Editor | Wu Blockchain about Blockchain
In this episode of the Wu Blockchain, Colin Wu, founder of WuSay, talks with Meng Yan, co-founder of Solv, mainly discussing the possible impact on the cryptocurrency industry after Trump wins the election. Meng Yan believes that Trump may partially fulfill his campaign promises and relax the regulation of cryptocurrencies in terms of policy, such as passing the FIT21 Act and the token safe haven mechanism, thereby bringing new development opportunities to the industry. Trump's change of attitude towards cryptocurrencies is due to multiple factors, including fundraising needs and the influence of right-wing economic ideas. The conversation predicts several possible development paths in the future. Prices may rise briefly under the new government, but whether they can enter a long bull state remains to be seen. The podcast also discusses the impact of the prediction market on the industry, the supply-side reforms that Trump may promote, and how the cryptocurrency industry can find new development opportunities in the regulatory environment in the next few years.
The audio transcript was generated by GPT, so there may be some errors. Please listen to the full podcast:
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Opening Introduction
Colin: Welcome to this podcast. As you know, today is the day when the results of the US election are released. Just a few hours before we recorded, Trump had already won 277 electoral votes and was actually elected as the next US president. Today, we specially invited Mr. Meng Yan, who is a very well-known cryptocurrency evangelist in the Chinese circle and has many unique insights on regulation. So today we will talk with Mr. Meng about the impact of the US election on the subsequent development of the cryptocurrency industry.
Meng Yan: Thank you Colin, my name is Meng Yan, I am the co-founder of Solv Protocol and the co-author of the ERC-3525 standard. I am very happy to participate in the Wu Blockchain Podcast and talk to you about the relationship between the US election and our industry.
Colin: Mr. Meng is too modest. Mr. Meng is also the vice president of CSDN, a well-known domestic technology website. He has always had a technical background and has been deeply involved in the blockchain field for a long time.
Meng Yan: Actually, this trip to the United States was not for the purpose of studying. It was mainly because my daughter was going to college this year and was going to study in the United States. As a parent, I was still a little worried about taking her to the United States for the first time, so I went with her. Her school is in Los Angeles. We flew to Los Angeles first, and I took her to see several major technology centers in the United States, including Silicon Valley and Seattle. I was in the United States for the whole of September, which was a long time, and I also had many friends there. I drove from Southern California to Northern California, and then went to Seattle. During this period, I met more than a dozen friends, both old friends and new friends, including white people, Indians, Japanese Americans, and of course more Chinese people, so there was a lot of communication. Later, I wrote a travel note and simply shared some of my observations. It can't be said to be a surprise. I originally thought that Trump's victory was a high probability event, and today's results have indeed confirmed my judgment.
Observation of Trump's support rate: American people are dissatisfied with economic and social governance
Colin: Were there fewer people who supported Trump among the people you met at the time? Did every friend you met support him?
Meng Yan: No, most of the people I met this time support Trump, which is quite strange. We all know, including the results of this election, that the three western states are deep blue states (states that traditionally support the Democratic Party). Most people still support Hillary or Harris, but among the people in the western states I met, many people expressed support for Trump.
Colin: I also had a very interesting experience before. A senior executive of an American crypto company came to have dinner with me. She is an American woman, highly educated, and can speak multiple languages. She expressed very contradictory emotions at the time. On the one hand, she felt that Trump's coming to power might be beneficial to the cryptocurrency industry. On the other hand, because of her personal political beliefs and various reasons, she really disliked Trump and hoped that Harris would be elected. In the end, she concluded that for the sake of a greater cause, she must support the Democratic Party and cannot support Trump for a small "crypto" interest. This experience is quite interesting.
In the pre-election observations, from polls or other aspects, many predictions still believe that Harris will be elected. However, in a certain prediction market, Trump's lead is very obvious, and his real-time data changes are relatively accurate. This should be the most closely related thing between the cryptocurrency industry and the election this year. What do you think?
