A 10,000-word article explaining: Bitcoin at the Crossroads

The U.S. would prefer to bring the crypto market within the original financial regulatory system, plugging the gaps of tax evasion and money laundering, and hoping to increase tax sources for the next round of the U.S. economic stimulus package.

A 10,000-word article explaining: Bitcoin at the Crossroads

Forecasting several market phases for the second half of this year.

The OKEx Ouiji ticker shows that on May 19, bitcoin started to fall from $44,000, dipping as low as $29,000 at 9 p.m. Within 24 hours, the total market value of the crypto market dropped 29%, 475,000 people became victims of a blowout, and the entire network exploded for a total of $5.87 billion. This is also the second time bitcoin has fallen below $30,000 after nearly 120 days since Jan. 29.

With all the regulatory turmoil in China and the U.S., many people are starting to ask if the bull market is still alive. And what should we make of the current regulatory landscape? If the bull market is still alive, what will it rely on to continue? What will be the future trend of the crypto market from the macro trend? In this article, we take a deeper look into the above questions from a macro perspective.

Core views

1、The U.S. prefers to incorporate the crypto market within the original financial regulatory system to block tax evasion and money laundering, and hopes to increase tax sources for the next round of U.S. economic stimulus plan.

2、The bull market is still in place, and only briefly fell into a technical bear market; the fundamentals of the bull market are still strong in terms of multiple dimensions such as technical aspects and experience, macro environment, on-chain data and blockchain technology development.

3、The development of blockchain technology is the main driving force for the second half of the bull market still exists.

4、The crypto market tends to adjust stage in June and July due to regulation, and will usher in a technology and application explosion in August and September, which will be favorable to push the market to flourish and thus form a market climax; once the second round of US economic stimulus plan is landed or Bitcoin ETF is passed, then the crypto market may enter a period of retailer mania, which is also a period of market risk. The topping time of the bull market may occur at the end of this year or early next year.

How to view the current regulation?

Since April, the market trend of the crypto market has been mainly influenced by regulation, where the market trend in April was largely influenced by US regulation, and the market trend in May was mainly influenced by domestic regulatory policies. The market was specifically affected by the regulatory policies in China and the U.S. in two plunges, one on April 18 and one on May 19. Although it is the same regulation, the regulatory objectives and starting points of the U.S. and China are obviously different, and the impact on the crypto market is also different.

The U.S. regulation of the crypto market The U.S. prefers to bring the crypto market within the original financial regulatory system, blocking tax evasion and money laundering, and hopes to increase tax sources for the next round of U.S. economic stimulus plan. U.S. Treasury Secretary Yellen said at her nomination hearing in January, “I think we really need to look at ways to reduce the use of cryptocurrencies and to make sure that money is not being laundered through those channels.” On April 16, the White House agreed with U.S. Treasury Secretary Yellen’s views on regulating cryptocurrencies. Subsequently, the Office of the Comptroller of the Currency (OCC), the Financial Crimes Enforcement Administration (FinCEN), and the Internal Revenue Service (IRS) under the U.S. Treasury Department began to step up regulation of the crypto market from different dimensions. on April 18, crypto market sentiment plummeted.

On April 20, a source came out and revealed that the Biden administration was working on a legislative framework for the fast-growing crypto assets, which would legally set the rules for the crypto market. Some big institutions may have known or anticipated the adverse effects of the regulations ahead of time, so they sold off in advance. So what exactly is making big institutions panic sell off? The taxation of the rich is a very important item in the crypto asset legislation process. President Joe Biden’s plan to nearly double the capital gains tax on the wealthy is a major negative for U.S. investors investing in crypto assets, which have risen sharply since last December and are already at risk of capital gains tax if they sell cryptocurrencies after holding them for more than a year. A look at GBTC premiums, the main channel for institutional entry, reveals that GBTC has continued to maintain a very high negative premium during that time, typically exceeding -15%. A series of subsequent U.S. Treasury regulatory requirements and initiatives can also support this view. The U.S. Treasury expects the entire wealthy tax group to conceal more than half of their income in addition to their salaries.

