Viewpoint | The premise of halving the price of bitcoin is that there is no financial crisis and focus on crypto assets out of the circle

On March 3rd, Tao Rongqi, the founder of X-Order and partner of NGC Ventures, was invited to participate in the informal talks of Gyro Finance, and shared the theme of [halving, risk aversion and crypto market]. The following is a wonderful record. enjoy ~

Under the crisis of magic epidemic, Long Crypto, Long Gold, Long China

1. The biannual "Bitcoin minus half a year", this label makes everyone look forward to 2020, but the opening epidemic caught the world off guard, global risk aversion sentiment broke out, and gold soared. The beginning of 2020 is so magical. What opportunities and risks should we focus on this year?

Tao Rongqi: The answer in one sentence is: Long Crypto, Long Gold, Long China. This issue implies a big background, that is, the crypto market has become closer to global macroeconomic politics. We have always advised to pay attention to the macro economy, especially the impact of the economic cycle on the crypto market. From this perspective, some definite trends can be found.

For example: the global economy is still inevitably going down, and it is still uncertain when it bottoms out; the global central bank is still unavoidably continuously releasing water, and when it bottoms out indefinitely; digital currencies (including Bitcoin, sovereign digital currencies, business Digital currencies, etc.) are and are becoming part of the mainstream economy.

Combining macroeconomics, the risks and opportunities of the crypto market come from two aspects: greed and fear. A typical example is the shrinking of the gold and bitcoin markets due to the global stock market crash last week and its lack of liquidity. This is tricky, because according to the general understanding, when the risk aversion is high, and Bitcoin does not care, shouldn't gold rise as a safe-haven asset? On the one hand, the central bank is releasing water, and on the other hand, the entire market is short of water. My understanding is that the leverage ratio of the entire market is too high, so it affected the remaining assets during a major local crash.

Next, if U.S. stocks really crash this year and the global stock market also follows the crash, it depends on whether the leverage of the funds in the rest of the market is the power to leverage, or the strength of the funds brought about by the risk aversion. Historically, at the beginning of the 2008 financial crisis, gold fell with the market, so this may be the risk.

But in turn, if there are any assets that can bottom out and then lead the next round of global economic development, I think it is crypto assets and China.

Many people dare not imagine what will happen once the financial crisis arrives. For the unimaginable global Ponzi, the essential problem is that there is too much money and too little assets, and the reason for too few assets is that the market itself is too expensive. I firmly believe that crypto assets will bring the future of millions and even millions of orders of magnitude assets. Crypto assets are the financial answer for the next era.

Regarding the impact of the epidemic on China's global economy, it now seems that Xiu Fu is suing, and Fu Xi is relying on it. Now that Apple has moved factories back to China, and in 2020 when masks become hard currency, China as a world factory has far more opportunities than risks. As a strategic safe-haven asset, gold is still optimistic until the next round of economic upswing.

So: Long Crypto, Long Gold, Long China.

If there is no financial crisis before halving, you can expect halving

2. With the recent sluggish trend of bitcoin, the epidemic situation is superimposed, and the world is facing uncertainty, can we still have expectations for the "half price"? A shares are booming, crypto and U.S. stocks are mixed … If the crypto season is still not up this year, will it be more pessimistic?

Tao Rongqi: Following on from the previous answer, if the financial crisis did not come before the halving, then we can look forward to the halving, otherwise it will stop. The sign of the outbreak of the financial crisis can be reviewed in the financial crisis of 2008. Everyone is talking about the financial crisis.

Since last year, the influence of mining power on Bitcoin has become smaller and smaller. I think that after the halving, the mining power will completely fade out of the bitcoin pricing right competition, and Wall Street will become the real protagonist of crypto after halving.

3. Why has A-shares continued to strengthen recently?

Tao Rongqi: The background of the stronger A-shares is: more and more money globally, and less and less good. In addition to gold, which does not lay eggs, only A shares can drive the global economy forward. When the economy is bad, there are very few investable targets, and A shares are one of the few.

4. Is it too early to say that digital currency is a safe-haven asset?

Tao Rongqi: Gold's performance during the 2008 financial crisis had nothing to do with hedging. Financial crisis gold also fell. Hedging and not hedging also depends on market preference.

5. Is there a second type of crypto assets that can exceed btc in three to five years?

Tao Rongqi: There is a high probability that the stablecoin will exceed btc, with a small probability of eth. Although stablecoins are not large now, once libra appears, it may exceed them all at once, let alone digital currencies of various sovereign countries.

6. How will the Fed's rate cut affect the market?

Tao Rongqi: The Fed's rate cut will cause the market to further move towards short-term highs, temporarily recover blood, and a more dangerous crash.

Traditional financial giants and the crypto world are converging, focusing on the extent of crypto assets

7. What new opportunities and risks will Ethereum 2.0 convert to POS? Will the acquisition of Ethereum developer ConsenSys by JPMorgan Chase's blockchain division promote Ethereum's development? Can Ethereum tell a new story?

