According to the mining rules of Bitcoin, in 2008, the genesis block was dug out with 50 rewards, and then it was reduced by half every four years, that is, 25 in 2012, 12.5 in 2016, 6.25 in 2020, until 21 million in 2140 All BTCs have been mined out, and Bitcoin mining rewards have bid farewell to the stage of history.
According to the historical price trend chart of Bitcoin, it seems that every time after the Bitcoin halving cycle, there will be a big market from bear to bull in the market.
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01 Blind psychological construction under the expectation of halving
Around May 2020, Bitcoin will usher in the third mining reward halving. Will this be the starting point of the next round of magnificent bull market in the digital asset market?
I think most people are looking forward to the fact that the laws of history can be fulfilled again. If that happens, the price of Bitcoin will rebound from the bottom of $3,152 to around $300,000. Thinking about it makes people feel cool that cant be said.
Mark Twain said, History doesnt simply repeat itself, but it always resembles surprisingly.
100 times is not enough, 50 times is not an exaggeration, 100,000 US dollars is appropriate; 50 times is not enough, 10 times is okay, 30,000 US dollars is appropriate; Another sprint back to 20,000 US dollars is all right. There are always people around you who advise you to invest in bitcoin now, and it will definitely double after halving. At least it can outperform most financial products.
Is this really the case?
Most people understand that the facts established in the past cannot be used as the basis for judging future investment decisions, but most people will also make a mistake, thinking that the big probability of many established and regular facts can be used as the basis for judgment.
Believe it or not, the law of history is not controlled by your will, just like tossing a coin. If all nine flips are heads, everyone will think without thinking that the tenth time will be positive. The fact is that the probability of each heads and tails is always 50%. Probability never changes, it becomes just everyones expectations.
According to CoinMarketCap data, the total market value of the blockchain industry is now 234.3 billion US dollars, which is not a small plate, and Bitcoin accounts for 65% of the total market value. The halving of Bitcoin may bring about a turnaround in the market, but it is unlikely to drive the entire blockchain industry to another mad bull.
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02 Looking long decision-making under optimism
Based on the blind optimistic sentiment with a high probability of rising, most of the decisions in the market are virtually bullish.
Some Internet practitioners have begun to cross-border into the blockchain industry to seek gold, thinking that the long bear market has passed, and it is time to take advantage of the wind to enter the market; some institutional funds have begun to include Bitcoin in their investment portfolios, looking forward to the decline in overall market investment returns. Bitcoin can outshine others; Bitcoin miners used to sell coins to pay electricity bills every day to maintain operations, but now they would rather not sell them, waiting for the halving market to come;
The capital project party is also active in planning the white paper, imagining that with the hot money in the bull market, they can harvest 100 times coins to their hearts content; contract players have also become bold, waiting for the market to start, 10 times , 100 times leverage to see more and make a lot of money; retail investors have also become buddhist, let the market fluctuate, it is not too late to hold coins until the big bull market; dicks have also become crazy, houses, credit cards, etc. All studs, one or two years of suffering, it is worth gambling on a chance to turn around.
You see, the market is still the same, the ups and downs are unknown, and the unstable market factors have not changed, but the market sentiment and the actions of some people have long been bullish.
The leverage on funds is bullish, and there is a risk of liquidation every minute, and your funds will return to zero. However, being bullish on emotions and actions also has hidden costs that cannot be ignored, even as much as the loss of pure funds. Lose all the principal, stud house gamble will lose all the cards and so on. These are actually the hidden costs of blind optimism, including economic costs, social costs, and even population costs (going to the rooftops) and so on.
The truly terrifying impact is not that there have been losses in the past, but that we face unknown possibilities with wrong methodologies and values. If you lose money, you can make it again, but if the methodology is wrong, you may make mistakes again and again until you lose your principal or even all your cards.
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03 The bull-bear conversion cycle under the adjustment of supply and demand
The blind optimism of the market generally appears in the period of bull-bear transition, not only in the digital asset market, but also in the traditional stock market and securities market, and even in the larger Compo economic cycle.
However, the problem is, boom, recession, depression, recovery, such a market cycle can happen as short as 2-4 years, and as long as 40 or 50 years, how can you be sure that you will be able to step on the point? Woolen cloth? After all, not everyone has the same general trend judgment ability as Rockefeller.
Although the prosperity and recession of the economic cycle are unpredictable, there are also inherent economic laws to follow. Downstream consumer demand stimulates production capacity in the midstream and upstream. Once the downstream demand is insufficient, the midstream merchants will generate inventory. When the inventory accumulates to a certain level, the merchants will clear their inventory, while the upstream manufacturers will stop production, and the economy will begin to decline. Conversely, when downstream consumer demand exceeds supply, it will have the opposite effect.
The economic cycle laws of traditional industries are also followed by the financial securities market and the digital market. It should be said that any economic system will have supply and demand, as well as irrational expectations, and bubbles will grow after a certain period of time. The digital asset market is no exception. Moreover, digital assets such as Bitcoin are relatively and more likely to have the amplification effect of anticipation psychology, and are more likely to produce the time span effect of eating more than enough food. The consequences of its prosperity and recession are often magnified geometrically.
