The U.S. federal funds rate remains at the highest level since 2022, between 5.25% and 5.50%. However, boosted by the suspension of interest rate hikes by the Federal Reserve and the expected approval of the Bitcoin spot ETF, funds on and off the market have joined forces to promote the return of Bitcoin. Return to the ascending channel. At the end of October this year, with a monthly increase of over 26%, BTC broke through the 30,000 suppression level that had lasted for nearly half a year, leading the crypto market to rebound across the board.
However, it is not easy to repair the market this time. Since BTC hit a new high of $69,000 in 2021, the industry has entered a long bear market that lasted more than 2 years. As of early October this year, crypto industry data have fallen to the “freezing point”. For example, NFT market transactions have hit a new low in two years, the ETH/BTC exchange rate has hit a new low in 15 months, the total financing of Q3 encryption companies has dropped to a new low since Q4 in 2020, DEX The transaction volume continued to hit a new low since January 2021, and the Bitcoin balance on the trading platform hit a new low in the past five years. Funds continued to flee, and the market fell into mourning.
At this “darkest moment”, the “spark” represented by Bitcoin Ordinals is gradually gaining momentum, the address on the Bitcoin chain has reached a record high, the bullish forces on the market are actively taking action, and the market sentiment has reached an inflection point. Subsequently, with the inflow of 900 million stablecoins, the encryption market swept away the gloom and ushered in a major reversal. Those projects and institutions that actively deployed in the bear market began to receive “rewards.”
This article aims to understand the market from their perspectives and explore their “knowledge” and “actions” in the bear market through dialogue with dappOS, Taiko, Celestia and OKX Ventures, which are high-quality industry plans and institutions that have successfully survived this bear market cycle. ”, looking for the key to future industrial development and does not constitute any investment advice.
Looking back at the past three bull-bear cycles
After more than ten years, the encryption industry has rapidly strengthened its connection with traditional financial markets and the real world through technological innovation, application iteration, and exploration of compliance. Taking the cycle as a guide, looking back at the past three rounds of bull and bear markets in the crypto industry, it is not difficult to find that the resonance of new funds, new narratives, and new technologies ultimately determined the arrival of the bull market. According to the narrative dimension, briefly describe the three bull-bear cycles of the encryption industry:
2009-2015: The first bull-bear cycle, innovative experiments, opening up a new world
At 6:15 pm on January 3, 2009, the Bitcoin genesis block was generated on a small server in Helsinki, the Netherlands, marking the official birth of Bitcoin. At this stage, Bitcoin was still limited to “niche experiments” by professional developers and early explorers, mainly due to the popularization of the concept and the formation of early consensus. Then the prototype of industrial infrastructure began to emerge. With the launch of early exchanges such as Mt. Gox, Bitcoin entered the trading era and ushered in a speculative boom. Its early trading price was US$0.0008, and it soared to the highest point of the current bull market of US$1,202 in 2013, and then entered a downward trend and bottomed out in 2015.
2015-2018: The second bull market cycle, the ICO era, and the formation of infrastructure
The market has completed repairs and reopened a new cycle. With the entry of speculative funds, the influx of developers, the iteration of innovative technologies, and narrative developments such as the Bitcoin halving, it has paved the way for the arrival of the bull market. At the same time, peripheral industries such as crypto media, mining machines and mines, data tools, and crypto funds began to take shape. In 2017, under the combined influence of narratives such as the explosion of the ICO model and the blooming of second-generation public chains such as Ethereum, speculation broke out. Various wealth-making myths appeared frequently in the news. The price of Bitcoin hit a record high of 19,800 on December 17. The crypto industry is starting to gain wider attention. Subsequently, the crypto industry entered a new round of bear market, accompanied by black swans and regulatory policies. BTC fell to around $3,000 in 2018, and struggled to develop amid doubts.
2018-2022: The third bull market cycle, mature infrastructure, and explosion of on-chain applications
After three years of silence, with the continuous upgrading of the Ethereum network, blockchain technology has moved from the bubble to the application stage. In 2020, many chain applications such as DeFi, NFT, DAO, GameFi, and IEO based on the Ethereum network will explode, attracting A large number of institutional investors have brought in a large amount of new funds. At the same time, the huge imagination that the encryption industry continues to show has also attracted a large number of developers to enter. Through the continuous iteration and innovation of the underlying technology, it will further promote the encryption industry to “move from virtuality to reality”, and various infrastructures will continue to mature. Under the superposition of multiple bullish factors, Bitcoin hit a record high of $69,000 on November 10, 2021, and then entered a long bear market that lasted more than 2 years.
2022-present: The fourth bull market cycle, compliance and application implementation have become development themes
Despite being hit hard by various black swan events, the industry continues to innovate and develop, and continues to move towards rational and value investment. With the establishment and improvement of the encryption regulatory framework, the expected approval of the BlackRock Bitcoin Spot ETF, Web3+AI, and new narratives such as the rise of the Bitcoin ecosystem, a new round of bull market is brewing.
