In last Saturday's online exchange, many readers once again asked for my view on the upcoming market trends.
In previous articles, I shared a new perspective:
I believe that in the future (at least for the rest of this year), Bitcoin and the crypto ecosystem should be viewed separately, as the factors driving their trends have already diverged. This difference may likely lead to quite noticeable differences in their trajectories.
So today's article will first share my thoughts on Bitcoin's trend in the second half of the year.
In previous articles, I considered Bitcoin as the crypto ecosystem's largest collectible. This collectible should have originally benefited from the value spillover caused by the prosperity of the crypto ecosystem—which is the healthiest and most sustainable driving factor.
However, in this current trend, since the crypto ecosystem has almost no fresh, continuous innovation and applications, Bitcoin's current rise is basically not from the value spillover of the crypto ecosystem, but rather benefits from the bullish sentiment of traditional financial capital (especially Wall Street-led financial capital).
This bullish sentiment is obviously positively correlated with risk assets (most typically US stocks).
I don't see this positive correlation changing significantly in the short term (at least in the second half of the year).
Therefore, if the crypto ecosystem itself does not produce disruptive, continuous innovative applications and business models in the second half of the year, Bitcoin's trend will likely still be strongly influenced by US stocks.
Judging the trend of US stocks in the second half of the year is quite complex.
On one hand, the current US stock market is certainly not cheap. This market has almost been continuously rising for 17 years since the 2008 financial crisis. Such a long and strong bull market is rare in US history.
Can such a market keep rising forever?
Impossible.
I always believe in a common sense that there is no market that only rises and never falls. Another myth of "only rising and never falling" - the Chinese real estate market, which was even longer and stronger than the US stock market, has already collapsed, with a aftermath that is unbearable to look at.
Common sense has no exceptions.
But on the other hand, saying it has a huge bubble is not necessarily true, because the seven giants driving the strong growth of US stocks now have clear performance support, so their fundamentals remain solid.
So this market is very strange. The more strange it is, the more dangerous I think it is—it could drop at any time, but it's impossible to determine when it will drop.
But if the US stock market enters a bear market, Bitcoin will likely experience a significant decline.
Additionally, Bitcoin's trend in this round has a major difference from previous trends:
In previous trends, once Bitcoin dropped more than 20% from its high point, it would directly enter a bear market, then hover at the bottom for several years until the next bull market.
However, this time, after creating a new high of over $100,000, although it subsequently dropped and fell below $80,000 with a decline of more than 20%, it miraculously rebounded close to its previous high in just a few months. Such a powerful rise is formed purely by US stock market sentiment, without any internal drive from the crypto ecosystem.
Many see this as a good sign, but in my view, this is consuming Bitcoin's bullish sentiment.
This bullish sentiment itself is not easy to sustain and long-lasting, and with such consumption, how much can continue to support its further rise?
Therefore, even if US stocks continue to rise in the second half of the year, I believe Bitcoin's gains will likely be limited. I absolutely cannot agree with predictions that it will rise to hundreds of thousands of dollars before the end of the year.
So I hold a very cautious attitude towards Bitcoin's market in the second half of the year. Even if it creates a new high, it's not worth being happy about, and even less worth being attached to. Instead, the higher it goes, the more one should be wary of a possible sudden crash.
Of course, if the crypto ecosystem itself can create a miracle and produce disruptive innovations and applications in the second half of the year, Bitcoin's rise would follow a different logic.
