Source: Talking about Li and other things
Ethereum has been falling from around $4,100 in December last year to around $1,700 in March this year. In just over three months, the price of Ethereum, the king of altcoins, has fallen by about 59%. During this process, many people who were originally optimistic about Ethereum gradually lost their patience and became more and more disappointed and pessimistic...
But as ETH rebounded to $2,000 yesterday (March 19), it seemed that some people saw hope again. Many partners who were trapped looked at Ethereum at $2,000 with desire and excitement in their eyes, and told each other about it.
1. Is ETH going to become strong again?
As for whether ETH can really stand firm this time, I don’t know. Because ETH is still in a downward trend, let’s focus on a few aspects:
The first is the technical level. Let’s see if it can recover to around 2,200 this month (March). If it can successfully recover and stabilize the 2,200 level, then maybe we will have a chance to see a higher level in the next step. Otherwise, we should continue to do what we should do. In addition, it is said that analysts at Standard Chartered Bank have lowered the bank’s target price forecast for ETH in 2025 from the original $10,000 to $4,000.
The second is the news level, such as the progress of Pectra upgrades, the progress of ETF approval for staking, institutional adoption rates (such as continued accumulation of WLFI, opportunities for RWA applications), some positive or negative impacts of the Ethereum Foundation and Vitalik personally, and so on.
The third is the data level, such as the inflow/outflow of ETF funds, the activity on the Ethereum chain, the changes in the supply held by the top addresses of non-exchanges, etc.
As for the reasons for the market rise this time, we will not go into details here. Many reasons have been summarized on the Internet. For example, the macro reasons are mainly the signals released by the Federal Reserve early this morning (March 20, Beijing time), that is, the interest rate will remain unchanged (in line with expectations), but the speed of QT (Quantitative Tightening) will be slowed down, which is seen by the market as a positive signal.
To put it simply, the fact that the Federal Reserve's interest rate remained unchanged at 4.25%-4.50% had long been digested by the market, but the balance sheet reduction was beyond the original expectations, which also reignited some confidence in the market and gave the market some motivation or reason to rise.
So, can Ethereum continue to buy on dips now?
The current price of ETH is equivalent to the level in October 2023. Therefore, many people may tell you that now is a good time to buy on dips, because Ethereum has fallen 60% from its high of $4,100, but you have to think about one more thing. If (here is just an assumption) ETH drops from -60% to -60%, can you accept it? If you can accept or bear this possible risk, then you can buy it at any time now.
Since it is buying on dips, the so-called "low" may have different definitions for different people. What is your definition?
Many people think that the current Ethereum price of $2,000 is low because it is anchored at a price of $4,100. However, if you anchor Ethereum to a minimum price of $800 in 2022, the conclusion may be completely different.
The same principle actually applies to selling on rallies. If you are anchoring on the fact that Ethereum will reach $10,000 sooner or later, then if you are currently holding $2,000 worth of Ethereum, or are stuck with a $3,000 cost of Ethereum, what is there to be pessimistic about?
Therefore, it is actually meaningless to ask others directly such questions (Should I buy now? Should I sell now?). If you cannot find your own anchor and you cannot strictly control your position (position management + risk management), then all your questions may be in vain, and others will not be able to give you the answers or results you need.
Anyway, as far as I am concerned, I always believe that as ordinary people, we must form our own strategies or methodologies when investing in a field, such as:
- Even though I am optimistic about Bitcoin in the long term and have always been adhering to the coin-based strategy, I will still choose to make necessary profit-taking during the bull market (i.e. sell part of the position in batches) in order to optimize capital efficiency as much as possible and increase my long-term BTC reserves.
- Although from a technical or market perspective, in terms of trading operations, I have every opportunity to quickly increase my profits by increasing leverage, but I still chose the slowest way of spot trading (just hoarding coins).
- Compared to watching the market for more than an hour every day, I prefer to take a quick look at the market for 10 minutes every week, and then spend the rest of my time and energy on things I like to do more, rather than exhausting myself with frequent trading or getting caught up in trading.
- Always stay in this field and always have chips to stay at the table. It is easier to succeed than leaving all the chips on the table at once to bet on the size. Only those who persevere to the end can get the results with a greater probability.
- Don’t let yourself fall into extreme survivorship bias. We always hear about people who got rich overnight, but rarely hear about the thousands of people who went bankrupt trying to do the same thing.
- In fact, when it comes to investing, most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years. If you can also reasonably customize a ten-year plan and insist on executing it in stages, then I believe you will definitely outperform most people.
2. Trump urges the Fed to cut interest rates
We mentioned QT above. If we look back at history, we can find that since the Federal Reserve launched QT in 2022, it has withdrawn tens of billions of dollars from the market every month. Now (from April 1), the scale of balance sheet reduction will be reduced from 25 billion US dollars to 5 billion US dollars. From a certain perspective, this means that the Federal Reserve's monthly withdrawal volume has dropped by four-fifths, which is equivalent to injecting some liquidity into the market again (if the interest rate cut is compared to a strong medicine, then this QT can be regarded as a tonic).
