Market Plunge and Investment Views: A Brief Analysis

The market has plummeted today, and I have received many panic letters from friends. Regarding the recent market situation, I would like to briefly share a few views:

1. Why did it fall so sharply this time?

Did it fall hard? Eth is only over 20% from the top, right? Bitcoin is only more than 10%. I think this kind of decline is very reasonable, after all, the previous rise was fierce. If it goes up too much, it will go down. This is normal. Funding rates and technical indicators have shown extreme FOMO some time ago, and a technical correction is long overdue. In addition, the Cancun upgrade and May ETF may not be approved, so a correction is inevitable.

2. Where will the callback be likely to be?

The current rate recovery is good, and both BTC and eth have reached or are close to the daily MA support level. However, the repair of liquidation volume and technical indicators is not very satisfactory. Next, we still need to focus on the macro aspect, because with the passage of ETF, it can be said that Bitcoin and the liquidity of US stocks are directly linked. If US stocks have a mid-line correction demand, Bitcoin and the entire cryptocurrency market will not feel good.

However, as a permanent bull, if the market holds stable support at a large level below, I may continue to increase my position.

3. Why does Sol stand out in this wave?

There are many reasons for this, including the improvement of sol's own fundamentals and the advantages of chip structure. But I want to talk about a small change in sol recently, that is, sol has begun to have the attribute of an exchange platform currency. The endless memes are the launchpad of this exchange, and these projects are more friendly to retail investors, with lower initial valuations and easier launches. high frequency. The reason why sol has been rising violently recently is that retail investors are buying sol regardless of cost and then participating in memes on the solana chain. In fact, the ICO craze in 2017 followed the same logic, so eth was very crazy back then.

4. Is Sol’s ecological madness sustainable?

I think it is unsustainable in the short term but sustainable in the medium and long term.

Why is it unsustainable in the short term? It’s because the financial nature of meme is to beat the drum and spread the flowers. The first one gets rich and the next one pays for it. Now the profit-loss ratio of meme trading has become negative. Once more people pay the tuition and understand the essence, the game will no longer be playable. This was basically the case with NFT and GameFi back then.

Why it is sustainable in the mid- to long-term is because Solana’s genes and narrative have been established—an open mind and embracing mass adoption.This gene will attract more grassroots entrepreneurs to choose the solana ecosystem in this round, thus ushering in a hundred flowers blooming. It may be meme today, nft tomorrow, depin the day after tomorrow, and AI the day after tomorrow. But you must pay attention to the rhythm, and never rush in to provide liquidity after each narrative becomes popular.

5. Are you still optimistic about eth? (This is the most asked question)

Still optimistic. Although eth currently has some problems, its essence is good.

The biggest problem facing Ethereum now is that it has become a whale chain and a bureaucratic chain, and the participation of new users and grassroots entrepreneurs is too low.

This is very disadvantageous in a market dominated by emotions and attention. Especially before the official approval of ETF, when more of the funds are purchased on the market, this kind of disadvantage will be obvious, because from the perspective of capital utilization rate and wealth creation effect, the current eth is definitely not as good as Solana, so it is not It is recommended to put too much leverage on eth. But as a long-term investor, I am still very optimistic about the future development of eth. Although it lacks explosiveness, it is very stable.

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Finally, I would like to emphasize the issue of leverage. Recently, a friend was very uncomfortable because he added leverage on the top of the mountain. I have always emphasized that 20-25% plunges are very common in bull markets, so I strongly discourage high leverage. A leverage ratio of 2.5x is already the limit, and I even think 2x is enough.

I hope everyone will never turn investment into gambling and stay away from high leverage

🈲Stay away from the gambler mentality🈲

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