Crazy bull market is coming? How to ride it?

The development of the cryptocurrency market is driven by emotions and stories. Investors can provide liquidity on protocols like Curve and others to earn YFI and get annual interest rates of up to 1000%. The competition between next-generation DEX, stablecoins, modular blockchains, and single-chip blockchains, as well as the integration of artificial intelligence and cryptocurrency, may bring new ways to get rich. Risk management is important, so it’s best to avoid trading when tired, busy, or in a hurry. You can use a hot wallet for degenerate purchases and entertainment.

Original article title: Navigating the Crazy Bull Market to Come

Original article author: IGNAS | DEFI RESEARCH

Original article source: Substack

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Translation: Lynn

The highest amount I received in an airdrop was $120,000, which is a crazy number. But I hoped it would reach $500,000, so I didn’t sell it.

Oh, silly me. When the market seemed hopeless to rise again, I ended up selling it at a lower price.

But the craziest part wasn’t the amount, it was how I got that money.

Any tips for creating images using ChatGPT + DALL-E 3?

After the frenzy of the previous bull market, my memory is a bit fuzzy (like being drunk for two years and now experiencing a hangover). I remember stumbling upon Nour Haridy, who was building a new stablecoin called DOLA. I knew it would be a “face-melter” because Nour had the public support of the “DeFi God” Andre Cronje from the previous round.

Back then, fair distribution was the new “thing.” So Nour decided to do it through… a Google Form survey. Users just had to share their Ethereum address and explain how they could help the protocol grow. I made some promises, but unfortunately, I couldn’t fully deliver. Sorry, Nour.

INV was definitely the most profitable airdrop in DeFi history, but it also shows how crazy bull markets can be. For more insane stories, check out the replies to my tweets below.

This blog post aims to help everyone have the right mindset and be prepared for what’s coming. Be prepared because things might get even crazier than you imagine in the near future. I also invite you to check out the new position manager at LianGuaincakeswap below!

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Don’t rush: Is this the beginning of a new bull market?

Interest rates are at the highest level in decades, people struggle to pay bills due to high inflation, two wars are still ongoing, and the S&P 500 has dropped 9% from its all-time high. As I write this article, Google’s stock price has also dropped by 10%.

Despite the bearish macro environment, BTC has held steady around the $34,000 mark for over a week. You’ve probably read Wall St Cheat Sheet’s “Market Cycle Psychology” a hundred times by now, so it seems like we’re currently experiencing an “unbelievable” rebound.

Over four months ago, Delphi Digital shared an eye-opening market research report titled “Catalysts Brewing – Narratives Will Drive Fundamentals”.

The report is paid, but I’ve written a summary below. The summary explains how narratives develop and identifies the catalysts that contribute to their emergence.

Delphi identified three major heavyweight narratives: the Fed liquidity cycle, war, and new government policies. They explained how each scenario impacts cryptocurrencies in the short and long term, and will continue to do so. The accuracy of this article has been prophetic, as many negative events are now transforming into positive ones. Since then:

• The US Securities and Exchange Commission lost its lawsuit against Grayscale (and XRP), paving the way for Grayscale’s BTC spot ETF and putting Gary’s position at the SEC in jeopardy. Further defeats against companies like Binance and Coinbase will (hopefully) continue to accumulate, injecting more fuel into the bull market.

• China has started combating deflation by increasing its budget by $137 billion. It’s not a “rocket launcher,” but it’s a start. Cryptocurrencies have historically benefited from China’s driven liquidity expansion.

• BTC spot ETFs from companies like Blackrock are almost a done deal. Hopefully. This will continue to bring much-needed liquidity to the cryptocurrency space.

When the Fed will start cutting rates is still unclear, but the worst of the rate hikes seems to be behind us. Arthur Hayes believes that with the end of the fiat era and the rise of artificial intelligence, cryptocurrencies will experience a “double stroke of luck”.

With the evolution of macro catalysts, they align perfectly with the Bitcoin halving in April 2024. The cyclical patterns of the macro cycle are the reason why BTC is following a similar trajectory as in the past.

So, is this the start of a bull market? I believe it is.

But even if I’m wrong, I can wait out any downturns and continue learning and researching cryptocurrencies to be prepared for the ultimate bull market. I can’t sit on the sidelines and miss out on the crazy bull run.

Bull markets are slower (crazier) than you think

Inverse finance ($INV) is just one example of how crazy the previous bull market was. However, the launch of INV started with the YFI token.

The yEarn yield aggregator was initiated by Andre Cronje himself, requiring what we know as “governance”: maintenance and decision-making to set fees and rules, among other things.

So, “mainly because we are lazy and don’t want to do it,” they released YFI, “a completely worthless token with 0 supply.”

“We reiterate again, it has no financial value. No pre-mine, no sale, you cannot buy it, no, it won’t appear on Uniswap, no, there won’t be an auction. We have nothing.” – YFI release blog post.