Tao Rongqi: The biggest opportunity for Ethereum to POS may be to improve the Dex experience. Combined with NFT, the direction of the Internet with built-in finance will make great strides forward. As for JPMorgan's acquisition of Consensys, in my opinion it is a signal: the traditional financial giants and the crypto world are stepping up their integration, and this form of integration will become a new financial carrier in the 2020s. I don't think Ethereum needs to tell a new story. The next thing to do is to wait for the natural development of finance in the Internet era.

8. Last year, various problems in the concept of the public chain led to the inability to continue. Funds were broken, "delivered to the community", and the public chain "in the second half". What are the key competitions, concepts, product design, or cooperation resources of traditional large companies?

Tao Rongqi: I think the end of the second half of the public chain has been decided last year. If the public chain can't be made ecological, why not cooperate with large companies / small countries and even serve them? This is the Matthew effect. There is no doubt that no one will recognize the concept of spelling, and the design of spelling products is not the focus. It is more important to see who is using it and, more importantly, who can serve it.

9. A few small circle concepts Defi, NFT, DEX, is there hope to go out in circle to let more people accept it in 2020? Recently a crypto art work on cryptovoxels sold 103 ETH, equivalent to 160,000 yuan.

Tao Rongqi: There is hope for the circle. Since 2019, NFT has been out of the circle through Nike, and Libra represents the out of the stablecoin. I think this direction will accelerate in 2020. NFT is not so hot, it is better to say that it just started. I think the word "out of the circle" is particularly good. I personally pay great attention to "out of circle". In all crypto assets and applications, the out-of-lap degree in the NFT direction is the best.

At the same time, NFT combines DEX and big data, and it can introduce new financial concepts. It is generally called "Social Money" overseas. For example, the bond issued by Ding Weidi is also the encryption of in-game assets, and the main issue asset in the future. I translate it as "self-finance." Since the concept of finance, Yao Qian mentioned before. I personally, very, very optimistic about this direction. Only in this direction can it be possible to realize the financial state of the Internet era and achieve millions and even billions of assets.

Industrial blockchain and public blockchain may end up in different directions

10. Libra and the central bank's digital currency were hot topics last year. Are there any expected landing opportunities this year? If it does, will it help blockchain concept stocks? Last year's official attention to the blockchain has caused a lot of market response. Will the # blockchain # tag attract more attention this year?

Tao Rongqi: I always think that the blockchain in China needs to be divided into two parts to interpret:

  1. Industrial blockchain, which represents data services;
  2. The financial blockchain represents technology finance based on distributed books.
The industrial blockchain and the corresponding data services, if last year was the Hype phase, this year may be the bottom phase.

Financial blockchain, distributed book-based technology finance, or opening up the financial and crypto markets, have always been my focus.

When it comes to finance, things get complicated. In this half year, I feel that the concept of "blockchain" is being attributed to the industrial blockchain in China. Although I think the development direction of the financial direction is greater, will it still be called "blockchain" in China? do not know. The domestic definition of the blockchain is that it needs to serve the real economy, which puts a hat on the blockchain. The domestic blockchain should be called "industrial blockchain data service", and it will be full of things in 2016-2017.

From this perspective, the concept of "blockchain" has been narrowed. Now when we talk about the issue of coins, it seems that it should not belong to the blockchain. When something becomes more and more "clean", it cannot be called "financial".

The funny thing is, what do you think is the application of "education field" of blockchain? ——It is to chain the result of CET 4.

11. In this case, how to treat the domestic "industrial blockchain data service", is there a feasible and sustainable business model?

Tao Rongqi: This is equivalent to endorsing the blockchain with the country, and then doing what the country has already done.

The information I received was at the end of last year. The situation at the end of last year was that industrial blockchain data service providers made money by taking orders. After taking the list, I want to make money for the annual maintenance fee. If there is a longer-term idea, it is money to make traffic, and what is this traffic? Traffic is the application that developers and developers will develop in the future.

What are developers and applications developed by developers? I think it is the combination of various defi, nft and internet that is already common in the crypto market. Of course, this is just a guess.

I think that the industrial blockchain and the current public chain will eventually achieve the same goal, but this inflection point needs to be promoted by important events, especially in China, which is likely to be promoted by regulation.

12. What are the expectations of the blockchain industry regulation at home and abroad this year? There have been several hearings on digital currencies in the United States recently. There seems to be no action in the country for the time being?

Tao Rongqi: In the supervision of crypto assets, the United States' direction is to compromise and formally coexist and become more and more formal. Typical examples are the three interaction results of EOS, Blockstack, Enigma and SEC. Domestic regulatory expectations are often accompanied by "chaotic clusters" in the market, which are close to a negative feedback automatic correction mechanism in the market.

There are two possible directions for domestic action, one is digital currency, and the other is the application of the securities market.

I attach more importance to the application of the securities market. After the chaos is eliminated, the regular army enters the market and promotes finance in the next era. From the content of Yao Qian's speech, it can be found that Yao Qian's research on blockchain has gradually shifted from the beginning of currency to a more comprehensive field of securities. In my opinion, currency is a special kind of security. Securities are the more common form of finance.