Seven aspects that need to be focused on in the interpretation of the Messari report (part 1)

At the beginning of December, the annual Messari year-end report arrived as scheduled. The full text is rich, the data is detailed, and it is widely cited. It is the best summary and review of the entire encryption industry in 2021. After reading this report, I think it is necessary to write this The most exciting views in the report will be introduced to everyone.

Reading through this report, at least three gains can be gained.

First, this report can enhance your confidence in the encryption industry and point out the direction of development of the encryption industry. What direction? Obviously, Web3 is the direction of development. After enduring the centralized Internet (Web2) for 20 years, we finally have the opportunity to come up with a complete set of solutions in a decentralized way. Whether you are a “preacher” or a speculator in the encrypted world, you will find that this is set off The power of the crypto movement is precisely our pursuit and yearning for the belief in decentralization. Web3, formed by the organic combination of decentralized networks and financial systems, is an excellent alternative to the declining traditional institutional system.

Second, you will find yourself in a huge blue ocean market. Although every project is currently involuntary due to expensive traffic and high handling fees, this is not an industry problem, but that Web3 is far from reaching its scale. The network value brought by the effect, in short, the blockchain world is still small, and this is a blue ocean market. Although small, it is by no means ignored by anyone as it was 10 years ago. The current crypto industry is an asset class worth 3 trillion U.S. dollars, with more than 150 billion U.S. dollars in stablecoins and more than 5 trillion U.S. dollars in annual With the volume of transactions on the chemical chain and the possible higher orders of magnitude of stable currency exchanges, cryptocurrencies have begun to revolve around regulated banking operations, which in turn will have an impact on policy in the opposite direction.

Third, although the current crypto market is in a deep correction of a bear market, the future of the crypto world is bright. As stated in the original report, there is 99% confidence that the cryptocurrency market will have an order of magnitude growth by 2030, because this market has a huge expected strong appeal. We are in a period of comprehensive global economic transformation. The emergence of cryptocurrency will have a greater impact than mobile communications and even the Internet.

All in all, this report by Messari is a look into the entire encryption industry, and it also points out the direction for future work and investment. In addition to the above three summary views, I think the seven key points detailed in the report also deserve special attention. If you don’t have time to read the original text in detail, after all, the original text has more than 100,000 words and more than 100 pages, just take a look at this short version of the article.

When will it reach the top? How will this bear market be different?

The report mentioned that we all know that the “crash” is coming, and this time the cycle may be more gradual than before, but we said before that there is “surplus heat” in the market, so before the crash, how much room is left for the market to rise Woolen cloth?

In order to explain when Bitcoin peaked, the Messari report introduced the index MVRV. The report believes that if you are not a HODLer and cannot tolerate a four-year bear market, then whenever the MVRV reaches 3, it is the best time for you to benefit ( When the MVRV drops below 1, you can sell one kidney to buy).

The calculation formula and trend chart of MVRV are as follows:

Seven aspects that need to be focused on in the interpretation of the Messari report (part 1)

Data source: https://www.lookintobitcoin.com/charts/mvrv-zscore/

This indicator estimates the popularity of the entire market by fitting calculations between the “circulation market value” and “realized value” of Bitcoin. As shown in the figure above, when the indicator enters the red zone, it means that the entire crypto market is overheated, and you need to pay attention to risks. On the contrary, entering the green area means that the market is deserted.

Messari reports expenditures that in the three previous bubbles, the time for MVRV to be above 3 is gradually getting shorter. In 2011, MVRV stayed above 3 for four months. In 2013, it stayed there for 10 weeks and in 2017 it stayed for three weeks. Earlier this year, it only stayed for 3 days.

The Messari report tends to believe that when the MVRV reaches 3 again this year, the price of Bitcoin will reach the level of $100,000-125,000!

However, a certain index cannot make the most accurate judgment on the entire crypto trend. Under the expectation of the Fed to raise interest rates, the probability that Bitcoin wants to regain its glory is quite low.

The Messari report also gave us a shot, that is, how to deal with the bear market.

The report pointed out that in the past bear markets, the winter of the crypto world made many people lose their confidence and could not bear the collapse of their souls and years of hardship.

In the bear market, we will see negative information about people’s collapse, bankruptcy, loss of confidence, etc., but this year’s bear market seems to be even worse, that is, facing the nightmare brought by unprecedented supervision, removing the veil of the bull market, protecting consumer rights, Market fraud and product abuse, systemic risks, ESG and market behavior compliance issues are likely to be a double blow to the entire market. At the same time, the number of “grassroots” groups in the crypto market will drop sharply. The reason is that when you lose 90% of your savings, you have to find a real job, and it will be more difficult to “fight” with the traditional market.

Before you lose confidence, you need to ask yourself a few questions, namely:

1) Has the centralized world really decayed?

2) In the future, will Web3 be a “bargaining chip” worth looking forward to against the traditional world?

3) Are the components (bridges, DAOs, NFTs) in the new areas we envisioned still worth a lot of investment in the next phase?

4) In the next down cycle, will it be easier to find projects with strong fundamentals?

5) Are there still enough funds available to fund interesting projects?

6) Do you still believe that the crypto market will return to the bull market in 5-10 years?