Anyone can provide liquidity on Curve and other protocols (AFAIK) and get YFI “for free”. I did provide liquidity. To my surprise, I earned a 1k% annual interest rate!

I couldn’t figure out how a seemingly “worthless” token could trade at thousands of dollars per token. Crypto Twitter is flooded with speculation about the YFI price, ranging from $0 to $1 million. But YFI is a completely new concept, and our traditional investment framework doesn’t apply. YFI completely changes our understanding of token issuance.

In the end, I sold my YFI at around $3,000 per token, and a few months later, it skyrocketed to $90,000. I missed out on a potential 2900% gain. I wasn’t ready for the craziness of the bull market.

Since then, I’ve kept an open mind about the most perplexing things. These things have the potential to either fade away or become the new norm, completely changing the industry. DeFi and NFTs are prime examples of this, as they have given rise to a new generation of “rich kids” just like early BTC and ETH buyers did before.

YFI is just one of the seven tokens that changed my understanding of token economics and dynamics. The other six are AMPL, OHM, COMP, CRV, NXM, and SNX.

I shared my reasons in a previous blog post (note that the blog posts from 30 days ago are now behind a paywall, but you can find a summary in this Twitter thread).

But behind them all, there are crazy stories and valuable lessons. Olympus DAO was a Ponzi scheme that boasted four-digit annual interest rates as long as nobody sold (3.3), inflating OHM’s market cap to $4.3 billion! In comparison, that’s higher than AVAX’s current market cap.

Everything was great until the Ponzi scheme collapsed. I had a friend who made crazy wealth from Olympus, but he held onto it and eventually joined the nine-to-five club.

Olympus post-traumatic stress disorder is the reason I dislike the FriendTech 3.3 game. Don’t naively believe in new marketing methods (Olympus should have been DeFi 2.0). Sell at least a portion of profits on the way up.

When the roar of the bull market returns, you will see bullish memos, WAGMI chants, and promises of bigger Ponzi schemes making a comeback, along with stories of some fallen ones getting rich. In short, we will become reckless, and the bull market will be even crazier than you imagine.

We need caution, but not too much caution, to avoid missing a “once in a lifetime” opportunity. We need to adjust our mindset while staying calm. It’s easier said than done.

How to navigate the various narratives in the future crazy bull market

Cryptocurrencies always have bull markets. Even in this bear market, we have seen PEPE rise to fame, hamsters taking over CT, and the recent rise of SocialFi.

How can we spot opportunities early in the new narrative? I shared why narratives matter and how they are formed in the aforementioned Delphi article.

Narratives are crucial because they help us understand the complex, daunting, and seemingly random world we live in. In the absence of clear communication, we rely on shared knowledge, common sense, and social norms to make decisions. These decisions often depend on prominent cues known as Schelling points.

“Two people are faced with a series of numbers [2, 5, 9, 25, 69, 73, 82, 96, 100, 126, 150]. If they independently choose the same number, they will be rewarded. If both are mathematicians, they are likely to choose 2 – the unique even prime number. Non-mathematicians might choose 100 – a number not more unique to mathematicians than the other two perfect squares. Illiterates might come to an agreement due to the special symmetry of 69 – for another reason, those more interested in the erotic than the mathematical aspects of the number might do so as well.” – Delphi numbers.

Crypto degens are likely to converge on 69, because, well, it’s a meme. Do you think BTC ATH being $69,000 is a coincidence?

In other words, diversity of decision-making is crucial; it drives market development. People are guided by emotions and stories, while the market thrives through collective consensus and flourishing narratives. These narratives help us understand seemingly random events happening around us.

PEPE has successfully captured the imagination of the bored but profit-hungry cryptocurrency community. In a market where almost nothing else is happening, PEPE’s engaging story sets it apart. Compared to competitors like Doge and Shiba Inu, PEPE has a smaller market value, which actually helps rally people around it.

But bear markets are tricky because opportunities are rare and often short-lived, much like poor hamsters and $HAMS. Bull markets, on the other hand, have multiple narratives happening simultaneously, so there are plenty of opportunities. And the level of craziness is beyond your imagination. I know I’m repeating myself, but that’s the reality!

My humble advice is to keep an open mind, try out the new things that confuse you the most, research them, and never sell 100% of shiny new tokens all at once. Even tokens that receive criticism or negative opinions are worth exploring. New ideas that challenge the status quo often make the older generation feel insecure.

This is exactly what Bitcoin did to TradFi and what Ordinals did to Bitcoin maximalists. The criticism Bitcoin maximalists have towards Ordinals is one of the reasons why I am optimistic about it. This shows that even they recognize its importance and believe it’s worth paying attention to.

I believe the cryptocurrency market will reward those who are quick to discover emerging narratives and manage to maintain an open mindset to adapt to new market dynamics. Even #realyield tokens, which should be driven by fundamentals, eventually become another sellable narrative. In fact, I checked the performance of #realyield tokens before and after the emergence (and decline) of this narrative, just to confirm this point.