Meng Yan: This time, our prediction market has indeed "gone viral". It demonstrates a high degree of accuracy and sharp response, which is in stark contrast to traditional prediction methods. I think from now on, many similar elections or major events will pay more and more attention to this completely free prediction market, or other mechanisms developed by our industry. The reaction and data of this market may receive greater attention and importance, and this time it is of great significance. What kind of policy attitude will Trump take after his election is actually a plus for our industry. In fact, I paid attention to these data on this prediction market a long time ago.
However, I judged that Trump has a better chance of winning the election mainly because I personally experienced it. I have some very simple views, or I think these are common sense. I think inflation is the main reason why the current government does not get the support of the masses and is even rejected. The biggest feeling I had during this trip to the United States was that when I talked to some friends, they all expressed confusion and did not understand why they were still hesitating. If it were me, I would vote against it just by looking at the degree of inflation, and there would be no need to consider other factors. Of course, they told me that Americans have many other considerations, but I think it may be because these people have higher incomes, live in better areas of the United States, have a high level of knowledge, and are more open-minded. But if it is put to a wider range of people, they cannot and should not take into account so many factors. Inflation alone is enough for them to veto the government. This is a normal and legitimate manifestation of public opinion. Because the government causes inflation or cannot control it, it can be said to be a "death sentence." This has been my view for a long time.
Of course, there are many other factors that affect voters, such as social security, homelessness, gender and diversity equality (DEI), etc. But in my opinion, inflation may indeed be the decisive factor in this election.
Colin: So do you think the core reason for Trump's victory is still closely related to the domestic economy and governance? Other aspects, such as diplomacy or military, may not have much impact on the two parties, but have even less impact on ideology. After all, blue states always support the Democratic Party, and red states always support the Republican Party. The key lies in those swing states.
Meng Yan: From this perspective, we can apply a saying, "There is no first in culture, and no second in military". In other words, we can debate on ideology, equal rights (DEI), and foreign policy. You have your reasons, I have mine, and history will tell who is right and who is wrong. But there is no room for debate on the issue of prices and inflation. Colin, I don't know if you have been to the United States recently. The cost of hotels there is almost twice what it was four years ago, food prices have risen by 30% to 60%, and car rentals, alcohol, gasoline, etc. have all risen by at least 30%.
Such a large increase, in my opinion, is a failure of economic governance. I particularly emphasize this factor because I have seen many reports that few Americans or Chinese living in the United States talk about inflation, but instead focus on threats to democracy and foreign policy.
Possible changes to the Fed’s policy after Trump’s election
Colin: If we follow this logic, does it mean that after Trump's election, the Fed's interest rate cut process or its policy path will be affected to some extent? Or do you think the Fed's policy is relatively independent?
Meng Yan: Judging from Trump's public statements, he believes that interest rate cuts should not only not stop, but should be further reduced. So, how will he control inflation? This has indeed caused some concerns in the macroeconomic community, who believe that his administration may lead to a resurgence of inflation in the United States. However, he also proposed an effective idea, which is to allow the United States to reopen domestic oil and gas production and curb overall inflation by lowering energy prices. This is indeed a very reasonable idea, but whether it can offset the impact of money supply caused by interest rate cuts in actual operations remains to be seen. However, at least he proposed this idea, the so-called supply-side reform.
Colin: There is also a possibility that if Trump starts a trade war with China or other countries, this will also affect inflation to some extent, and the import of cheap goods may be restricted.
Meng Yan: Yes, I met some compatriots during my stay in the United States. They are fully prepared for the trade war. Trump's tariff policy is not only aimed at China, but also at Europe. The only exception is the North American Free Trade Area, that is, Canada and Mexico, where the tax level will be maintained at a very low level or even without tariffs based on the agreement. Therefore, many Chinese companies are now taking early action to move their factories to Mexico. This is actually Trump's goal - to bring manufacturing back to North America. Therefore, although his policy combination may not be 100% effective, it is indeed logically self-contained. In contrast, I listened to some of Harris's speeches and felt that she did not have a clear policy logic. I think this is also one of the important reasons why she was ultimately defeated.
