The most important things in July were the ETH ETF and Mt. Gox. Markets always react to events before they happen. As events come, their impact on the market will become smaller and smaller. This is why people often say "buy the rumor, sell the news."
If history repeats itself, ETH may behave similarly to BTC after the ETF is passed - of course, we also need to consider the impact of the overall macro environment on the market.
In addition to the impact of the macro environment on the market, we should also pay attention to microeconomic factors such as bank deposits. For example, ordinary investors may choose to deposit their funds in banks to earn interest when faced with high interest rates, but this may also have an impact on market liquidity. Historically, the growth rate of deposits slowed significantly after the banking crisis in the 1980s and 1990s. After the SVB incident in 2023, we saw a similar situation, with bank deposits declining while the stock market and other asset markets began to resume growth. In addition, international liquidity, such as the Bank of Japan's Japan-US carry trade, also brings additional liquidity resources to the market.
In a high interest rate cycle, people tend to deposit money in banks to earn interest. However, when banks face operating risks, investors may turn their funds to the stock market or other assets, such as short-term Treasury bonds. Currently, the yield on short-term U.S. Treasury bonds is close to 5%, which has attracted many investors. At the same time, investors may also choose to invest in stocks, derivatives or ETFs, etc., in order to seek higher returns.
Therefore, we need to pay attention to the macro aspects.
The industry dividend is disappearing, and the crypto is about to enter the next cycle, which will skip the early stage and enter the growth stage. If you can't accept the original return from 50 times or 100 times to 5 times, 10 times or even 0, then this circle is not suitable for you. Once you enter the industry, you must accept the cycle, do the right thing at the right time, and prepare in advance for the next industry cycle. Only by being fast in one step can you be fast in every step.
We are naturally opposed to the project owners. They want me to make data for them but don’t want to pay us. How to upgrade is the most important thing.
There are three ways to understand making money:
The first is to make money in the big direction: this means buying and holding spot when the big market trend is clear, not trading frequently, and being patient.
The second is to make money from volatility: this usually involves quantitative trading, taking advantage of market volatility to buy and sell without paying attention to the specific direction of the market.
The third is to make money from liquidity: during a bull market, invest funds in the market and earn high interest by lending to traders in need.
I personally believe that macro factors affect the cryptocurrency market in two main ways: liquidity and penetration. Liquidity determines the amount of funds in the market, while penetration is the proportion of funds allocated to cryptocurrencies such as Bitcoin.
In terms of operation, I tend to hold full spot positions during the bull market, especially mainstream currencies such as Bitcoin. This is the first type I just talked about: making money in the big direction.
At the same time, I will appropriately use part of the funds to long on the currency standard, but avoid frequent long and short operations in the bull market. I think the key is to identify the highs and lows of the market, which requires comprehensive consideration of multiple information sources, such as miners' costs, market heat, lending rates, funding rates, etc.
Market performance in the second half of 2021 shows that there is a chronological relationship between the highs of Bitcoin prices and the highs of the Nasdaq index and US dollar liquidity. This suggests that when liquidity peaks, risk assets may need to prepare for exit. Therefore, I will pay close attention to liquidity indicators to determine whether the market is close to a top or bottom.
