Using data to explain the trend of this round of bear market

The main points are as follows:

1. In 2017-2018, most projects were financed by ETH, which greatly reduced the circulation of ETH, so the value spiraled upward. However, with the advent of the bear market, project parties had to sell ETH to pay various expenses, which led to a downward spiral in the price of ETH.

2. During 2020-2022, people began to become more practical and began to rely more on stablecoins for financing to avoid losses in market fluctuations.

3. From 2020 to Q3 2022, the total disclosed financing amount is about 74.5 billion US dollars. During the same period, the total market value of major stablecoins (USDT, USDC, BUSD) is 134.1 billion US dollars.

A large amount of stablecoins in the hands of the project will have two main impacts on the market:

First, there is no need to sell ETH to pay for operating expenses, so ETH will not continue to fall like in the last bear market.

Second, the project owner needs to sell U to pay for operating expenses, which will indirectly reduce the U in circulation and make liquidity worse.

The conclusion is:

USDT will continue to flow out slowly, and liquidity will deteriorate until the Fed cuts interest rates. The market value of the cryptocurrency market is essentially leveraged. When the liquidity at the bottom continues to deteriorate, no digital currency can remain immune.

Pay attention to the total amount of stablecoins in the overall market. If the total amount increases, there is a basis for a bull market, and if it decreases, it is undoubtedly a bear market.

What are the four major channels to start the cryptocurrency bull market?

The bear market has reached its mid-to-late stage. After the $XRP incident last week, many friends' sentiments have changed from bearish to bullish, and the market has experienced a brief shock.

The following four channels are not independent, but promote each other to form a cycle.

1. Funding channel. Funding entry is the key direction of the construction of the crypto industry. Spot ETF/Hong Kong New Policy, etc., these actions imply the potential factors that large-scale compliant funds may enter, and the overall market liquidity will be activated;

2. Talent channel. Establishing a native encryption protocol and an application stack on top of the protocol not only requires encryption-native developers and talents, who come from different fields and industries and have rich experience and innovation awareness, but can also promote a more prosperous ecosystem. At present, the talent spillover effect of large companies is significant and the opportunities are obvious;

3. Technology channel. The wonderful chemical reaction brought about by paradigm innovation and technology integration, RWA and LSDFi in Defi are likely to start a long-term slow bull market. In the long run, these will be the focus/hotspots. The commercialization of artificial intelligence/MR and its combination with Blockchain technology will also be an important highlight;

4. User channel. Killer applications attract a large number of users. The process of users using infrastructure makes the value stream more robust, the protocol revenue and innovation are further guaranteed, the needs of users are met, the scope of application of the protocol is continuously expanded, and user retention and stickiness are continuously improved.