Colin: Indeed, it was later clear that although Harris had a slight advantage in the debate with Trump at the beginning, her performance began to be unsatisfactory as the campaign progressed. She also refused some important interview opportunities, which disappointed some supporters. This may be one of the reasons why she lost the election.
Trump’s Proposal for Cryptocurrency: Fundraising and Political Strategy
Colin: Then we come to the issue that the audience is most concerned about, as Mr. Meng mentioned in the article, Trump's support for cryptocurrency. In fact, although people in the crypto are very concerned, this topic actually has little impact on the election results. From my understanding, Trump's core purpose of supporting the cryptocurrency industry is to raise funds. Because for him, the key voter groups that need to be won over have no direct connection with cryptocurrency. But he may have obtained a lot of funds through the cryptocurrency field, such as issuing NFTs, issuing coins or accepting donations, especially his overall campaign funds are far behind the Democratic Party. I don't know if my understanding is correct? What do you think of Trump's sudden turn to support cryptocurrency?
Meng Yan: Indeed, when he was president, someone asked him about his opinion on Bitcoin, and he replied: "I know a better currency, called the US dollar. I trust the US dollar, not Bitcoin." He did say that. I think this change was caused by multiple factors. The fundraising factor you mentioned just now, Colin, is indeed an important reason, especially since he launched an ICO project a few weeks before the election, which is quite indicative. I think that ordinary cautious politicians will not make such a move easily. Of course, Trump is not a cautious politician in the traditional sense, which is also what makes him special, or what makes him "tough".
Think about the first time he ran for president, it seemed like he won the lottery by accident, and even he himself was not prepared. After winning the election, 60% of the positions in his cabinet were vacant, and they were not filled until the end of his term. During the entire four-year term, 40% of the positions were still unfilled. So when he was first elected, he himself did not expect it. However, in the past few years, despite all the prosecutions and attacks he has experienced, regardless of whether these attacks are just or not, he has always insisted on not backing down. Imagine if you or I encountered this situation, maybe just say a soft word, express your attitude, and the problem will be solved. But Trump does not compromise and must fight to the end. This kind of willpower is not something that ordinary people can achieve.
In this context, supporting cryptocurrency is undoubtedly one of the important reasons for his fundraising, but I think there are other reasons, and perhaps even more important reasons, which is that his personal perception of cryptocurrency has indeed changed.
Multiple factors behind Trump’s change in attitude towards cryptocurrencies
Meng Yan: Over the past four years, from the perspective of the political spectrum, one notable change in Trump's relationship with the Republican establishment has been his relationship with the establishment. He was always at odds with the establishment during his previous term, but by the 2022 midterm elections, the entire Republican Party has gradually been "Trumpized." However, we can also say the other way around, the Republican Party has been "Trumpized," so has Trump also been "Republicanized" to some extent? I think so.
Trump already has some basic Republican ways of thinking. Through mutual influence with the Republicans, he gradually converged with the establishment. In our words, it is "moving in opposite directions". When he moved closer to the Republicans, some traditional right-wing ideas and views had a greater impact on him. We all know that many ideas of blockchain and digital currency actually come from Hayek's free market economics, which belongs to the right-wing Austrian school in the economics spectrum. Through this interaction, Trump gradually accepted these theoretical concepts.
There are also deeper issues involved here. The main supporters of the Democratic Party are financial capital from Wall Street, and the most representative ones are Jewish financial capital forces such as Soros. This class is the main funder and supporter of the Democratic Party. In fact, there are also contradictions within the Jewish community. For example, the relationship between the Israeli state and Jewish financial capital on Wall Street is very complicated. In addition, there is also a big contradiction between the traditional "Anglo-Saxon" industrial capital and Jewish financial capital in the United States. Trump obviously stands on the side of traditional industrial capital, representing the manufacturing industry and the middle-class white people in the United States. Cryptocurrency poses a subversive challenge to the traditional financial system, especially Wall Street financial capital. For Trump, this "nuclear weapon" has become a valuable political bargaining chip. He may fulfill some of his promises and promote the development of the crypto industry, but he may also remain silent on certain issues and use cryptocurrency as a card to negotiate with Wall Street financial capital.