The U.S. Treasury further requires that cryptocurrency transfers involving amounts of $10,000 or more be reported to the IRS; as cash transfers, those companies that accept crypto assets as a method of payment should also report to the IRS if the fair market value of the transfer transaction crypto assets exceeds $10,000. In addition to the Treasury Department’s IRS, the OCC is also taking the initiative, having earlier proposed to join the Federal Reserve and FDIC to form an “interagency sprint group” on cryptocurrency regulation. The OCC, Federal Reserve and FDIC’s review of cryptocurrency regulation includes a review of banks’ capital charges on cryptocurrency held by customers. During the same period, the SEC is also beginning to regulate the crypto market. on May 21, SEC Chairman Gary Gensler said that crypto exchanges need more regulation and that the public would benefit from more SEC protection for investors on crypto exchanges. SEC Chairman Gary Gensler said that federal financial regulators should be “prepared to prosecute” bad actors in the crypto and other emerging technologies. Subsequently, the SEC chairman continued to speak out intensively. At this point, the U.S. has basically rolled out a multi-sector, all-encompassing regulation.

Domestic Regulation of Crypto Market Domestic regulation of crypto market mainly aims to prevent individual risks from being transferred to the social sector, prevent systemic financial risks, and maintain social stability. In addition, in the context of “carbon neutrality”, bitcoin mining is also the main reason why it needs to be rectified due to the energy consumption problem.

Since this year, dog coins have skyrocketed, followed by a series of “animal coins” such as SHIB, triggering widespread concern in the traditional market and serious signs of capital speculation; in addition, the rise of new mining tokens such as Chia has caused the graphics card market to overheat, affecting normal social production development. In addition, the energy consumption of bitcoin mining has been increasingly criticized, which is contrary to the general trend of “carbon neutrality”, and is also the main reason for the suppression. Based on the above background, on April 23, China’s Inter-Ministerial Joint Conference on the Disposal of Illegal Fund Raising also said: pay close attention to the new risks under the banner of virtual currencies and other new types of risk.

On May 18, China Internet Finance Association, China Banking Association and China Payment Clearing Association jointly issued an announcement that financial institutions and payment institutions are not allowed to carry out business related to virtual currencies. on May 21, Vice Premier Liu He chaired a meeting of the State Council Financial Stability Development Committee, which called for strengthening the supervision of financial activities of platform companies, cracking down on bitcoin mining and trading, and resolutely preventing transmission of individual risks to the social sector. Subsequently, the main regions of bitcoin mining, Inner Mongolia and Sichuan, have issued policies as well as seminars to rectify the situation for bitcoin mining.

Bitcoin miners began to de-china. Jiang Zhuoer, a bitcoin mining pool, compared the current market chaos with the market before September 4, 2017, stating in his Weibo post that the highest and most fundamental purpose of regulation is to maintain social stability.94 The market was in chaos before, with various ICO coin offerings flying all over the place, and if no action was taken to stop it and it was allowed to develop, at the end of the bull market, the end result would definitely be a large number of retail investors going bankrupt and social instability, so regulation stepped in .

The Impact of Regulation on the Crypto Market

At the moment, China is deepening the de-Chineseization of bitcoin mining, while US mining companies are stepping up their leadership in “green crypto”, and the US dominance in the bitcoin market will continue to grow stronger. As the U.S. improves its regulation of the crypto market and Bitcoin becomes more and more recognized and accepted by traditional institutions, the possibility of the U.S., as a financial powerhouse, adopting a Bitcoin ETF will also grow. other products offered.

He also hinted that SEC Chairman Gary Gensler is “smart” enough to approve the plan soon. Bitcoin ETFs could go live within a year, and ARK Fund founder Cathie Wood said in a recent interview that the Bitcoin correction has improved the chances of a crypto ETF being approved. Recently, SEC Chairman Gary Gensler tweeted his “green laser eye” emoji and advocated for “green crypto”, which has a deep and intriguing meaning behind it.