7) If you still believe in all of this, please wear a helmet, embrace the cold winter, and pay attention to these “winter survival skills”: de-leverage as soon as possible, see the tax time, cash it out in time, and don’t try to guess the “top” time.

In short, although the MVRV indicator cited by Messari shows that there may be new highs in the future, it also reminds us to prepare for the next bear market and not fight unprepared battles. When the real bear market comes, do not despair of the market, because Web3 Such concepts are entering the mainstream.

Can Ethereum surpass Bitcoin?

Whether Ethereum will “flippening”, that is, the market value surpassing BTC, is a question that the crypto industry has been discussing. It is generally believed that with the advent of ETH2.0, ETH will become the underlying protocol of Web3, which will inspire greater application space. It seems that it is only a matter of time before the market value of ETH surpasses BTC, but Messari does not think so.

Messari believes that the probability of “flippening” next year may be 20%. If ETH can really surpass BTC, it is not because it is a high-level “currency”, but because the market evaluates the computing platform owned by the world’s most unique users and its revenue and growth potential higher than digital gold . In other words, we will treat BTC and ETH like M0 (cash in circulation) and Google.

Messari does not believe that ETH will surpass BTC next year not only because Ethereum is facing the expansion problem, but also because the current public chain competition is fierce, and the market is more inclined to build a multi-chain parallel ecosystem in the future. Just like h/tArthur Hayes’s point of view, can public chains such as BSC/Solana/Polkadot “jointly overthrow” like FAMGA (Facebook/Apple/Microsoft/Google/Amazon, etc.) whose market capitalization exceeds M1 (M0+ corporate demand deposits)? What about Bitcoin?

So can Ethereum surpass Microsoft, Apple or Google? At present, Ethereum is 3-5 times worse than them. Can ETH exceed the total market capitalization of FAMGA? That’s 15-20 times worse, and this requirement is quite high. After all, Ethereum currently accounts for 5% of FAMGA’s total market value, and ETH is still “cheap”.

The arrival of Web3 is inevitable

From Twitter, Instagram, Telegram to country clubs, from Cape Town in South Africa to Washington in North America, from Beijing to Tokyo, almost all Internet practitioners are talking about the new term Web3. In fact, Web3 is not a new vocabulary. It is a vocabulary invented by Polkadot founder Gavin Wood in 2014, namely “Web 3.0”.

Obviously, Web3 is the direction of development. After enduring the centralized Internet (Web2) for 20 years, we finally have the opportunity to come up with a set of solutions in a decentralized way, whether you are a “preacher” in the encrypted world. Or a speculator, you will find that the power that set off this encryption movement is our pursuit and yearning for the belief in decentralization. Web3 (the organic combination of decentralized network and financial system) is an excellent alternative to the declining traditional institutional system.

As the Messari report explained, we are moving from the era of Internet hegemony of “rental land” to a new era full of infinite possibilities. In this frontier field, the development of cryptocurrency is like setting off an inevitable revolution, which scares all profiters in the monopoly economy.

In the long run, the development momentum of Web3 is unstoppable.

Chris Dixon, partner of A16z, called Web3 “the Internet that uses tokens as a medium and is jointly owned by builders and users.”

Messari researcher Eshita described the evolution from Web1 to Web2 to Web3 in his article “Web3: In a Word” as “read-only to write-read, to write, read, and own.” No matter which model you prefer, in the long run, the user’s income in Web3 is higher than Web2 (monopoly Internet economy).

In fact, we already have all the key factors necessary for the success of Web3, namely 1) Talent: talented, passionate, and visionary young people are flooding into and building the crypto world; 2) Capital: the cryptocurrency market has been raised A large number of venture capital funds, cryptocurrency startups have begun to raise funds, and the number of emerging liquidity agreements on the Internet is also growing rapidly. 3) Time node: During the last bear market, the key infrastructure of the crypto world has been deployed. At this time, launching an “encryption movement” (a technological revolution with a certain political nature) is easier to be accepted and accommodated by society.

In short, the current environment is simply “the right time, the right place and the people” for Web3.

In addition, in a recent article by Eric Peters, he mentioned that we are now in a period of social transformation. People of the younger generation are keen on emerging investments, and they are reluctant to invest in those traditional investments that the older generation likes, because at present, traditional institutions will only help the older generation who have accumulated a lot of assets to continue” “Create wealth”, and these emerging investment methods have the opportunity to subvert those traditional investments (and even bankrupt them). It is inevitable that this kind of antagonism appears. Young people have realized that those traditional institutions are exploiting them.

The most obvious example is that DeFi provides savers with an annualized return of 5%, while Wall Street has only 0.5%. The emergence of NFT (non-homogeneous tokens) provides creators with a greater opportunity to make money, and will not take 50% of the share like Hollywood does. The emergence of GameFi and SocialFi has broken the monopoly, leading Internet companies will lose 100% of the market share, and institutional risks will also be reduced.

I have 99% confidence that the cryptocurrency market will have an order of magnitude growth by 2030, because this market has a huge expected strong appeal. We are in a period of comprehensive global economic transformation. The emergence of cryptocurrency will have a greater impact than mobile communications and even the Internet.

Due to the length of the space, the second half will be released on December 16, so stay tuned.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/seven-aspects-that-need-to-be-focused-on-in-the-interpretation-of-the-messari-report-part-1/
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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