From these perspectives, I analyzed three reasons, including the fundraising factor you mentioned. I think Trump's playing the "cryptocurrency" card is a brilliant move for him. Although cryptocurrency may be a small factor in his victory, not even as important as the horse-drawn voters in Pennsylvania, it is still a brilliant move. Once this "window" is opened, he may take a series of policy measures that are beneficial to our industry in the next few years. Whether he intends to or not, this may bring historic development opportunities to the industry. Therefore, the next few years are particularly critical for our industry.
Discussion on the possibility of implementing Trump's policies after his election
Colin: There are indeed two very different views now. One is that pre-election promises and post-election performance are often two different things, especially promises to "small" industries like cryptocurrencies, which Trump has no need or pressure to fulfill. But there are also many people, including you, who hope that he can fulfill these promises to a certain extent. For example, he has mentioned that he will immediately fire the chairman of the SEC, stop selling government-held Bitcoin, and even propose specific measures such as establishing a strategic Bitcoin reserve. However, some people point out that Trump does not actually have the power to directly fire the chairman of the SEC, but can only wait for the chairman to resign voluntarily, and perhaps influence the leadership of the SEC in other ways. From your perspective, what practical actions do you think Trump is most likely to take after being elected?
Meng Yan: Let me tell you what I think. First of all, I think Trump will fulfill some of his promises, but not all of them. During his last term, he was probably one of the presidents in American history who tried the hardest to fulfill his campaign promises. There are many reasons for this, one of the important factors being that he is not a typical politician, and he consciously wants to show voters that he is different from traditional politicians. Therefore, he is very strong in executing his promises. For example, although the repeal of Obamacare failed, he did try his best to promote it, but was ultimately blocked by Congress. If you look at all the promises that have been fulfilled and attempted to be fulfilled, he has done a good job.
So, will it be the same this time? I don't think we need to be too optimistic. In the past few years, as I just mentioned, he has gradually become more like a traditional politician and has reached a certain degree of reconciliation with the Republican establishment. The two sides have learned from each other and complemented each other's strengths. He is now more familiar with the "pretentious" way of politicians, and I don't think he lacks skills in this regard. He is not a simple and straightforward person, on the contrary, he is very smart and smooth. In the last term, he deliberately highlighted his ability to execute his promises in order to win the basis for re-election. But this time is different. After four years of hardship, he was re-elected and may choose and implement policies more according to his own will.
Based on this starting point, I think he will fulfill quite a lot of his promises, but not all of them. I mentioned before that he really agrees with digital currency, digital assets, blockchain and DeFi, and he seems to be convinced by these ideas. I have heard some of his speeches at the Bitcoin Conference, and I can see that he has a deeper understanding and cognition of these issues. However, it is a bit naive and optimistic to think that he will fully fulfill all his promises. After all, he is now a sophisticated politician.
The second point is what specific actions will Trump take? I am sure that he will give priority to promoting the FIT21 bill. How far has this bill progressed? It has been passed by the House of Representatives, but due to the Senate's vacation and the general election, it has not been paid attention to by the Senate. The bill was passed by the House of Representatives in May this year, and the current situation is that Trump not only won the electoral votes and the popular vote, but also won the support of the Senate and the House of Representatives, which is extremely rare in modern times. Since his ruling foundation is so solid, I think he will go with the flow and promote the passage of the FIT21 bill, which will have a far greater impact on the crypto industry than changing the SEC chairman.
We have to understand that the SEC chairman must act in accordance with the law, and the existing laws are enacted by Congress, and the SEC is only implementing them. Changing a chairman does not change the constraints of the regulations. If we change the law itself through legislation, then even if the current chairman remains in office, his behavior will change greatly. Therefore, I think Trump will prioritize the FIT21 bill.