However, digital assets such as Bitcoin have not yet found a large-scale popular application scenario. What affects supply and demand is the consensus on hoarding coins and the circulation of buying and selling. For the real application layer, the market demand for peer-to-peer electronic payment is far from rising. Therefore, the digital asset market where Bitcoin is located is currently only a mid-upstream market driven by expectations. It will generate bubbles faster and burst faster, and the conversion between bulls and bears will be very fast.
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04 The stock market is not enough to start a bull market
At first glance, Bitcoin halving has indeed affected the market supply and demand. The number of newly mined Bitcoins per day has been reduced from 1,800 to 900. The market will demand more and more Bitcoins, while the number of newly minted Bitcoins will decrease every day. Yes, the supply exceeds demand, which will directly lead to a rise in the price of Bitcoin.
There is nothing wrong with the logic of this assumption, but it ignores an established fact: 18 million bitcoins have been dug up, and excluding the lost 3 million bitcoins, there are still 15 million bitcoins circulating in the market. At present, the transaction depth and volume of stock bitcoins are far from the level of the last round of bull market. How can we believe that the unmined 3 million bitcoins can turn against the sky?
Everyone knows that the only way to increase the price of Bitcoin is to rely on incremental users and funds. When the number of users in the currency circle doubles one day, and more people need to hold bitcoins, they will buy from those who hold bitcoins, and those who hold bitcoins have higher price expectations and demand for hoarding coins. In this way, a premium will be generated, which will drive the price of Bitcoin to climb.
It can be said that most peoples demand for Bitcoin is still limited to hoarding coins, except for miners who need to consume a lot of electricity in the competition of computing power. In order to maintain cash flow, these miners have to sell coins every day. If the demand for buying coins in the market is lower than the amount of coins sold by miners, the price of Bitcoin may fall, and on the contrary, it will directly stimulate the rise.
The halving of Bitcoin is expected to make some miners no longer sell coins in the short term, so that the stock of Bitcoin in the market cannot meet the market demand, thus driving up the price. However, the cost of mining is so high now that the cost of mining a Bitcoin in the future may It will reach $9,000, and miners may not sell coins all the time. Some people have calculated the cost of mining. When the Bitcoin computing power exceeds 100E, the total power consumption of mining will reach 6 million kilowatts, and an average of 6 million kilowatt-hours of electricity will be burned per hour. Calculated at 3.5 gross kilowatt-hours, one hour of mining The cost will consume 2.1 million RMB. Why not sell it?
On the contrary, if the market price of Bitcoin does not meet expectations after the halving, miners will not be able to make ends meet, and there will be a series of collapses. Frequent mining accidents and panic-smacking will turn bulls into bears in an instant, overdrawing the markets expectations for a bull market and destroying the markets confidence in the popularization of blockchain technology, resulting in even more dire consequences.
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05 Key variables before the next round of bull market
If pure hype can concoct a fake bull market, then the bull market born at the end of 2017 is relatively real from the perspective of bottom-building institutions.
The ICO model launched by the Ethereum smart contract not only changed the traditional investment and financing model, but also just continued the main theme of the era of mass entrepreneurship and innovation, and set off a wave of blockchain industry boom. The hot money of investment institutions, innovative talents, and various entrepreneurial projects have brought in funds for the blockchain industry in a short time, created supply and demand, and pulled in entrepreneurial and innovative forces.
Therefore, in 2017, there was a grand carnival of hundreds of coins, and many dicks realized their counterattack and embarked on the road to wealth and freedom. But what about the upcoming 2020 bull market? There is also a certain increase, but whether it can undertake or even carry forward the glory of 2017, there are still many keyword variables.
1. Institutions enter the market. There is a saying that the last round of bull market was driven by retail investors, and the next round of bull market will be driven by institutions. Institutions have larger money volume, stronger depth, and more stable layout, which theoretically will raise the market price to an unimaginable new height. However, institutions buying coins are not like retail investors just to earn value-added space.
Facts show that hot money from institutions is more inclined to invest in money-making machines rather than appreciation space. Institutions invest in Bitcoin because Bitcoin represents the most extensive blockchain technology consensus, and will become the hard currency leading the deepening of blockchain technology in the future. Institutions grab some bargaining chips in advance, just to pave the way for the future expansion of the blockchain technology industry. To attract more institutions and enthusiasm to enter the market, it still depends on a steady stream of innovative projects, such as DeFi, cross-chain, layer 2 and many other emerging fields.
Don’t assume that institutions will enter the market to scramble for funds. Those financial predators have played tricks of making money out of thin air. How can they try to take money from their pockets to fatten the market you have already occupied.
