Trade Bitcoin Assets

Yesterday the entire cryptocurrency market crashed, led by Bitcoin and Ethereum. As of this writing, Bitcoin is down $36,889 and Ethereum is down $2,620.

My first reaction to seeing this sharp decline was to look at the US stock market and gold. Of the three major US stocks, the Dow Jones fell 1.3%, the Nasdaq 2.72% and the S&P 500 1.89%. Gold However, the strong resistance and reliability were stronger.

It is true that cryptocurrencies are in contact with American commodities.

Actually, it's not the first time, but since November last year, the connection between the two has become stronger and clearer and more and more similar.

This relationship can be seen as an important turning point in the crypto industry.

When it comes to the concept of Bitcoin inheritance, people always adhere to two "strict criteria".

One is the phrase in Bitcoin's creator block. "Period 03/Jan/2009 Chancellor on the verge of a second bailout for the bank."

This quote made the front page of The Times of Great Britain that day. Satoshi Nakamoto uttered these phrases that year, which can be seen as a reminder of the importance of financial freedom and explained when building the blocks. In other words, the proclamation of Bitcoin is not strictly controlled by an algorithm, but is provided by a government as a fiat currency.

The second is the maximum circulation limit of 21 million bitcoins.

The two "strict procedures", especially the second, make everyone want to. Bitcoin will resemble gold as a weapon against inflation. In this case, it seems like a sacred place that should not be questioned in the world of cryptocurrency.

However, given the growth of this bull market, it is clear that the impact of Wall Street investments has shifted the strength of Bitcoin and Ethereum from investors to big business. average time.

The reason I talk about the short and medium term here is that in the long term, like 10 years, 20 years, or even 100 years, the bigger Bitcoin gets, the more obvious it is to prevent inflation. However, in the medium to long term, it performs better as a riskier asset than a safe-haven asset, and the most direct evidence is that its relationship with US commodities has strengthened.

The direct force influencing the differences between US commodities is US monetary policy and US fiscal policy. Because these relationships are strong and robust, since late last year when I introduced the short and medium term, the first thing I talked about was US monetary policy and financial policy. United. The pace and the atherosclerosis of the Fed's obligation and the rate hike?

By understanding these two rules, you can understand the short-term shortcomings of digital currencies, especially Bitcoin and Ethereum.

Reflecting on this, I remember the words quoted repeatedly by Chairman Mao Zedong in "On Dissent". The inconsistency of all things creates and changes, and to hold the fundamental principle of the development of things, one must hold the inconsistencies that are created in a modern way. and change.

Using this description for cryptocurrencies, one can understand that with the entry of large corporations and venture capitalists, significant conflicts affect Bitcoin in the short to medium term. The highs and lows have changed, and the heritage has changed accordingly.

Here I would like to point out that asset risk is often referred to as investors who dare to buy assets when they think macro laws will help them seek out risk.

Commodities are representing assets, and gold represents assets.

In this regard, I think people in the financial industry have always understood this very well, and like many of our circles are still legends.

It was around the last year that the news in the traditional financial world, whether it was securities or cheap assets, almost talked about cryptocurrency and talked about risky asset products. , and the word that it is anti-inflationary is rarely mentioned.

So if you're worried about the short to medium term trends in Bitcoin, and you're still watching it from a defensive rate hike, there may be significant differences and you need to pay attention to the impact on your risk. tool. Especially this year, he has been watching carefully what activity and music the Fed might show in response to inflation.