The possibility of replacing the SEC chairman: implications for regulation
Meng Yan: Regarding the SEC Chairman, as far as I know, the President of the United States cannot directly remove the SEC Chairman, but if the Chairman resigns or dies, the President has the right to nominate a new candidate and submit it to Congress for approval. Now, the Republican-controlled White House and Congress can use a variety of means to force the Chairman to step down, so when Trump said that he wanted the current Chairman to "get out", it was not completely empty talk. I think he is likely to promote this change, but this is not because cryptocurrency policy cannot be advanced, but more of a symbolic move to calm the dissatisfaction of the cryptocurrency community and Wall Street.
This is like Cao Cao's move of borrowing someone's head for use. The purpose is not to address fundamental personal or policy issues, but to send a clear signal to the cryptocurrency industry and related supporters, indicating his position and determination.
If you combine these actions, the impact on our industry is already very significant. We can discuss this further later. But there is also a "half" action, which is that many people speculate that he will let the female SEC commissioner be the next SEC chairman. In this regard, I think it is unlikely and not certain. Trump may not appoint her as chairman just to please the cryptocurrency community. I don't think he will necessarily make such a decision, so we will have to wait and see.
Therefore, I think these "two and a half" measures - pushing the FIT21 bill, replacing the SEC chairman, and "possibly" appointing a female commissioner - are already the main actions he may take. There is also a very interesting topic here, which is his attitude towards 1CO. Because when he launched 1CO a few weeks before the election, I was both happy and worried about him. This move does seem a bit risky, but then I think about it carefully. Trump is no longer the same as before, and his team, think tanks, and family members must have thought carefully about this issue.
Judging from the results, my worries were proven to be unnecessary. But this incident actually had a very big impact on our industry, because our industry itself is constantly evolving and changing.
The global regulatory impact of FIT21
Colin: Regarding the core content of the FIT21 Act, it actually provides a solution, focusing on basic issues such as whether cryptocurrencies are securities and the registration process. The bill proposes that as long as the degree of decentralization of the project reaches a certain standard, it can be exempted for several years. I understand that this is the case. Do you think this bill itself is important? Or is it possible to actually land? If it can land, will it form a clear standard guidance for the entire industry?
Meng Yan: Yes, this is indeed very important. We can combine the FIT21 Act with the Token Safe Harbor Act. Let me briefly describe the context. The core of the FIT21 Act is to solve under what circumstances a token can be regarded as a commodity and under what circumstances it must be regarded as a security. The basic principle is: if no single entity controls more than 20% of a token, including secretly controlled alliances, then it may be identified as a commodity and subject to CFTC supervision. This will bring a more relaxed environment for project parties, such as allowing various derivative operations on commodity trading. If the control exceeds 20%, then the token will be regarded as a security and subject to stricter securities law supervision.
At the beginning of most blockchain and crypto projects, the proportion of control by the team is usually far more than 20%, which means that most projects may be identified as securities. However, at this time, the Token Safe Harbor Act is particularly important. This bill was revised twice by "Crypto Mom" herself. Its core is: even if the project is identified as a security, as long as the team promises to achieve decentralization in the future, it will be granted a "safe harbor" exemption period of several years. During this period, although the project is regarded as a security, the regulatory authorities will not interfere too much in accordance with the requirements of the securities law, allowing the project team to develop according to its own plan. For example, after three or five years, the project needs to submit an application. If decentralization has been completed, it can "leave the port", and the previous securities law violations during the safe harbor period can be written off; if decentralization has not been completed, it may face refunds or other legal consequences.
If these two bills are really introduced, their impact will be global. Although these bills cannot directly regulate projects in China, Singapore or Japan, once implemented, regulators in other countries will also be affected, and exchanges will be more inclined to only support projects that meet the standards of these two bills. In this way, all project parties will take the initiative to follow these standards, and the entire industry will be completely renewed in a short period of time. This is where I think the global impact of the FIT21 Act and the Token Haven Act lies.
For example, the Reserve Bank of Australia currently has no formal regulatory framework for stablecoins, only a draft. Despite this, Australia already has several "compliant" stablecoins that operate in full compliance with the draft, even though the draft has not yet been submitted to Congress. However, these stablecoin operators are unwilling to take the risk of being held accountable later, so they would rather follow the draft that has not yet officially come into effect. This shows that even in non-US jurisdictions, once these bills are implemented, the impact will be far-reaching.