Still in the Bull Market?

Following the regulation of the crypto market in China and the United States, on May 27th, the governor of the Bank of Korea, Lee Joo-yeol, also said that individual leveraged cryptocurrency trading in Korea threatened the financial system of Korea. This regulation of the crypto market has clearly taken on a global dimension. So is the bull market still in place under strong regulation? In this article, we believe that BTC has fallen into a technical bear market in the short term, but the fundamentals that support the bull market still exist, and we introduce the basis that supports the bull market below.

BTC falls below the bull/bear boundary

Many in the crypto market see MA200 as a very important bull/bear dividing line, while others see MA240 (currently at $36,396) as a very important bull/bear dividing line, and from the current chart, Bitcoin has fallen into a technical bear market. While this article argues that bitcoin bull market fundamentals exist, BTC should be cautious of bottoming until it stands at MA240.

Macro positives still exist

The U.S. Biden administration came to power and implemented the first round of economic stimulus bailout bill. We have marked the key time points in the bitcoin ticker chart, from which we can see the impact of the big U.S. release on the rising bitcoin market.

The Biden administration proposed the $2.3 trillion American Jobs Plan and the $1.8 trillion American Family Plan in March and April of this year, respectively. In the early hours of May 29, Beijing time, the White House officially released the first budget proposal of President Biden’s presidency, which calls for an increase in government spending to $6 trillion (about RMB 38 trillion) in fiscal year 2022. This will undoubtedly increase inflation and push up the prices of major global assets such as U.S. stocks, as it did last year. (Note: The $6 trillion proposed by the Biden administration is for the fiscal year 2021 budget, of which the first round of fiscal stimulus is $1.9 trillion, which has already been disbursed, $2.3 trillion for the American Jobs Initiative, and $1.8 trillion for the American Family Initiative “) Singapore’s DBS Bank (DBS) recently reported that bitcoin’s volatility correlation with U.S. index futures is increasing and that bitcoin is no longer a fringe asset class. Then, with the macro impact of the big U.S. deflation and Bitcoin’s own deflationary attributes, it still has strong upside potential.
Against the backdrop of a global debt crisis and severe inflation, Bridgewater Fund Dario has also made a marked change in his attitude towards bitcoin, from being skeptical to starting to try to buy it. He believes that the dollar will go back to 1971 and that the US will keep printing money and raising taxes for some time to come, which will cause stocks to rise and will also cause all assets such as bitcoin, gold and real estate to rise, and he believes that the environment we are in is a cycle of dollar devaluation. He also said that in an inflationary scenario, personally, I would rather hold bitcoin than bonds, and said he already holds some bitcoin.

On-chain data growth remains robust

Anthony Pompliano, founder of Morgan Creek, said on May 24 that after analyzing Glassnode’s data, he found that bitcoin giants holding between 10,000 and 100,000 BTC purchased a total of 122,588 BTC since the market crash last Wednesday. lex Moskovski, CIO of Moskovski Capital Moskovski shared Glassnode bitcoin stablecoin supply data, which shows that the bitcoin stablecoin supply ratio (SSR) has fallen to an all-time low. lex Moskovski said that the SSR is the ratio between the circulating bitcoin supply and the stablecoin supply expressed in bitcoin. When the SSR is low, the current stablecoin supply has more purchasing power to buy BTC. he added that there is a lot of idle money starting to pour into the bitcoin market.

