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Are we staying optimistic or turning bearish? Which stage is the current market in?

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I don't know how much longer it will take for us to reach the speculative level of 2021, but I believe we are still far from that point.

Original Title: "Don't be afraid to dream a little bigger"

Original Author: knower

Original Translation: Luccy, BlockBeats

Editor's Note:

The surge in the price of Bitcoin has ignited the market's enthusiasm, and various institutions and researchers have made assumptions about the current bull market phase. Among them, crypto researcher knower compared the characteristics of past market cycles and pointed out that despite the huge changes in the cryptocurrency market in recent years, there are still many signs that we may still be in the early stages. BlockBeats has translated the original article as follows:

If you've been active online in the past week or two, you've probably seen dozens of tweets about when the current cycle and music will stop. Bitcoin's price has now exceeded $60,000 and has steadily climbed since the launch of some ETFs, with daily inflows demonstrating a wonderful scenario of strong demand and insufficient supply. Fidelity recommends that individuals allocate 1-3% of their investment portfolio to cryptocurrencies for safe and responsible investing, indicating that after FTX, cryptocurrencies are no longer something to be afraid of, but something to accept and embrace.

From March 2023 to around October 2023, the price of Bitcoin fluctuated between $27,000 and $30,000. If you try to hold it for a long time and expect a breakthrough, you may be very frustrated. During this period, there will occasionally be some bright spots, but there are not many things actually happening in the public market if you expect to earn wealth similar to that of 2021. We are lucky in PEPE, Friend Tech, Telegram Bots, and some other activities, but most of these activities are just temporary pastimes, and the entire market is still self-adjusting. There are many discussions about interest rate hikes, soft landings, and other macroeconomic issues, but to be honest, these issues are too far away and I cannot recall them.

The bear market is likely to end in March 2023. Bitcoin soared from $20,000 to $28,000 in just a few weeks, which is a moment I miss, even though it was only about a year ago. At that time, we finally left behind the collapse of FTX, and the media largely stopped persecuting cryptocurrencies. Finally, there were some solid price movements that allowed Crypto Twitter to regain its footing.

Now, one year later, we have arrived here. The historical highs of Bitcoin and Ethereum are within reach, and alternative coins are showing rapid growth. The plot is beginning to take shape, and the private market is once again rampant and disconnected from reality. It is easy to observe the recent behavior of cryptocurrencies and think that we are closer to the finish line than the starting line, but I believe this is extremely short-sighted and naive. Not only have we not broken through historical highs, but there really aren't many signs that we are approaching some kind of climax state.

If you only look at the price trend of Bitcoin, you may feel that it is a bit overbought. But we no longer live in that world. Larry Fink took a risk by betting his reputation on a Bitcoin ETF, while the media and people in the traditional financial industry looked at him in a shocking and confusing way.

How can an asset manager with trillions of dollars in assets be so humble? This isn't even real money, there's no backing! Haven't you seen SBF being tried for allegedly using cryptocurrency to commit fraud and ruin lives?

This article will not discuss why Bitcoin is essential or why it deserves respect from the traditional financial system. If you are reading this article, you may already be aware of these reasons and believe in them firmly. Instead, I want to talk about why we may still be relatively early or why there are multiple reasons to remain optimistic for a longer period of time.

The emergence of ETFs has fundamentally changed this cycle from previous cycles, as there is now an accessible liquidity channel between cryptocurrencies and traditional finance. Unless you have been living under a rock or intentionally ignoring the obvious, traditional financial institutions and participants have been present since the last cycle. Cryptocurrencies have become more mainstream, socially accepted, and people are looking to invest or provide investment opportunities in digital assets for their clients. Coupled with the obvious fact that volatile markets in an upward trend will attract more liquidity and attention, Blackrock, Fidelity, and VanEck can now market Bitcoin to their clients without any regulatory or legal concerns. The door is open and there is no indication that it will close again.

Due to the fact that this is an extremely new, unique, and unprecedented event, it is difficult to establish a realistic model around ETF fund inflows. When was the last time a completely new asset class was introduced to the public? Well, it was probably when the gold ETF was launched, which means it has been about 20 years. You can search online and find the performance of gold ETFs in the first 5-10 years and draw your own conclusions.

