When the market is no longer booming, should we go or stay?
原文标题：《 Time to dig in | Market Monday LITE 》
Original source: David Hoffman, co-founder of Bankless
Last night's porridge, Babbitt
When financial markets collide with paradigm-shifting technology... Things are going to get weird.
Time is warped. Markets always try to put a price on the future, and humans inadvertently do so when disruptive technologies emerge that promise to change everything we know about the world.
In 2017, when BTC went from $1,000 to $20,000 and ETH went from $10 to $1,440, people were pricing in the future. Investors paying for these new prices believe that three to five years of ecological progress is... Priced immediately.
But financial markets are not that simple. A market is a second-order chaotic market. Unlike first-order systems, such as the weather or trajectories of planets and stars, second-order systems change their trajectories based on people's predictions about them.
In other words, the market will react to people's predictions.
This makes the market both a self-fulfilling prophecy...
If everyone thinks the price of an asset will go up, it will go up, because everyone will buy it.
... It is also bound that the answers of these people are wrong.
If everyone sees everyone else buying, it becomes a game of chicken who will hit the sell button first?
It's all about psychology
Markets are emergent, born of the collective thinking of individual participants. Prices will rise or fall based on the stories and narratives we share with each other.
When it comes to the intersection of financial markets and breakthrough technologies, assets are priced by the shared stories and narratives we tell ourselves.
Ultimately, this means that these markets are largely narrative driven, and the stories we tell ourselves ultimately determine how these markets unfold.
I think that's one of the reasons we have these massive boom and bust cycles in the crypto industry. Finally, it was time for optimism and prosperity, and after three brutal years of bear markets, and after the COMP token sparked the yield farming revolution, people collectively decided it was time to be bullish again.
There is no reason for this other than the bullish mood
Of course, basic catalysts drive these things, too. On the one hand, 29 percent of the public is focused on bitcoin after the massive printing of dollars in 2020. Of course, the only reason they care about bitcoin is the claim that its limited amount protects against inflation.
Optimism and prosperity have pushed the price of bitcoin into the stratosphere. Start with some basic, solid fundamentals, plus a really good narrative, but also in an industry that's known for going up exponentially, and all of a sudden you have a lot of money that's interesting, and that's way beyond the fundamentals that we started with.
It's also a two-way street. Starting with a fundamental negative for the industry (bitcoin energy waste), some concerns about inflation, and a trashy billionaire with a massive Twitter following, then all the optimism and excitement about the future gives way to fears about regulation and doubts about the actual adoption rate.
It's time to dig deeper
In the last 3 months, there has been a lot of junk in the crypto market, such as Doggie coins, liquid mining tokens that claim 10000% annualized return, Ada everywhere in CX, Dogecoin that says "to the moon", right guys?
These are crypto tourists, they're just here because the numbers are going up, they don't know why, but they don't care.
They are here for excitement and riches.
It seems that many crypto tourists have left. New stablecoin supply is flat, gas fees are at year-low levels and high-yield liquid mining is disappearing.
Tourists are leaving, and those who are still here are still here because they know it's not over. Unlike in 2017/18, there are a lot of positive drivers behind the industry that we've never had before, while the general public is getting closer to using crypto assets as part of their daily finances.
So now is the time to ask yourself: Are you packing? Or is it exploring?
Wealth is built in quiet times
If you got into the business because of a bull market, you might feel like you're late. You feel left behind because there is so much to learn and so much you don't know that everyone else knows and you don't know.
The quiet time in the crypto market is the time to build things. That's where value is created. This is your chance to build your knowledge, build a long-term position in high-quality crypto assets with a real foundation, and connect with like-minded people in the industry.
If you enter the industry with a dream of becoming a cryptocurrency millionaire, it will become a reality if you stay during the quiet periods.
You won't become a millionaire overnight, there is no such thing. But if you stick with it, do your homework, pay attention and accumulate quality crypto assets, then when crypto tourists come back, you'll be the crypto asset expert everyone needs in their lives.
Pay attention to
If you decide to set up camp in the crypto industry, you'll be able to see for yourself:
1. The integration of EIP 1559 and the origin of the fee-burning market;
2. Merger of Ethereum and Beacon Chain, the launch of the first high-security, high-value proof-of-stake (POS) economy;
3. Growth of competitive Layer 2 environments and fierce competition between DEFI applications on these L2's;
While we can do our best to speculate about what these events might have looked like, there is no substitute for seeing them. In order to stand out in the industry and become the cryptocurrency millionaire you want to be, you have to experience these things yourself.
You have to be there when things happen and look at yourself as they happen.
A lot of the wealth created in the DEFI summer of 2020, most of it belongs to people who are already in the industry, who look at why DEFI summer is happening and know how to deal with it, who are the people who are doing the best in the industry, and who are well positioned to take advantage of an unknown future event before it happens. If you leave and go back to the industry, you will be left behind and you will miss a lot of opportunities.
So get out your spades and axes, set up your own camp and explore deep. Now is the time to position yourself for long-term success rather than short-term happiness.
Wealth is expressed in times of irrational exuberance.
Now that prosperity has left the market, it is time to build wealth.
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