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Bitcoin may take over the DeFi frenzy and lead the next stage of the bull market.



BlockVC strategy research pointed out in "Grasping the "Structural Bull Market" under the Background of Monetary Easing" that under the background of global monetary easing and the continued weakening of the US dollar index, assets are rising, and it seems inevitable to push up the price of gold. In the past month, the international gold price broke through the previous high of 1923 points (November 2011), setting a new high in nearly ten years. BlockVC strategy research has repeatedly been optimistic that Bitcoin as "digital gold" will take over as a liquidity reservoir, and will have a good price performance in the future.

Following the Bitcoin daily volatility index BVOL (provided by BitMEX) for nearly 20 trading days from the end of June to the end of July, it gradually converged to near historical lows, and the price of Bitcoin immediately followed gold and broke through upwards. After Russia announced the registration of vaccines in August, the risk aversion sentiment in the market eased, coupled with the flight of profit from above, gold prices stepped back on the 30-day moving average on August 11, falling nearly 6% in a single day.

The digital currency market also "slumped" immediately after, and stabilized and recovered in the next few trading days. From a short-term perspective, Bitcoin price fluctuations in the past two weeks are greatly affected by gold, and the trend is highly correlated. Plotting the two prices on the same graph (the red line is gold), it is not difficult to find that under the investment logic of the long-term weakening of the US dollar, we have reason to believe that this synchronous trend will continue to exist in the future.

Bitcoin whales bought more than 122,500 BTC during last week's market crash: May 24 news, in the recent price adjustment, large Bitcoin holders seem to be actively buying Bitcoin. Anthony Pompliano from Morgan Glass Digital, an encryption investment agency, said that he analyzed Glassnode data and found that since the market crash last Wednesday, Bitcoin whales holding 10,000 to 100,000 BTC have purchased a total of 122,588 BTC. Bloomberg interviewed some crypto hedge funds and found that these funds also participated in the purchase, and they were actually bargain hunters, including London-based MVPQ Capital and ByteTree Asset Management and Singapore-based Three Arrows Capital (Three Arrows Capital). Kyle Davies, co-founder of Three Arrows Capital, said: "Every time we see a large amount of liquidation is an opportunity to buy, I would not be surprised if Bitcoin and Ethereum can retrace the entire decline within a week." (cointelegraph)[ 2021/5/24 22:37:01]

Two-Line Capital CEO Gundlach: The market is out of control, and Bitcoin is the "incarnation of a speculative bubble": Jeffrey Gundlach, CEO of Double-Line Capital and known as the "New Debt King", has recently changed his view on Bitcoin. Gundlach suddenly "turned fans to black" on Bitcoin, warning that the market is out of control and Bitcoin is "the embodiment of a speculative bubble." Regarding the recent violent fluctuations in the currency circle, Gundlach said: "Bitcoin and cryptocurrencies are 'typical representatives' of out-of-control speculation in the contemporary market. Cryptocurrencies cannot become speculative objects without the support of government funds. Some investors are just playing. These illegal funds. However, when the government keeps giving people excessive funds, they only feel that they are money in the players." He added: "For them, speculation is really like a gamble." [2021/ 5/17 22:11:09]

Image source: Tradingview

When the capital market is facing a test, people are willing to exchange credit currency into gold for hedging or resisting inflation. Gold also played a central role in physical trade, becoming a settlement tool for trade across ethnic languages. At present, the human community is at the cusp of the fourth digital economic revolution, and Bitcoin also takes on a more important role in hedging and settlement functions with its unique advantages. Compared with physical gold, "digital gold" Bitcoin has the characteristics of zero storage pressure, more refined value segmentation, and cross-regional value circulation. There is no doubt that Bitcoin has long been a powerful weapon against global credit expansion and is on a long-term upward price channel. Continuing the previous views of the BlockVC strategy, since Bitcoin broke through the downward channel, a bull market trend above the weekly level has gradually formed.

The Bitcoin WeChat index rose by 2.96% on a day-to-day basis: Jinse Finance reported that the WeChat index showed that on April 2, the blockchain search-ethexc index was 878802, a day-to-day increase of 2.74%; the Bitcoin search-ethexc index was 424182, a day-to-day increase of 2.96%; The Ethereum search-ethexc index was 30962, a day-to-day decrease of 18.33%. [2020/4/3]

However, despite the stable and powerful performance of Bitcoin in this round of rise, its market capitalization is still in a downward trend. A large amount of funds have re-entered other mainstream currencies and popular copycats that are in line with market concepts, driving the overall market value of the encryption world to increase by leaps and bounds.