Another reason why this cycle may be different from previous cycles is that, despite many patterns repeating themselves over and over again, cryptocurrencies have matured to a considerable extent every year. People on Twitter often point out the top 10 coin lists from previous cycles, many of which have completely disappeared from the market and are far from public memory, but this is another example of how fast things move in this space. If you look at the top 10 stocks by market capitalization since the beginning of the 21st century, you will definitely see a lot of drastic changes and power struggles, as any economy needs competition to promote growth and progress. For cryptocurrencies, many parts of this process have already been accelerated, as the industry has evolved from a white paper written by anonymous individuals to a technological phenomenon that is increasingly capable of disrupting the entire global financial system. There seem to be more market makers, more funds focused on cryptocurrencies, and more venture capital willing to invest in cryptocurrencies. Another observation of mine is that recent batches of project funding are more respected than in any previous cycle, almost as if cryptocurrencies are slowly becoming a legitimate asset class right before our eyes.

Every bull market provides an opportunity for the cryptocurrency industry to experiment with new ideas, which has never been truly possible in traditional finance, using financial speculation as an innovative "Trojan horse". The bear market is a period of purification, where bad ideas, explosions, and tragedies are washed away, and hopefully will never happen again. This is healthy because it is clear that the cryptocurrency market is far from mature, and this will continue for some time, which is very advantageous for us. You usually don't get opportunities like DOGE in the stock market. The closest example of price behavior in the real world for cryptocurrency is the GME phenomenon, although even this cannot compare to the performance of the average token in 2021. This is a special market, and people like Larry Fink decide it is worth pushing and leveraging.

I would like to add that although institutional involvement in the space may bring negative connotations, the emergence of a Bitcoin ETF is more of a positive factor than a negative one. Blackrock is a blessing and I believe this cycle will be the most spectacular one we have seen. It will take the general public longer to forget FTX and accept that cryptocurrency is far bigger than a fraudulent centralized exchange, but this is to be expected. For the average person, it is difficult to imagine investing in such a volatile market, let alone after months of continuous FTX controversy being pumped into every major media outlet, scaring them away from ever buying tokens again. Just like not everyone left the entire stock market after Bernie Madoff, he was just a bad apple.

I don't know how much longer it will take us to reach the speculative level of 2021, but I believe we are far from that point. When I see people on Twitter discussing the second half of this cycle, I wonder what kind of audience they are trying to attract. In the frenzy of the last bull market, I took a screenshot. It was a list of popular coins with names like Dogelon Mars, BabyCare, and Rainbow Token. What are these tokens for? I don't know. What are their trading prices today? I'm not sure. I don't see any scams like this today; I don't see any tokens like Safemoon or Shiba Inu that attract the attention of the entire internet and separate fools from their money. Of course, be cautious and don't get ahead of yourself too early, but is it really that bad to say that we are still early? From an objective perspective, it can be fully debated that we are still early.

Bitcoin experienced a 20-fold price increase in 2017. It rose 10-fold from its low point in March 2020 and double-topped. If Bitcoin rises 10-fold from its low point in November 2022, its peak will reach $160,000. When I say this, I know there will be objections. The obvious objection is that Bitcoin's market value was much smaller in 2017 and 2020, which is correct. I am not calling for Bitcoin to rise 25-fold from here because of ETFs, but it is worth noting how foolish the financial system has become and how rapidly our world is changing due to advances in artificial intelligence. We could very well create AGI in the next 20 to 30 years, which will have an unprecedented impact on our daily lives and what our future may look like. Sam Altman is trying to raise trillions of dollars to prepare for this, which in my opinion is more optimistic than anything else you could ask me about. The US printed a lot of money during the pandemic, things got out of control, and this is just the beginning.

I believe that in a world where artificial intelligence is rapidly overturning all previous assumptions about humans and intelligence, it is not unreasonable to think that Bitcoin will reach over $160,000 in this cycle. The bear market has poisoned many people's minds, and this damage is beginning to show up on my timeline in the form of poorly reasoned tweets. While this may mark a local peak, it does not change my view. I am not afraid to be wrong, although if I did not believe this, I would not be writing this article. Even if public and private markets are as hot as they are now, they will only continue to deviate from the areas of expected reality, leaving all non-believers behind. If there is a timeline where Zhu Su's super cycle theory is proven to be true, and if I say that I do not believe we are living in it, then I am lying.

Disclaimer: The materials provided here only represent my personal opinions and are for informational purposes only. They should not be construed as investment advice. This is not a recommendation for any particular security, strategy, or investment product, nor is it an offer or solicitation for the purchase or sale of any particular security, strategy, or investment product.