Another interesting thing happened today (March 20). Trump sent a tweet on Truth Social (a Twitter-like social platform under the Trump Media Technology Group) urging a rate cut. He believes that with the adjustment of tariff policies, the US economy will need lower interest rates to adapt to the changes. As shown in the figure below.
As for Trump's interest rate cut and the possible impact of the Fed's interest rate cut on the crypto market, we have already sorted out and introduced it in previous articles (such as related articles on March 16, March 12, March 11, etc.), so we will not repeat them here. Those who are interested can look back at the historical articles of Huali Huawai.
3. Let’s continue to talk about investment style
Next, we will continue to talk about the issue of investment style based on the previous article (March 17):
A few days ago, I saw a friend leave a message in the background asking: Can I still get UNI?
When I saw this message, my first reaction was to copy the reply I had given to the same question a few days ago and reply to this friend with my own opinion. But I found something very interesting. I had already replied to the friend who asked the above question. Then I continued to check the friend’s historical message records and found that he had repeatedly asked me about UNI 8 times in the past six months.
It can be clearly seen that this guy has probably been trapped by UNI for a long time, and he may have been a little pessimistic in the past six months. It is estimated that in addition to leaving a message on Hualihuawai, he may also leave messages under many other bloggers to ask the same question, but he never gets the result he wants.
To be honest, if you encounter a problem (loss) and instead of summarizing, reflecting and reviewing it yourself, you try to seek help from others (strangers) everywhere, hoping that others can give you a perfect result and rely on others to directly change your destiny, this is actually very difficult.
Everyone is chasing money and likes to chase money, but some people seem to find it difficult to understand a basic truth or logic, which is: chasing money is not the most important thing. What is important is to develop some (or several) money-making habits that suit you.
Many people only think about making a small profit or making quick money, and then they hope to build this goal on the help of others (such as some KOLs, bloggers, etc.). In fact, what others do and what you should do are two completely different concepts. We have mentioned this issue many times in previous articles. For example, different people have very different backgrounds, experiences, and risk tolerance, and everyone's thinking model, knowledge and experience, observation angle, and interest demands are also different.
Other people’s investment methods may not be suitable for you. The best way should be: to learn and understand other people’s investment ideas or logic, and then to draw inferences from their experience based on your own situation, and then to form a set of investment methodology or investment system that suits you.
In this process, you should avoid having high aspirations but low skills. For example, if you want to be ahead in the field of encryption that you are interested in, you need to continue learning (learning + notes + thinking) during the investment process. Learning can be achieved through many ways or channels, such as:
- Some people like to follow a bunch of bloggers on Twitter and read various news every day.
- Some people like to join various chat groups and then check various messages every day.
- Some people like to leave messages everywhere and ask others all kinds of questions.
- Some people like to use ChatGPT directly to get one or several answers.
- etc……
Regarding how to learn effectively, I remember that I have sorted out some of my personal experiences or methods in previous articles of Hualihuawai. We will not go into details here. Here I would like to remind you of one important point: any information must be checked and verified as necessary, and do not trust it casually.
The purpose of investment is to make more money, but you must learn to make your money work for you, rather than making yourself a slave to money. In any investment field, no one will take you to get rich for no reason, and the money in the market will not just sit there waiting for you to pick the fruits. We must pursue the gameplay that suits us and is right for us, whether it is spot, contract, airdrop, new listing, arbitrage... or any other type of gameplay, you can try it, but you must think clearly during the participation process: In a PvP game, how can you (or do you have any unique method) make money from other people's pockets?
The so-called unique methods here can be divided into two types:
One is a unique strategy (only a few people have it, but most people don't). This uniqueness is mainly reflected in its scarcity and leading nature. For example, you have developed a set of indicator systems, and you can accurately judge the market trend with a high probability through your own indicators, and use this to get profits one step ahead of others. Another example is that you can get some differentiated information earlier than others, you can filter out effective information from massive amounts of information faster than others, or you have a lot of traffic that can be used to lead or shout orders, etc.
One is a universal strategy (most people have it, but only a few can execute it). This uniqueness is mainly reflected in the psychological and cognitive lead. For example, the old leeks earnestly tell you that as long as you invest in the big cake at a low level and hold it, you will have good returns if you wait patiently, but you will still go all in on various cottages without hesitation, or directly exchange the big cake you originally bought for various cottages, because you think that the cottages will have a greater increase and make money faster.
In short, many times, after seeing the brilliance of others, some people always want to directly possess the brilliance of others, while ignoring their true selves. In any investment field, it is not enough to just do transactions (for example, you buy whatever others ask you to buy, or you buy whatever you hear is popular), we need to learn to create and form our own unique methods. For ordinary people, it is difficult for most people to succeed casually after entering a new field. The first few attempts may fail, but failure often means more experience than others. How to make good use of your own experience (combined with some of the methods of others to draw inferences from one example) to establish your own investment method is the correct way to accumulate wealth.
That’s all for today. The sources of the images/data cited in the text have been added to Notion. The above content is only personal opinion and analysis, and is only for learning records and communication purposes, and does not constitute any investment advice.