A 10,000-word article explaining: Bitcoin at the Crossroads

Institutions Continue to Enter as Traditional Market Acceptance Continues to Expand

Institutions continue to enter the market in the wake of the bitcoin crash. In terms of data, GBTC premiums have clearly rebounded after the “519” crash, with Grayscale Bitcoin Trust as the preferred entry point for large U.S. institutions, which certainly suggests that institutions are taking advantage of the bitcoin crash to sweep. On the news front, some big U.S. institutions are indeed buying after the bitcoin pullback, with Ark Investment Management’s recent SEC filing showing it purchased $19,872,939 in bitcoin. Kyle Davies, co-founder of Three Arrows Capital, said, “Every time we see a lot of liquidation it’s a buying opportunity, and I wouldn’t be surprised if Bitcoin and Ether could retrace their entire decline in a week.”

Blockchain’s intrinsic value remains unlocked

Bitcoin is seen as a financial scam by many traditionalists, and there is a great deal of confusion about the continued rise in bitcoin prices. The cryptocurrency properties of bitcoin continue to be more accepted and recognized as more and more institutions begin to accept bitcoin payments. It is worth noting, however, that many cryptocurrencies that mimic Bitcoin are not so hit and miss. Ether is considered Blockchain 2.0, and there are many blockchain projects imitating Ether, and again, few projects are as successful as Ether. So why is this? Unlike the traditional Internet world, it is difficult for small company developers to compete with big Internet companies. The big Internet companies have more people and more money and more resources, so they can easily suppress or defeat small competitors, which is caused by the existence of technical barriers in traditional Internet companies.

In the blockchain world, most of the blockchain project codes are open source, which actively give up the technical barriers and anyone can freely call and copy them, which forms the “Lego effect” and greatly liberates the productivity of developers. After a contract is proven valuable and widely invoked, it will gradually become the underlying infrastructure, thus releasing strong vitality and value. This article believes that the fundamental reason why the bull market is not over is that there are still many new technologies in the blockchain industry that are about to explode, and this new technology, through continuous integration, will probably produce a magical “chemical reaction”. Below, we will sort out the important technological forces that are about to change the blockchain industry.

Technology-driven bull market

In a recent interview with CNN, Vitalik Buterin (V God) said: It feels like cryptocurrencies are ready for mainstream integration, whereas four years ago it was the complete opposite scenario. Back then it was completely unprepared, and now cryptocurrency is no longer just a toy. So what are the major blockchain technologies that can drive the bull market going forward?

The landing of two major public chain infrastructures

Two infrastructures that are highly anticipated by the blockchain industry in 2021 should be DFINITY and Polka. Here we briefly introduce this important blockchain infrastructure. Dominic Williams, founder and chief scientist of DFINITY Foundation, has described the innovation brought by DFINITY as follows: “It’s the first true, universal blockchain computer that allows us to re-imagine, the way we build everything, a seamless, infinitely performant blockchain.” This quote from Dominic briefly describes the three main features of DFINITY: the ability to build all kinds of applications, seamless connectivity, and unlimited performance. On DFINITY, developers can build programs and applications directly on the Internet ontology, without the need for cloud services, databases or payment interfaces, etc.

DFINITY is a paradigm shift that changes the way and content of building application services. This will not only bring great rewards for entrepreneurs and investors, but is also expected to inspire new application forms and lead the blockchain industry out of the loop. Gavin wood, the founder of Polkadot, refers to Polkadot as a “platform of platforms”. We can consider Polkadot as Layer 0, which is the foundation layer to provide security and interoperability between parallel chains. Polkadot is often mentioned for its technical features, such as: the double-layer structure of relay and parallel chains provides stronger scaling capacity for the system; Polkadot can dock with Bitcoin and Ether to realize asset ecological migration and has strong compatibility; Polkadot’s substrate can significantly reduce the cost and difficulty of public chain development, etc. In addition, Polka solves the fork dilemma of public chain, and the business logic of Polka itself is included in Polka consensus, which means that Polka can achieve fork-free upgrade.

