Review the impact of US Treasury yields on the crypto market over the past two years

The 10-year U.S. Treasury yield is the real interest rate in the financial market. Every time it rises rapidly at a high slope, the crypto market will experience a wave of bear market selling.

This situation has occurred three times in the past two years, from March 22 to May 22, from July 22 to October 22, and from May 23 to present.

It can be observed from the chart that the slope of the three upward movements of the 10-year US Treasury yield has shown a decreasing trend.

This round of mild upward movement from May 2023 to now is one of the reasons why the crypto market has only had a cold rebound and continued sideways trend under many internal and external positive stimuli.

Last week, under the influence of the US's concentrated bond issuance of 1 trillion this month, the 10-year US Treasury yield hit a 10-year high, triggering a sharp correction in the global risk market

The downward trend of 10-year Treasury yields corresponds to a bear market rebound in the crypto market. The greater the downward slope, the stronger the rebound. For example, from December 2022 to March 2023,

At the end of the Fed's interest rate hike, the market transitioned from overheated trading to trading recession. The inversion of the inversion means that the expectation of recession has increased. The market in the bear market will have a new wave of diving, such as May to June 2023.

Since July 22, the 10-year U.S. Treasury yield and the 2-year U.S. Treasury yield have been inverted, and it has been 13 months so far.

According to historical data, the US economy should have entered a recession cycle long ago after such a long period of inversion. But the fact is that the latest US economic data is still stronger than expected. What this means is still unknown to us.

In August, we were in a state where the 10-year U.S. Treasury yield and the 2-year U.S. Treasury yield rose in parallel at a low slope, and the inversion of long-term and short-term U.S. Treasury yields converged.

If the Fed stops raising interest rates in September and the bond issuance plan in August is successfully completed, the 2-year Treasury yield and the 10-year Treasury yield are expected to turn around and go down in parallel, and it is likely that there will be an autumn market similar to this year's spring market.

Otherwise, I don't dare to say anything about what will happen in November.

I understand the mood of many people. They are waiting for an epic crash and then buy at the bottom. The epic crash is prepared for the big bull market. The chips are almost ready, and a big crash is coming to an end. Wait patiently, save the principal, hoard the coins patiently, and wait patiently for the bull market.

In the new round of trends, which new sectors are worth paying attention to?

Web3 is a big sector

1. Infrastructure

Storage is obviously not a new sector, but it is one of the infrastructures of Web3. Compared with the public chain, the public chain is too complicated, while storage does not seem to be that complicated.

But it is important to note that expectations for storage tokens should not be too high, because not only is this an old track, but tokens have also been hyped up in the past.

(II) Supporting facilities

DID is a Web3 supporting facility. If you look at Defi projects by TVL, then the Web3 ecosystem should be based on the number of valid participants. DID provides identification for participants and uses KYC or other methods to mark valid users.

Domain name projects like ENS and ID can also play a role in identification. After all, domain names need to be purchased, and the cost is used to increase the participation threshold, while domain names are used to mark users. wld also belongs to the DID concept

(III) Application

The web3 education ecosystem has not yet developed. Binance has launched two education projects, one is HOOK and the other is EDU.

X to earn (X2E) is also a kind of web3 application. It should be noted that the dividends of such projects are relatively high in the early stage of participation, and there may be losses if you participate late. Investing in X to earn tokens should be very cautious, because in the long run, the tokens may be continuously released.

And we should participate in X to earn that suits us. Those who like sports can participate in sports, those who like reading can participate in reading, and those who are willing to learn can participate in education... stepn ( GMX )#read2n( RCM )

The NFT trading market is actually a track that has never exploded.

Opensea has never been inclined to issue coins. Let me introduce two NFT trading markets. One is Blur, which is very familiar to everyone. Although Blur started out by inflating the volume, it cannot be underestimated. It is currently the most influential NFT trading market besides Opensea.

Currently, Blur’s transaction volume is still the highest, and its gas fees and transaction wallet addresses are second only to Opensea.

In contrast, Blur is more friendly to traders, who can obtain Blur through transactions, while the other platform is more friendly to creators.

Cross-chain bridge

At present, the more well-known cross-chain bridge is LayerZero. Recently, many friends have been interacting with it. This project may have an airdrop. LayerZero is a full-chain interoperability protocol designed specifically for lightweight cross-chain messaging.

It can support many public chains such as Ethereum and BSC. Moreover, it also provides support for non-EVM chains such as Aptos. Previously, LayerZero was a highly sought-after cross-chain protocol.

LSD

Among all protocols, the TVL of LSD protocol is the highest. You should know that there are many L2 L1, but there are not many meaningful LSD protocols. Moreover, whether it is Layer2 or Layer1, LSD is their common infrastructure. The protocol with the highest TVL is Lido (LDO), which has a TVL of 2.5 times that of the second-ranked (makerdao)

Regarding the concerns and configuration issues of the new sector, I plan to publish several versions of research reports, which will be shared with you in the next few days.

Today's sharing ends here. Thank you very much for taking the time to read this article in your busy schedule. I hope the article is helpful to you. You can follow me and leave me comments to communicate with me.