The weekend was relatively quiet. Bitcoin didn't move. Ethereum was a little bit moving, but it didn't seem to be the leader. DeFi was the turn of the altcoins. It was very fierce. Now is the time for funds to pull it around. It's like a bunch of dry grass. Once it hits the fire, it will burn. Most of the concepts in the market are like this now. Bitcoin gave big funds hope, so in the long run, we should cherish our chips.
The Wagner incident subsided within 24 hours, and its impact on the entire market was limited. Russia and Ukraine have not made any big moves for a long time, and they are all a little tired. However, it has almost no impact on the encryption market. Unless a nuclear bomb is dropped, there will be no shadow for the time being.
The rest is to return to yesterday's view, 29900. If it falls below 29900, it will peak and correct in the short term. It is estimated that it will not return to a very low position in the medium term. 24800 has become an important strategic fulcrum in the medium term. However, the big long bull that everyone wants is still very early. This round focuses on repairs and wrong kills. It is still a long way from the real bull, so the mid-term opportunity will wait. Looking at the bull in the long term is not a big problem. There seems to be another big shock in the mid-term.
If you want to seize the next round of wealth, you must follow the narrative of Ethereum
If you want to seize the next round of wealth, you have to follow the narrative of Ethereum. The last round of Ethereum transfers was slow and GAS was high. It was so good. New public chains appeared (such as AVAX, SOL, LUNA...) and various public chains known as Ethereum killers appeared. During this period, these public chains increased dozens of times or even Up to a hundred times. The Ethereum chain is booming online, with loans, mortgages, and all kinds of top mining happening, and of course there are many in the top seven.
What did we see last round? Yes, there are new public chains that are meant to replace Ethereum and seize the market. There are also Defi, decentralized financial spirals, AAVE, UNI, COMP, and SUSHI. These Defi products are also rising so high that you can’t catch up.
What's in store for this round? How was the last round of public chains? It’s terrible, people are dying, people are getting hurt, where are the currency prices going? The real dads are only BTC and ETH, so the Ethereum expansion network appeared. I no longer want to replace Ethereum, but think about how to assist. The Ethereum network builds a better blockchain, and these L2 projects (ARB/OP...) all use ETH as gas fee. The more active the chain is, the better the ETH consumption is, symbiotically.
After converting Ethereum POW to POS, you can also obtain annual income by staking Ethereum. During the bull market, the pledge rate of some public chains was as high as more than 60%. Currently, the pledge rate of Ethereum is only about 16%. There is still a big improvement in this data. If there is room for growth, the LSDfi project will be derived. It is still in the early stage.
Regardless of the previous round or the next round, we will all find that the narrative revolves around Ethereum. The story must be told through Ethereum. New public chains, Defi, L2, LSDfi...
Accumulate chips and wait for the 24-year bull market
One year ahead:
- Inflation largely ends in 2023
- Interest rates are about to remain unchanged, with the possibility of an interest rate cut at the beginning of the year
- Liquidity remains or increases because the risk level of the financial system has been reached
- GDP maintains weak growth/no growth because job opening is still at a high level, the unemployment rate cannot go up, and consumption cannot go down.
Risk market:
- Mainly look at PE, because Earning has not changed much.
- PE is related to liquidity and not related to interest rates
For example, in 2020, as low as early 22, interest rates were close to 0, but the SNP500 PE fell. From September 22 to now, interest rates have been rising, but SnP PE has risen.
In turn, it can be easily explained by using "net liquidity".
Net liquidity = fed assets - RRP - TGA
The asterisks in the figure are the periodic highs of SnP 500 PE, while the circles are the periodic lows.
It can be seen that it explains most of the changes in PE. Like interest rates, it cannot explain the decline in PE in the first half of 2021, but it explains the increase in PE in 2023.
21 may be priced in due to fear of future uncertainty due to inflation.
Inflation has reached this day, although everyone still has controversy:
- When will inflation go down? But it's just a matter of time. Few people now think that inflation will continue.
- Whether there will be a recession next year, the probability this year is too small, so valuations have returned to "rationality", that is, they are no longer dominated by the fear of big inflation. Liquidity has reached the bottom, reaching the warning line of the banking industry, so it will not decline again.
Coincidentally, before the first half of next year, it will overlap with the "washing season" in the history of the currency circle. Some people call it the "accumulation period." So: Accumulate chips and wait for the 24-year bull market~