Colin: I understand. However, I am not optimistic about this. Looking back over the past few years, during Trump's last administration, some tokens were indeed registered with the SEC, but the final effect was not good, and many projects even chose to terminate the issuance of tokens on their own. These processes are very cumbersome, resulting in almost no one going to the SEC to register later, which has led to some setbacks. Now that Trump has taken office, it is very important to be able to untie this regulatory shackles. First of all, I hope he will no longer pursue the legal responsibilities of those old projects, so that platforms such as DeFi and NFT will no longer be hung over their heads by the "Sword of Damocles", and dare not innovate, empower tokens, or even issue tokens. If this shackle can be lifted, this is the first step; the second step is to formulate clear rules so that new users and participants can enter the market more smoothly.
The trend of crypto-related litigation: the crypto industry environment under the new law
Colin: Do you think that Trump's election will ease the current crypto industry-related lawsuits? Or do you think there will still be many similar lawsuits in the future?
Meng Yan: I think it will be alleviated. As you mentioned, the main reason why those registered tokens could not continue was that the so-called STO (Securities Token Offering) projects like RDRA at that time rigidly applied the securities law and applied the requirements of traditional securities to tokens, completely ignoring the characteristics of tokens themselves. When I register a token according to the securities process, what is the point of the token? In the end, these projects were required to trade on specific STO exchanges, but the traffic and liquidity of these exchanges were far less than that of traditional markets. Since the entire registration process is no different from securities registration, why didn't the project party directly choose the more liquid traditional stock market, but go to an STO exchange that no one cares about? This was the main problem at the time.
Under such circumstances, projects that attempted to take the STO path quickly fell out of favor after a round of setbacks. However, today's FIT21 Act and Token Safe Harbor Act have significantly relaxed the requirements in this regard, taking into account the unique characteristics of tokens, including how to operate in compliance in DeFi and centralized exchanges. These new bills do provide more feasible guidance for the industry. At this point, I am relatively optimistic. I believe that after the new law is enacted, the number of related lawsuits will decrease. Of course, specific cases still need to be analyzed specifically, but in the past few years, some hawkish regulatory attitudes have also intensified the frequent pursuit of cases that can and do not need to be pursued.
Colin: However, we have to admit that the approval of Bitcoin and Ethereum ETFs is indeed a landmark development in the industry. Although there are also some court factors involved, such as Grayscale’s court ruling, which has promoted this process.
Meng Yan: Yes.
Support for Solana and future market outlook
Colin: It seems like Trump’s election could be a boon for Solana, as the US seems to be supporting Wall Street and the cryptocurrency industry while also paying special attention to Solana. Do you think this election will bring more support for Solana’s future development?
Meng Yan: I agree with this view. When the United States passed the Bitcoin and Ethereum ETFs, we were all very excited, and sometimes we would half-jokingly say in private that this was "insiders" helping our industry. But in fact, what this industry really needs is not the recognition of individual assets, especially this kind of post-hoc recognition. The most important thing is to output an order product for this industry, which I call a "benign order product." At present, only the United States in the world has the ability to provide such an order for the crypto industry.
Of course, whether this benign order can be effectively applied requires close interaction between the government, the market and the industry, which cannot be achieved by Trump alone. But such actions and efforts are still very important for the industry. This order means much more to our industry than the performance of individual assets. If everyone is just speculating on Bitcoin or Ethereum, we don’t need such an industry, and we can directly operate them as soybean oil or crude oil. The reason why we have built a new industry around blockchain technology is because we believe that this technology can bring unprecedented innovation, so a brand new industry and rules are needed. Personally, I hope that the Trump administration can provide such rules for the industry, rather than just approving more ETFs, otherwise it will be like teasing, giving a little sweetness, but no real support.