Ethernet to PoS, Layer 2 and Sidechain

Ether 2.0 has made great progress so far this year, and some core Ether developers predict that the PoS mechanism will be implemented soon at the end of the year. Once Ether is converted to PoS mechanism, it will greatly improve scalability, security and accessibility. However, the market is still doubtful whether Ether can realize this expectation at the end of the year, but Layer 2 and so on are really on the eve of the outbreak, Layer 2 has been very popular since the beginning of the year, but the early Layer 2 network wallet, applications and supporting tools are not very perfect, with a period of development, Layer 2 has been called out.

The Optimism mainline is expected to go live in July, and Arbitrum, another hot project of Optimistic Rollup, went live on the mainline on May 28 and is open to developers. zkSync, which uses ZK Rollup technology, announced its 2.0 roadmap on March 27; on May 25, zkSync announced the launch of the zkSync 1.x test network; the main network is expected to go live in August. on April 9, zkSync tweeted that zkSync 2.0 will be Turing-complete, meaning it will be EVM-compatible. in addition, they launched On April 21, Loopring, the decentralized trading protocol based on ZK Rollup, announced that it will release Loopring 3.7 in May, which will launch a bridge product across L1, L2 and centralized exchanges Ethport.

It is understood that using Ethport can enable Loopring users to interact directly from Layer 2 to Layer 1 DApp at low cost through batch processing and zero-knowledge proof function, supporting cross-Layer 2 transfers. Ether-based sidechain and state channel projects have also made great progress. Recent projects such as Polygon (Matic Network) and Celer Network, among which Polygon is the most eye-catching development, have also shown the blockchain industry the huge potential of Layer 2. The Polygon ecosystem development and TVL are also eye-catching.

A 10,000-word article explaining: Bitcoin at the Crossroads

In addition, NEAR, the “alternative” Layer 2 solution, has also made good progress recently. On May 12, NEAR released Aurora, an EVM solution that means developers can seamlessly deploy Solidity and Vyper smart contracts while offering token transfers and data transfers between Ether and Aurora without a license, based on Rainbow Bridge technology. . The full expansion of blockchain application scenarios DeFi, as the first major application scenario of blockchain technology, is essentially a financial innovation driven by technology and products, and with the arrival of Layer 2, DeFi will bring a new innovation to the crypto market. on May 27, Uniswap founder Hayden Adams tweeted that the community vote has been overwhelmingly supportive to support Uniswap v3 deployment in Arbitrum, and assuming the snapshot passes, we will deploy the v3 smart contract to Arbitrum.

Uniswap V3 +Layer 2 will undoubtedly bring new opportunities and different to the crypto market. deFi is gradually gaining recognition in the traditional financial market during its development and has started to challenge the traditional financial market in terms of data such as trading volume and lock-in volume. on December 17, 2020, the CFTC released a primer on the cryptocurrency industry. In its article, it stated that DeFi and cryptocurrency governance has become one of the topics of interest for the CFTC in the digital asset space.

DeFi is starting to empower NFTs, and NFTs are starting to link the real world.

In the DeFi space, Uniswap is the top performer, and with the launch of Uniswap V3, DeFi has begun to empower the NFT space with innovations such as centralized liquidity, multiple rates, range pending orders, improved prophecy machines, and the deployment of a Layer2 version of Optimism. All of these operations can use NFT, which is a very huge breakthrough and innovation for the expansion of NFT application boundaries. nft is now gradually entering the real world, many things are starting to NFT, and DeFi will undoubtedly open a door between the real world and blockchain when it is linked with NFT.

NFT’s influence out of the circle is expanding.

May 11 news, e-commerce giant eBay on Tuesday said it allows the sale of digital collectibles such as trading cards, pictures or video clips NFT on its platform. May 19 news, crypto artist Sean Williams tweeted that Instagram may launch an NFT platform and is currently communicating with the artist to sign a related agreement. Taobao Ali auction poly fun 520 auction festival launched NFT digital art special, will be on May 20 from 10:00 auction artist Wan Wenguang works “U107 – no waste planet system – cabinet family of Van Gogh” and many other digital artworks. the influence of NFT is constantly amplified, it seems that everything can be NFT.