2. Regulatory black swans. Since 1025, the countrys top-level design has taken blockchain technology as the core breakthrough, giving a shot in the arm to the weak digital asset market, which indicates that the regulators are gradually becoming clearer. But is the blockchain in the eyes of the post-50s and 60s really the same as the blockchain in the eyes of everyone? When the black swan event of supervision, a little bit of bone and flesh, strips the Token mechanism and decentralization from the current blockchain technology field, will the blockchain industry still have a soul at that time?
These are not optimistic variables. In fact, isn’t the core technology that the blockchain industry needs to overcome now is the rationality of the Token model and the security and operating efficiency under decentralization? Without these, blockchain technology is just an upgraded version of the Internet, interesting, but certainly not sexy. The most important thing is, can the existing blockchain take advantage of the digital economy under the policy order?
How to leverage, how to realize the integration of the alliance chain and the public chain, how to make the Token mechanism compliant, we cant think about it, and we have to think about it.
3. Reconstruction of order. The growth of any economy is inseparable from the accumulation of innovative talents. However, the industry atmosphere dominated by speculation and speculation in the early days will invisibly drive a large number of innovative talents out of the car. I found that the landscape of the digital asset market can be well explained by the survivor bias theory. Those who use the laws of history to recharge their beliefs are mostly survivors of the last two rounds of bull markets. They are only a very small number of people who have benefited, and few people can replicate their way of counterattack. In contrast, we should look at how most people are washed off the car? That is the experience and lessons of blood.
The Token mechanism was originally an ecological economic model used to motivate the community, but under peoples speculation and gambler psychology, it has become a poison that stifles innovation in the cradle. Technological and model innovation is the only way to generate new projects. Under the guidance of 1CO and later 1EO models, it has become a sickle for harvesting IQ tax. The ecology is too chaotic right now. The blockchain ecology needs too many re-enactments of standards and rules and order, so that the disorderly growth of barbaric growth will bury all kinds of hidden dangers for the maturity and stability of the industry.
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06 Digital economy, the fundamentals of the inevitable bull market
I said a lot of reasons not to be blindly optimistic about the bull market next year. Some people are starting to get upset. On the contrary, I am absolutely bullish.
Li Xiao said: In the short term, no digital asset is absolutely bullish, but in the long run it must be up. Just as the absolute force driving the growth of the stock market must be fundamental economic growth, what drives the rise of digital assets is the future The advent of the digital economy society. You cant deny that the economy will grow and society will progress, right?
Most people look at the ups and downs of stocks and are used to saying without hesitation that dealers control the market to harvest retail investors. The digital asset market is considered to be a battlefield where dealers wield sickles due to the small market size. In the perception of these people, a rise in the market is to lure more, and a fall in the market is to harvest. Anyway, it is a big banner set by the dealer, and retail investors are the meat on the chopping board to be slaughtered. Is this really the case?
How can retail investors be so stupid? Those gamblers who gamble for short-term profits are the smartest in the world, who know how to seek advantages and avoid disadvantages. The reason why they are really stupid from the results is that they are fooled by their cleverness. You look at those who play with the fund mode currency, the project party puts on an innocent face when they run away, are they really stupid? You know, when an avalanche comes, no snowflake is innocent.
Productivity is improving, technology is developing, collaboration is deepening, and efficiency is improving. We need to see the source of economic growth projected behind any securities investment target. This is the first step for retail investors to improve their rational cognition, eliminate zero-sum game conspiracy theories, and get rid of persecution paranoia.
From the perspective of trend development, the transformation of the Internet into a digital economy is inevitable. The reason is simple: the Internet of Information is invading the privacy of individuals, eroding the integrity of the society, and increasing the cost of assistance in the form of connection based on virtual vest identity and information flow replication, while the Internet of Value uses distributed database storage and the connection of digital as assets way to refactor all of this.
Facebook is working on Libra, and the central bank is doing DECP. They are all paving the way for the arrival of the digital economy. And value digital assets such as Bitcoin are likely to become the anchor of value in the future digital economy world. This is not just wishful thinking. Projects and teams that really work in the blockchain ecosystem understand the value that is deposited in it.
If I add a footnote to the bull market of the digital asset market in the next three years, I hope that the upstream and downstream industries such as innovation power, capital market, talent echelon, and landing applications will be activated and opened up, and the grand scene of blockchain mass entrepreneurship will be officially staged. I believe that the new market rules and order, new technological development standards, new transaction supply and demand models, and new collaboration methods will bring about a major change in the Internet economy. At that time, the new Ali Tencent, the new Weibo, and the new Meituan public Comments and the new Didi Chuxing may be reborn based on the soil of the blockchain. Bull or not, you say.
Not to be blindly optimistic, but to be truly optimistic in nature.
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Blockchain value cognition evangelist, senior blockchain practitioner. There are no lofty concepts or uncommon technical explanations here, only the most popular business, the sharpest perspective, and the most unique insights. I am still an elementary school student in the blockchain industry, and the thoughts and thoughts in the article are all broken thoughts. Don’t laugh at the insiders, welcome to discuss, don’t spray the outsiders, the code words are not easy.