Indeed, Solana's position in the industry has a certain symbolic significance. If Solana's token also has an ETF, it will just repeat the model of Bitcoin and Ethereum. Bitcoin's ETF has a great influence, and Ethereum's relative decline, even if Solana is approved for an ETF, will not bring about a qualitative change. However, what is special about Solana is that it is currently a very active innovation ecosystem. If the Trump administration can interact with the Solana community, and even support the development of the Solana ecosystem through legislation or administrative measures, then it is possible to achieve the direction I just mentioned - truly providing a benign order for the industry, which is a more important support.
Bitcoin and Ethereum price trend predictions after Trump's election
Colin: Finally, let me ask you a question that everyone is concerned about. Based on your personal experience and understanding of the market, what kind of fluctuations will the prices of Bitcoin and Ethereum experience after Trump's election? Which track do you think is more worthy of everyone's attention?
Meng Yan: Actually, the older I get, the less I want to make predictions. There are two reasons: one is that predictions are not easy, and the other is that predictions are not necessary. Of course, I know that everyone likes to hear predictions, so I will still share my views. This does not constitute financial advice, and I have no historical record in this regard.
Predictions are not easy because few people can make accurate predictions, and countless experts and KOL have "turned over" in this regard. But more importantly, I don't think it's necessary to make accurate predictions. Over time, I found a better way of thinking, which is called "Bayesian thinking" in academic terms. You don't need to predict the future specifically, but you can build a model. For example, after Trump came to power, there may be three scenarios for the development of the currency market: the first, the second, and the third. Then you can design a strategy to observe what signals and events will occur if the first scenario occurs; what signals will appear in the second and third scenarios. Through this modeling method, paying close attention to market signals and constantly revising the probability judgment of these scenarios can be more flexible and effective than making precise predictions.
I found that, especially in the crypto, many people hesitate about events that have already happened. For example, when Trump won the election, everyone generally believed that Bitcoin and Dogecoin would soar, but when the signal really appeared, many people still hesitated. If you can act when others hesitate, this method is more effective than having the ability to predict. This is my methodology in the market. Then, based on this methodology, I have three possible judgments on the future of the industry.
The first possibility is the most ideal situation: Trump fully fulfills his promise and promotes the development of the industry, such as restarting ICO, implementing the FIT21 Act and the Token Safe Haven Act, etc. In this case, the market will first rise sharply, and may fluctuate slightly before entering a long-term bull market, similar to the Internet industry after 2004. This is what I most want to see, but I think it is unlikely.
The second is a worse situation, that is, a "bull market" occurs, which overdraws the confidence and momentum of the market, and then the market collapses, and even brings negative pressure to Trump, causing regulation to tighten again. Similar to the collapse of Three Arrows Capital and FTX in 2022, this situation may lead to a regulatory backlash in the industry. This "bull market" will reproduce the vicious cycle of ups and downs, hindering the long-term development of the industry.
The third scenario is what I think is most likely to happen, that is, Trump partially fulfills his promise, and the industry experiences a good round of growth, but it will not be a crazy bull market. This means that the market will have cyclical fluctuations, but it will develop in a healthy direction as a whole and gradually mature, but it will still need to go through one or two cycles of adjustment. In this scenario, the industry will grow steadily, but it has not yet completely gotten rid of its volatile characteristics.
In terms of probability, I think the distribution of the three possibilities is about 20%, 30%, and 50%. I will pay close attention to market signals to determine which path is more likely and adjust the operation strategy accordingly. Some people may think that I least want to see the second situation, but frankly speaking, there is no "like" or "dislike", only facing the objective reality. If the industry really enters the "mad bull" state, then collapses and brings a series of problems, we also need to find a strategy to adapt. For example, decisively cashing in on the profits when the "mad bull" is about to end and protecting ourselves is a tolerable strategy.
Looking back at the last bull market, the biggest mistake I made was to judge too early that the industry would move towards a healthy and sustainable development path. As a result, several major crashes caught me off guard and I did not exit at the best time. This time, I will adjust my strategy based on this way of thinking to avoid repeating the same mistakes.
Colin: OK, that’s all for today. I wish Mr. Meng’s project a smooth development and hope you will pay more attention to Mr. Meng’s Twitter and his project. Thank you!
Meng Yan: Thank you Colin, goodbye everyone!