The Narrative of Future Bull Markets

In my previous blog post about the lessons we can learn from past bear markets, I mentioned that narratives are created through a combination of new technological innovations and engaging stories.

The shiny new things that can “print money” are my top choice.

One of them is Bitcoin DeFi, which includes Ordinals, Stacks, and now BitVM, aiming to enhance the capabilities of Bitcoin smart contracts without forking. I will share a dedicated blog post about it in the future because I’m still pondering on this issue.

However, due to 1) technological innovation and 2) the ability to mint currency (tokens), I believe there are still some tokens that can explode in a bull market.

• Liquidity reboot tokens. For more information, please refer to my previous blog post or this free theme.

• The integration of artificial intelligence and cryptocurrencies. Arthur Hayes promoted Filecoin (FIL) tokens for the need of decentralized storage, but Arweave (AR) or newer tokens can also shine when the timing is right (both tokens have been underperforming). With the development of artificial intelligence and other technologies, machine-to-machine microtransactions can also make a comeback.

• The battle between modular blockchains and monolithic blockchains. Ethereum and Cosmos are typical representatives of modular blockchains, although they have different visions of implementation. Solana is leading the narrative of monolithic L1, and time will prove which approach will dominate this decade.

• The next generation of DEX: I am closely watching projects that have recently raised funds from top venture capital firms. A significant portion of newly fundraised DeFi protocols are DEX. It’s not surprising since speculation is one of the main purposes of cryptocurrencies. As trading volumes rise during a bull market, Dexes and their tokens will also increase in value. Here are the top five new Dexes you should try.

• The next generation of DeFi stablecoins: The collapse of UST is definitely not the last attempt to solve the trilemma of stablecoins. It is said that Liquity V2 will achieve this, and Frax v3 and DAI will profit from RWA to scale up. Ethena offers a different (although not decentralized) approach to scalability, and I expect new patterns to constantly provide new paths to wealth.

However, in the typical cryptocurrency “fuck you” mode, a new term is likely to emerge that could surpass all of the above. This is like the sudden appearance of FriendTech and SocialFi.

This is great!

Those protocols that can create new concepts, and those that can accept new concepts early on, will be the winners of the next bull market.

Al Ries and Jack Trout wrote about the “law of leadership” in their book “22 Immutable Laws of Marketing”. According to this law, it is much easier to establish oneself as the first in the minds of others than to convince them that your product is better than the pioneers.

All these SocialFi forked products are marketing themselves as better “friend technologies”, they are just helping FT become the leader in this category. I wrote that for a SocialFi fork to succeed, it should create its own category, such as a trading or mini-DAO hub.

Remember, when a new narrative emerges, it is usually wiser to bet on the original protocol rather than the fork. There are a few exceptions, like LianGuaincakeswap and Velodrome, but most forked protocols promise you heaven and only send you straight to hell (rug pulls, token zeroing, or exploitation).

Celestia protocol is a good example, as it firmly embraces another marketing law mentioned in the book – the “category law”. Celestia is not the first protocol to jump into modular blockchain narratives, but they don’t focus on the “execution layer” like many L2s today, they focus on the data availability layer. How many DA solutions do you know? (And Avail, LOL).

Easier said than done. Some forks perform well in the short term, so completely abandoning them in the new metaverse could mean missing out on short-term opportunities.

One more thing

Everyone’s experience and lessons are different. That’s why there is a saying in the cryptocurrency field: you need three cycles to “succeed” in cryptocurrency: one for learning, one for making money, and one for creating generational wealth.

No matter how crazy the market gets, make sure it doesn’t wipe you out. You can gain 10%, 20%, or even 50% of net assets on a protocol, but you can’t recover a loss of 100% of your portfolio on a bet.

Cryptocurrency is full of what Nassim Taleb calls “fat-tailed” distribution events. These extreme events happen frequently, but we have no ability to predict them. Companies like FTX, Celsius, Terra were major players in the last bull market, but now their stories are chilling.

Therefore, being prepared for the future bull market also means being prepared for the worst-case scenario. Risk management sounds boring until you start losing money. In terms of dollars, my biggest loss was in the Osmosis OSMO/UST pool when Terra collapsed. Due to a two-week unlocking period, I couldn’t remove my LP, so since then, I no longer time-lock my stablecoins.

I also upgraded my system, just in case. I avoid trading when tired, busy, or in a hurry, and even add extra steps to my trades (a hardware wallet is a must, or consider using a multi-signature wallet). I choose the location and time to execute trades, so it’s never in public places but rather at a quiet spot at home.

But more importantly, I have a hot wallet for degenerate purchases and entertainment because sometimes the itch of FOMO is hard to resist.

For detailed information on how to stay safe in DeFi, check out my blog post below.

Therefore, even if the market becomes slower and crazier than expected, it should not become an excuse for us to become crazy and sluggish ourselves. Learn, prepare, and enjoy!

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