The public chain silo effect will be broken, and specialized application-oriented public chains will explode.

At present, public chains are still developing separately from each other, and this fragmentation makes it difficult to complement each other in the ecology, and even generates internal consumption. In the future, as public chain technology matures and more application areas start to migrate to blockchain, different fields need differentiated and specialized public chains. Poca’s Substrate can greatly reduce the cost and difficulty for developers to develop and operate in public chains, so that developers can focus more on applications. Poca will also connect private chains, federated chains, public chains, open networks and prophecy machines, and future technologies yet to be created, which will break the “silo effect” of public chains and realize the “interconnection of all chains”. Along with security, data and information sharing, polka will drive the explosion of professional application public chains in the blockchain industry.

The boundaries of blockchain applications are being greatly expanded. In addition to the DeFi and NFT domains, products such as social applications developed based on DFINITY are expanding the application areas of blockchain.

On May 22, OpenChat, a decentralized chat application based on DFINITY, has opened Alpha testing. OpenChat also has a bonus feature that allows you to send digital asset bonuses to your friends. In addition to OpenChat, there are many more diverse blockchain applications in development. The following chart shows the more complex blockchain applications of the DFINITY ecosystem.

A 10,000-word article explaining: Bitcoin at the Crossroads

When will the bull market come to an end?

This article believes that blockchain technology can drive the bull market onward, but the bull market can’t stay bullish. So when exactly will this bull market end? This is probably what many people are concerned about and want to find out. We have written about this in “How High Will Bitcoin Go In 2021 With Tesla’s High Profile Entry? and “Under the Big Change, Bitcoin’s Trend Development and Economic Cycle” have been arguing that this bull market is formed by external and internal factors driving each other. So by analyzing the changes in internal and external factors, this article tries to infer the trend of this bull market.

The exogenous factors include two main aspects: 1. the strong demand for digitalization under the influence of the New Crown epidemic, which has led to a strong interest in digital assets such as Bitcoin and the gradual increase in participants; 2. the heavy impact of the New Crown epidemic on the global economy, the major global central banks have released water, and the central bank fiscal policy has formed a push up for global financial assets. The internal factors are also mainly reflected in two aspects at present: 1. at the financial level, DeFi’s innovation drives blockchain technology towards traditional finance and achieves breakthroughs at the application level; 2. at the technical level, along with DFINITY, Boka, Layer 2, etc. coming online and landing one after another in the next, blockchain technology breakthroughs mainly in terms of expansion and high performance are expected to continue to drive blockchain technology forward development. Next, we will judge the approximate time when the bull market may end from these four dimensions.

Impact of the epidemic

The impact of the epidemic on the global economy is mainly concentrated in China and the United States. If the epidemic in China and the United States can be controlled, the fundamentals of the global economy can be stabilized, and China and the United States are major vaccine producers, which can accelerate the global economic recovery by exporting vaccines. At present, there is a clear trend of improvement in the US epidemic, but it is not yet solid, so overall the Federal Reserve still maintains quantitative easing policy. As the epidemic gradually gets under control and the U.S. economy stabilizes, a Fed rate hike is bound to come as inflation is expected to get more severe, which will undoubtedly have a huge impact on bitcoin.

In terms of the epidemic, China is relatively well controlled and the focus of the problem is mainly in the United States. Currently roughly 48% of the U.S. population has received at least one dose of the vaccine, and the coverage rate is roughly 37% or so. When the vaccination rate reaches 70%, herd immunity can be achieved. Biden officially entered the White House in January of this year, which means that it took Biden almost five months to achieve this effect, which then means that by October at the latest, the U.S. will reach herd immunity. By then, the U.S. economy will have basically recovered and the Fed’s rate hike expectations will have risen like never before. Combined with the Fed’s schedule, the U.S. economic data on Nov. 3 will be crucial, and macro trends may appear to be somewhat larger variables here. Even taking into account that the U.S. economic recovery is not firmly based, the end of 2021 or early in the first half of 2022, a rate hike is inevitable.