The hype of the DeFi concept in the market and the wealth effect brought by small coins on the decentralized exchange Uniswap far exceed the expectations of "classical coin circles". The concept of DeFi is not new. It has been more than two years since it was proposed in 2018. It refers to "decentralized finance". The goal is to establish a multi-layered financial system based on blockchain technology and cryptocurrency. Re-create and improve the existing financial system. Total Value Locked (TVL) is an indicator to measure the gold-absorbing ability of the DeFi ecosystem. It refers to the total value of Ethereum deposited in a certain DeFi ecosystem. The TVL change curve in 2020 can be described as a roller coaster - the TVL of DeFi at the beginning of the year was 680 million US dollars, and it suddenly increased to 1.2 billion US dollars in the "bull market" market in February. After the 312 sharp drop, the market sentiment was greatly affected, and TVL had a cliff-like decline that was almost halved. But after that, it took less than three months for the market value to break through 3 billion U.S. dollars, the value of DeFi lockups increased by 4 times, and the total market value increased by about 10 times. At the same time, the number of active-ethexc addresses in the Ethereum wallet also doubled. Doubling. the

News | Steem has banned the account of hacker organization who threatened to release 9.11 files and asked for Bitcoin: According to CCN, the content-ethexc release open source blockchain platform Steem has banned hackers who threatened to publish the files of the "9.11" attack and demanded Bitcoin ransom Organize TheDarkOverlord account. It is reported that the hacker group used Steem to post its announcements and demands, which had previously been banned by Twitter. [2019/1/9]

Image source: ConsenSys

Everyone who takes the initiative in the DeFi wave is enjoying the frenzy and volatility brought by the market. Thinking carefully about this round of frenzy and the 2017 ICO bull market is somewhat similar. DeFi concept projects have sprung up like mushrooms, the scarcity of the primary market quota, and the brilliant performance of the secondary market after logging in to the exchange, attracting a steady stream of investors to buy ETH and invest in DeFi projects to "lock in" ——These exuberant speculative demands constitute a strong buying of ETH, making ETH the only leader in this round of market. Due to the increase in the number of people engaged in small currency speculation on Uniswap and other decentralized exchanges, the gas fee paid for Ethereum transfers has repeatedly hit new highs, even passing through the ICO event of the year. Perhaps seeing the growth space and dividends that DeFi brings to ETH, many public chain projects that benchmark against ETH are eager to announce their entry into DeFi after a long period of silence. EOS released a new DeFi project "DeFis", which made the price trend of EOS, which was mediocre in the secondary market, suddenly become stronger. There are also many old-fashioned projects such as TRX and ADA that have made similar moves. Based on their technical advantages compared with Ethereum, they have waved their flags and announced their embrace of DeFi.

Bitcoin long-term bearish view shakes or supports sudden rise in Bitcoin price: Jim Cramer, a well-known CNBC financial analyst and a firm bearish bear on cryptocurrency, said that banks are facing pressure from encrypted currency assets. The wavering of Cramer's long-term bearish view may be one of the reasons for the sudden rise in the price of Bitcoin in the early morning of the 19th. [2018/6/19]

Data source:

The development of the DeFi investment ecology is too rapid, and a huge bubble will inevitably be generated in the process. But for ordinary investors, the most convenient way to participate in DeFi is to hold (long) ETH and other DeFi concept coins that can be traded on centralized exchanges. As the price of ETH continued to rise, it broke through the short-term previous high of 415 US dollars on August 13, rushed up to 445 US dollars and then fell back in shock. At present, the open interest of various contract platforms has reached a high level again, and the recent increase in trading volume and open interest on okex has even exceeded the level around 312. Whenever the position is high, it is often accompanied by short-term adjustments and reshuffles. Therefore, short-term chasing and long trading behaviors appear to be not cost-effective. In addition, the price bubble of DeFi projects may burst. Beware of a series of black swan events (such as code audits, hacker attacks, coin theft, etc.) that will hit the DeFi concept sector and cause ETH to fall.

Data source: Skew

Data source: OKEX

Affected by the blood-sucking effect of ETH skyrocketing brought about by DeFi, the mainstream currencies that had a large increase in the early stage are still mainly adjusted by shocks. However, judging from the current market sentiment and the momentum of small and medium market value currencies, there is still room for speculation. Once the trend starts, it will not stop easily. During the period of leading shocks and sideways trading, it may be a feasible choice to look for sub-mainstream and small and medium-sized market capitalization currencies that may be related to the concept of DeFi on the fundamentals.

In recent rounds of the market, Bitcoin's final accelerated upward rush often declares the end of the current round of market. At present, Bitcoin is in a healthy trend, and it is possible to choose to test the previous high upwards. In the long run, its gold-like attribute status and investment logic under a weak dollar support the judgment that Bitcoin will maintain a long-term upward trend. The DeFi frenzy seems to have entered its second half, handing the baton of the bull market to Bitcoin.


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