First, let’s talk about how we should correctly view bull markets and bear markets?

If you want to make long-term investments or trend investments, accurately judging the market's big cycles will be a decisive ability. Bull markets and bear markets have always existed cyclically, and many new entrants may not fully understand their underlying causes. The main causes are the combined effects of group effects and human weaknesses.

Although we have been pursuing rationality in speculative behavior, from a psychological perspective, greed and fear are easily transmitted, spread, and continuously strengthened in a group, and these emotions will form potential energy and affect market trends for a long time. Therefore, we will see that very good assets will be seriously undervalued in panic, and even very bad assets may be seriously overvalued in a bull market dominated by greed.

The market is constantly switching between shorts and longs. In a bull market, the greed for gains will resonate, spread, and intensify among the group, leading to a more violent rise. As the number of longs continues to expand, the pressure for longs to turn into shorts is also accumulating.

When this force approaches the critical value, any negative news may become the last straw that ends the bull market, causing the bulls to quickly turn into bears and the market to enter a bear market. The opposite is also true. From the perspective of long-term value investors, as long as the overall upward trend of the blockchain industry does not undergo a fundamental reversal, the sluggish bear market can be fully understood as accumulating strength for the future bull market.

Since bull and bear markets are largely driven by group sentiment, it is easy to make profits as long as we have the ability to observe the patterns of these long-short conversions and accurately judge the critical interval of bull-bear conversions.

The key point is to first expand your perspective, not just focus on the daily ups and downs, but consciously stand at a high enough level to examine the trend, which is exactly what many people can never do. Friends who have suffered serious losses in investment, please ask yourself, have you really examined your investment decisions from the perspective of the big cycle?

Will the next bull market be a cold bull market?

To borrow the political terms "Cold War" and "Cold Peace" to describe the crypto market, we are experiencing a cold rebound, and we may experience a cold bull market in the future.

1. We are experiencing a cold rebound without money-making effect

The EDX exchange, a new private territory opened up by the old money on Wall Street in the United States, has only launched four old coins: BTC/ETH/BCH/LTC. However, their vigorous rebound belongs to the old money, and most of the new leeks can only watch the fun and cheer for them.

The L2 governance coins, DeFi governance coins, Web3 game governance coins, and CEX governance coins that we own and cherish have just been cut in half after being hit hard by the SEC, and most of them are still fluctuating at the bottom today. In the absence of substantial improvement in liquidity, each rebound is a bloodsucking of crypto core assets led by BTC on crypto risk assets, and this rebound is expected to be no exception.

2. We may experience a cold bull market without a big innovation narrative

The last bull market was the result of positive resonance of multiple cycles, including the Federal Reserve’s monetary policy cycle (interest rate cut to 0 + QE easing) + the US economic cycle (recession ==> recovery ==> overheating) + Gartner’s emerging technology growth curve (DeFi and NFT entering a period of large-scale adoption) + BTC halving cycle.

As for us now, with the Federal Reserve's monetary policy cycle (two more rate hikes + QT recovering liquidity) + the US economic cycle (overheating ==> mild recession) + Gartner's emerging technology growth curve (a gap between new narratives) + BTC halving cycle (the halving effect is diminishing marginally), under the resonance of such cycles, it is expected that the next bull market may not be as splendid and lively as the previous bull market, and it is very likely that there will not be a wealth effect similar to the previous bull market where DeFi and NFT projects mass-produced millionaires.

Of course, if a black swan event occurs in the second half of 2023 or the first half of 2024, and the Federal Reserve again rapidly cuts interest rates to 0 + quantitative easing + fiscal spending to flood the market with money, it will be a completely different picture.

3. Personal trading strategies in cold rebound and cold bull market

The cold bull market does not mean the end of the wild west adventure era in the crypto world, nor does it mean that retail investors no longer have the opportunity to make money. It’s just that we need to slightly adjust our trading thinking, from being keen on exploring alpha income opportunities such as 100x and 10,000x coins to striving to maintain beta income + compound interest thinking.

Cold rebound and cold bull market mean the decline of volatility, and also the arrival of the spring of neutral strategy, neither long nor short, nor swing trading. Instead, we should adhere to the principle of currency standard and strive to hoard more core assets in the currency circle: BTC, ETH, Uniswap V3 WBTC-WETH LP, GLP, etc.

However, if you think the neutral strategy is dull and boring, you can try the investment direction with positive mathematical expectation, such as playing with wool, Web3 game gold, MEV robot arbitrage, BaiU charging MeMe coins or Tugou, etc.

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