Morgan Stanley CEO Gore-Man James expects that the Fed will start raising interest rates as early as early next year, and will start to scale back the quantitative easing program at the end of this year, the Fed may raise interest rates in the first half of next year, rather than the market is currently expected in 2023, no matter how the Fed will be driven by economic data. Gore-Man James’ view tends to be towards the end and beginning of this year, and our theoretical forecast from the epidemic’s impact on the economy suggests that policy adjustments tend to be more towards the end of the year; if we further take into account the uncertainty caused by the new winter crown epidemic, then a rate hike early next year may become the most probable event.

In addition to the Fed’s policy changes, the Biden administration’s $2.3 trillion American Jobs Plan and the $1.8 trillion American Family Plan are of most concern. The Biden administration is currently estimated to be working hard to raise money and convince both houses of Congress, and substantial progress is expected in the following months. These two huge economic stimulus plans, once passed, will give a huge boost to bitcoin, and at this point, I fear, will also spawn a huge bull market bubble. With, the crypto market becoming increasingly large and crypto assets becoming a non-negligible part of the traditional financial market, and the US ramping up its bill and Wall Street accelerating its entry into the crypto market, it will also be probable that the US SEC will eventually pass a bitcoin ETF. If the U.S. is a big release and the Bitcoin ETF passes, this will trigger a massive retail entry, and once the market gets too frenzied, a top may also be imminent.

DeFi and the development of blockchain technology At present, the development of DeFi has reached a certain bottleneck, and now the crypto market is still focused on Laye2 and sidechain, Ether to PoS, PoC slot auction, ecological development of DFINITY, etc. From the point of view of time nodes, the time node for Layer 2 and other technologies to explode centrally will be in July and August; the auction of wave card slots will mainly be in June and July, and the ecological outbreak of wave card will probably be in August and September; Ether developers said they will enter Ether 2.0 in a few months, but there are doubts in this market, and the end of the year or the first half of next year may be more promising; on May 25, DFINITY Foundation announced a $250 million developer incentive program, and OpenChat, a decentralized chat application based on the DFINITY Internet computer, has also opened Alpha testing, with some subsequent applications different from DeFi coming online. Driven by technology, the crypto market may reach a technology-driven climax in the bull market in August and September.

Summary

Summing up the above information, we believe that the crypto market tends to be in the adjustment stage in June and July due to regulation, and will usher in a technology and application explosion in August and September, which will be favorable to push the market to flourish and thus form a market climax; once the second round of US economic stimulus plan is landed or Bitcoin ETF is passed, then the crypto market may enter a period of retailer mania, which is also a period of market risk.

Comparing with the development of the Internet industry, this paper believes that the blockchain industry is still at a relatively early stage of the development of large-scale landing applications, and many infrastructures need to be further improved. Blockchain applications also need time to subvert centralized applications, and at least the basic user education is still lacking. With the US epidemic basically under control, the economy back to stability, the Fed starting to raise interest rates, and the market bubbling extremely badly, the market may face the possibility of bubble bursting.

In other words, the bull market topping time may occur at the end of this year or early next year. The chart below shows the topping out time for bitcoin according to the halving effect projected by Jiang Zhuoer of the Lebit mining pool. Assuming the same length of the bull market, bitcoin could top out on October 12, 2021; and assuming the bull market gets longer, the bull market could top out on March 19, 2022. We have scientifically explained the logic behind Bitcoin’s “four-year halving” cycle from the perspective of the “inventory cycle” (see “Uncovering the Economics Behind Bitcoin’s Bull/Bear Transition”), and this article suggests that Jiang Zhuoer’s topping time prediction is also indicative.

Finally, it should be emphasized that the final forecast of the market in this article is for reference only, the crypto market is volatile and investors should operate with caution and refrain from adding leverage.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/a-10000-word-article-explaining-bitcoin-at-the-crossroads/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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