How to discover the next encryption bubble: some thoughts on technology and fundamentals

In the past year, if three words are used to describe the cryptocurrency market situation, it may be: uncertain.

Since the beginning of 2018, the cryptocurrency market has been in a downtrend, as if it does not see when it will bottom out. But soon, after the market entered 2019, it began to pick up quickly. The price of bitcoin was close to 14,000 US dollars. At this time, the bulls screamed proudly: "Look, I have already told you that bitcoin prices will It’s not good, and the short-selling pushes the bitcoin price below $10,000 again. At the time of this writing, according to Coinmarketcap data, the bitcoin price is about $8,179.32.

For many new investors who have not experienced the 2017 cryptocurrency market bubble, if you read this article carefully, there may be a little help, because I will tell you how to find the next time through technical and fundamental analysis. Encrypted currency market bubble.

Well, there is one special thing to note before the formal explanation, that is, we have a big assumption that the next wave of bubbles will definitely appear. Let's not say much, let's get to the point:

Technical analysis

If you trade in the cryptocurrency market, you will find it is completely different from the traditional investment/speculation market. The traditional market will allow you to retest the support level or retest the resistance level, and the market rules are relatively simple. However, in the cryptocurrency market, even if the support or resistance level is established, you may encounter the opposite market trend, and in all likelihood, the money in your account will be “before the target level you expect to reach”. Rushing out."

If you don't understand the above paragraph, you may feel that the cryptocurrency market is artificially manipulated.

For example, if we look at the trend of the past two months, you may feel that the market is relatively stable, but just as the storm is always full of calm, whenever the market stabilizes for a period of time, there will always be a large Up or down breaks (Stars Note: The reality is also true, the market downturn in late September and early October has caused Bitcoin prices to fall to the $8,000 range). Those who don't know the technology may say: "You are not talking nonsense, the market always rises or falls." But the charm of technology is that it can help you make the best market forecast, and you can still The price level is within the tolerance range and even profitable.

To make a long story short, the current bitcoin price is actually very sensitive, at least until the price is in the long-term stable, the price will fall sharply in a short period of time may cause a serious blow to those new traders. Of course, even if there is a slight increase now, it may not have any impact on the long-term trend.

So what we have to do is actually very simple: look at the point.

Fundamental analysis

In fact, we need to analyze several factors to determine whether the market will be bullish. To help with further analysis, it may be helpful to understand the bull market in 2013 and 2017.

In 2013, Wall Street began to be interested in Bitcoin, and many people gradually accepted the concept of cryptocurrency, thus stimulating the market to rise. Then in 2017, Ethereum launched a new cryptocurrency project financing method as a decentralized network: the initial token issuance (ICO), which opened the bull market of the year.

In this way, if the 2019/2020 bull market appears, there should be a similar "story". It is worth noting that bitcoin prices have actually started to rise slowly, but even so, it is not too late to enter. Here, let's take a look at the three fundamental elements that make up the next wave of bulls (bubble):

1. Bitcoin block rewards are halved + Ethereum 2.0

If you don't know what Bitcoin block rewards are halved and Ethereum 2.0 is up to now, you can search for the answer yourself. We won't spend too much time explaining this. According to the time disclosed previously, these two events are expected to be completed in the first quarter of 2020.

Of course, we assume that Bitcoin always has value, which means that halving the upcoming block reward will make Bitcoin more valuable. In addition, if the "European" of the Ethereum Proof of Entitlement (PoS) can be successfully completed and delivered on time, the price of Ethereum will naturally become higher and higher – although we have seen Ethereum hard forked many times Delay, it must not be too smooth to transfer from proof of work to proof of equity.

However, if these things finally happen, there is no doubt that the price of Bitcoin and Ethereum will definitely pick up slowly in the months before the arrival of the bull market. Therefore, we need to pay close attention to at least the upcoming hard fork of Istanbul.

2. Cryptographic currency acceptance and popularity

In fact, we've seen many companies pushing people to accept and use cryptocurrencies, including Facebook, Telegram and other social networks. Of course, they all face a lot of resistance.

The problem with Facebook's digital currency, Lirba, is the concentration of resources, which has quickly made them a target for regulators. On the other hand, bitcoin is decentralized, which is both its advantages and disadvantages, because decentralized traits are difficult to use on a large scale by ordinary people.

So why do those social media giants want to promote the popularity of cryptocurrencies? Very simple, because these social media networks already have a very wide audience and target users. Considering the development of the payment industry over the past two years, security, usability, and electronic channels have been greatly improved, so it is not difficult to imagine that cryptocurrencies will be integrated into instant messaging applications in the near future, and many people will be use.

3. Encryption funds and other stable currencies

There is now a very interesting value proposition: how do we model cryptocurrencies after the bond? A bond is a fixed-income investment that you can lend to an institution or company to earn interest. Similarly, by pleasing your cryptocurrency to some funds or companies, they will want you to pay interest. Of course, if you continue to hold the currency, or you can directly trade the cryptocurrency, you may get a better return, but if the mortgage cryptocurrency can get up to 10% (the actual number is different), the income is obviously more attractive. Therefore, you may choose to put your cryptocurrency in an institutional fund, at least to get a 0% gain in a private wallet.

The most creative of these is that some institutional funds will even let you HODL your own cryptocurrency instead of spending or selling. Seeing this kind of initiative will make you feel that this is a good signal because it shows that funds are increasingly being deposited in the market, which means that the market boom is getting bigger and bigger.

By the way, there is a lot of controversial stable currency USDT. Don't you know that the supply of USDT has now exceeded $4 billion, and its real market value is only over $2 billion? Have you ever thought about where the "extra money" flows?

Next wave of encryption bubble

Ok, after reading the list of reasons listed above, the discerning person has actually seen one thing: the current cryptocurrency price will not continue to rise forever. On the other hand, if you want to say that the cryptocurrency market will fall forever, it is also very stupid and short-sighted, because the cryptocurrency industry has so many innovations, and it is also evolving.

In the past few years, there have been many negative factors affecting the rise of cryptocurrency prices, such as various unreliable partnerships, imperfect development work, hard forks, and so on. The only thing that is reliable is to get more money into the cryptocurrency market and let people have the confidence to put their money on the cryptocurrency, but the market is still in a state of too cautious.

Future market conditions may be very interesting: bitcoin prices remain dominant, and altcoin prices are stable and may even be associated with major stock market indices. But at least, you need to research key developments in mainstream cryptocurrencies such as Ethereum and Bitcoin so that you can profit from the next wave of encryption bubbles and get out of the way before the risk comes. This article from the Medium, the original author: Hansel

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