, with the AMM protocol at its core powering its Launchpad and Orderbook. It also has a BSC/Ethereum USDT cross-chain bridge linking the Stacks chain. Alex also launched an on-chain indexer (wrapper) for the BRC 20 token, so BRC 20 can be traded on Stacks and add any desired Ponzi token economics.

When is the bull market coming?

The two aforementioned narratives have significant advantages in issuing new tokens and controlling inflation, mainly due to compelling stories (Secure Sharing and Decentralized Finance on Bitcoin) and innovative token economics.

However, an infusion of fresh capital is critical to sustainability and determining the life cycle of the echo bubble. Currently, narratives appear and disappear quite frequently due to the lack of new money being pumped into the system. But I believe these specific narratives have the potential to attract outside capital to the crypto market as a whole, especially buyers who are buying ETH to re-stake, and buyers who are buying BTC to use in the Bitcoin decentralized finance narrative.

But keep in mind that both of these narratives will also one day be shattered, and too many tokens will be minted to keep up with the demand and attention. Don’t blindly buy into the narrative they’re selling you, develop an exit strategy ahead of time. The key is timing, the most important factor is still the macro situation, which is also improving. In the past few years, we have been affected by three heavyweight narratives: the Fed liquidity cycle, war and new policies. Recently, however, there have been some changes, with the regulatory crackdown slowing down, China entering deflation, and inflation and rising interest rates peaking.

If we believe in the cryptocurrency cycle, then we can predict that in Q4 2024, the cryptocurrency will reach a peak price of $69,000, and then by Q4 2025, the cryptocurrency will experience a crazy wave of rise until the creation New all-time high price.

If true as expected, these two Ponzi echo bubbles will begin before the new ATH.

Now is the perfect time to research and learn because when the fun starts, we need to be ready.