Bitcoin has rebounded from the troughs of the bear market several times and hit record highs, showing great “elasticity.” As of November 3, Bitcoin has surpassed Tesla with a market value of US$726 billion, ranking 11th in the world. This means strong liquidity support and global recognition behind it. However, as the depth and breadth of liquidity in the crypto industry continues to increase, the market will become more rational and mature, and Bitcoin volatility may further decrease. As an emerging financial industry, the encryption industry continues to expand towards multiple narratives, no longer relying on the single narrative of Bitcoin halving, and constantly exploring future development and creating new imaginations. But this process is full of thorns and twists and turns, and industry participants who are not determined will be forced out of the game.
“Knowing” and “doing” of head organizations
Under pressure in a bear market that lasts for several years, faith will fail in the face of reality. As a high-quality project and institution in the industry that has successfully survived the bear market cycle, we discussed macroeconomics, bear market strategies, focus, etc. with dappOS, Taiko, Celestia, and OKX Ventures to explore how they understand the market.
The encryption industry cannot exist independently of the macroeconomic cycle. Daniel Wang of Layer2 Network Taiko believes that “the current positive correlation between virtual asset prices and the real economy or Wall Street is relatively strong, so if the real economy is not good, virtual assets will also be difficult to There is an independent bull market for a single country. Unless there are more regional conflicts, or major countries lose confidence in US dollar bonds, or ETF applications are approved, allowing the correlation to turn from positive to negative at least in some countries, this may create a small bull market. But I think the big bull market may require more patience. If it is a strategic long-term investment, just make a fixed investment. There is no need to judge whether the market is bullish or bearish in the moment. Don’t invest money that is urgently needed. Mentality is very important.”
Daniel Wang is a firm long-term investor, and this thinking is also reflected in Taiko’s development strategy, that is, he maintains the unity of “knowing” and “doing”. According to Daniel Wang, Taiko has now launched five test networks, testing different second-layer network protocol designs, economic models, proof systems, multi-hop cross-chain bridges and other design elements. We are currently waiting patiently for EIP4844 to go online. After that, one or two testnets will be launched, and it should be not far from the mainnet. Taiko is a ZK-Rollup equivalent to Ethereum. It aims to extend Ethereum by supporting all EVM opcodes in a decentralized, permissionless and secure Layer 2 architecture. It is considered a Layer 2 newcomer by the industry.
The person in charge of Celestia, the first “modular blockchain”, is more determined on the track he is deeply involved in. “We believe that modular blockchain, this category will drive encryption innovation in the next decade.”
OKX Ventures researcher Kiwi remains optimistic about the development trend of the crypto industry in the second half of the year. He believes that although the world is currently experiencing an unstable macroeconomic situation, when the traditional financial system becomes more volatile, people may be more willing to hold and use cryptocurrencies. . Moreover, the current activity on the chain continues to increase, and the number of addresses and users on each chain has been growing steadily. For example, the cumulative number of Bitcoin addresses is approximately 1.2 billion, and the number of active addresses is approximately 1 million. The application ecosystem on the chain is booming, and Ethereum has completed Shanghai is upgrading, Cancun is about to be upgraded, and various infrastructure constructions are accelerating. These are all signs of a good industry. In addition, if the Bitcoin halving expectation is combined with the double detonation of the Bitcoin spot ETF application approval expectation, it may trigger huge demand from institutions.
Kiwi said that on-chain transaction volume, active addresses and miner fees can reflect the intensity of market activities and the behavior of participants. These fundamental data are of great value for discovering projects, discovering trends, and making judgments. In addition to on-chain data such as transaction volume, active addresses, miner fees, network hash rate, token supply, etc., he pays relatively more attention to developer activity data, including submitting code, releasing new versions, etc., which shows the vitality and future prospects of the project. Prospects.
The person in charge of dappOS said, “As the inflation problem becomes more obvious, the new generation of people will turn to cryptocurrency. In the future, Web3 and blockchain applications will enter people’s daily lives. dappOS is an intention-centered operating protocol. , aiming to make dApps as user-friendly as mobile apps. I am always optimistic about the crypto industry. Those who benefit the most during the bull market are those who gain a foothold at the bottom of the bear market. Patience and discipline are the key to getting through the bear market. Two key factors. In addition, it is very important to keep learning. New things happen in the Web3 industry every day. Ask questions, read articles, listen to the opinions of industry professionals and KOLs, continue to pay attention to the data on the chain, and start to form your own opinions. These will help you see market trends first.”
By communicating with these high-quality plans and organizations, we can accurately extract the two key words “optimism” and “long-term”. They always insist on in-depth cultivation, keep learning, and be friends of time. In the future, young people in the new era will become a key group for the adoption of applications in the crypto industry.
No matter what it has experienced, the trend of the Bitcoin and crypto market is still upward, and has driven endless innovations in the industry, achieving financial democratization, awakening of personal sovereignty awareness, return of data rights, privacy protection, trust reform, and even changing the development direction of the Internet. , this is cool enough! What we have to do is “emphasis on participation and freedom at the same time.”