Shenyu: There may be no "copycat season" in this bull market

Original author: blocktempo, original source: BlockTempo

During the Hong Kong Web3 Carnival, Shenyu shared how the halving pattern will affect the market. Interestingly, he also shared his current state of mind in investing.

The altcoin season may not come

Currently, Bitcoin's daily emission is about 60 million to 70 million US dollars. After the halving, the block reward will be directly reduced by half. In this regard, Dongqu asked Shenyu about his views on the altcoin market after the Bitcoin halving this time, and how much will the increase and expectations be?

There is a high probability that there will be no "copycat season" this time, because the current players in the market are different from the previous players. From the perspective of miners, after the Bitcoin spot ETF was passed on January 10, risk hedging was carried out several months in advance to cope with the risk of Bitcoin halving. In addition, we have seen that many listed companies have used the good news of the ETF's passage to raise a large amount of legal currency funds.

Some mining companies have moved their mines to South America and Africa, where costs are lower, which reduces their sensitivity to costs and allows them to maintain a gross profit margin of about 10% to 20% even with the previous generation of mining machines. Therefore, even in the case of Bitcoin halving, the economic impact on these miners is relatively small, especially considering that the price of Bitcoin has risen before the halving.

For investors, especially those who invest in altcoins, this cycle is characterized by the flow of funds into Bitcoin mainly through channels such as ETFs. As for when these funds will flow to other cryptocurrencies, we are still observing.

In May last year, Shenyu once assessed that it was in the "early stage of the bull market", the absolute bottom of the bear market had passed, and the cryptocurrency industry was in a state of looking for new narrative logic and development. So what is the current stage for the current cycle?

I think it is likely that in the middle of the bull market, the market has begun to pick up and has found a new narrative logic, but it is not yet in a very high leverage and FOMO state.

Shenyu also reminds readers that since the market is a dynamic, multi-party game complex system, relying only on a single indicator or historical data to predict the market top is often not suitable for the current situation.

He suggested that the best practice is to continue to observe market developments and rebalance and reallocate assets when a certain stage is reached. This approach can help keep a stable mentality when the market falls rapidly or enters a bear market, and may increase their absolute rate of return.

The necessity of Bitcoin ecosystem expansion

In the review at the end of 2023, Shenyu once said that he was slightly surprised by the development of the Bitcoin ecosystem, which may be "unnecessary" for many Bitcoin "valueists". Judging from the current situation, it is not just Layer2, Side chain, Rollups, NFT... etc. The BTC ecosystem can now be said to be in full bloom, and the funds invested by users to participate are also quite amazing. Shenyu shared his views on the current Bitcoin ecosystem.

The current Bitcoin system can be divided into two parts. First of all, the Bitcoin main chain is mainly used as a store of value, and it is difficult to make major updates or iterations. Its core function is to ensure decentralization and relative stability.

On this basis, many innovative attempts that gradually emerge from the bottom are also underway. In the past year or so, we have also seen many interesting attempts that have emerged from the bottom up. In the end, everyone found that it is still difficult to innovate on the first layer of Bitcoin, and finally had to choose a second layer or a side chain to develop.

In addition, although technologies such as the Lightning Network lack bottom-up application scenarios, the recent economic incentives have solved this problem to a certain extent, attracting a large number of real users to try in the BTC ecosystem, which is a gratifying progress. At the same time, we are also closely observing the development trends of these second-layer and sidechain technologies, which are still in the early stages.

Now it is such a situation: With the sedimentation of a large number of assets on Bitcoin, these assets have an urgent need to obtain income and interest on Ethereum. In the past, these needs could not be met for a long time. These scenarios that suddenly emerged, everyone will test and try them out.

What is the final state of the Bitcoin ecosystem? It is not so obvious now, but these attempts are good. We need to try and finally find a path.

Talking about the Bitcoin ecosystem, Shenyu also shared what challenges he is facing now. He believes that although it is in the early stages, the ecosystem is moving in an optimistic direction.

The early views of some large companies and Bitcoin Core on the Bitcoin ecosystem, I think, show a positive trend. Even if some members of the Core team may not like the emerging changes, they cannot stop these developments, which is the charm of decentralized networks. Such networks naturally give rise to many market demands and innovative ways of playing, even if these innovations may seem clumsy in the early days.

Just like many things that emerged on Ethereum in the early days, it was also a mess and full of various problems, but in the end there were indeed successful cases. The same is true for Bitcoin. We need to observe more and give it enough time and patience to develop, and some revolutionary new developments should appear. At present, we are still in the early stages of this process.

Last December, Bitcoin Core developer Luke Dashjr posted a post on X, saying that the inscription was actually a spam attack on the Bitcoin network, and hoped to fix it before the latest version in 2024. Therefore, it became one of the main factors for the plunge of $ORDI at the time, and the dynamic zone also asked Shenyu for his insights.

The Bitcoin ecosystem is a three-party game: core developers develop code and submit proposals; miners use computing power to vote to decide whether to support and implement these proposals; and finally users vote.

This structure ensures the decentralized nature of the system, meaning that even the Core Team cannot unilaterally reject a feature or new idea. This decentralization is a major advantage of Bitcoin over other tokens or chains. In its current state, it is difficult for a single entity to determine the future direction of any new development that occurs spontaneously on the chain.

The current situation of competition in the custody business and the introduction of DeFi

With the maturity of the cryptocurrency market, including the launch of Wall Street ETFs and the gradual compliance of exchanges, traditional banks and custodians have entered the cryptocurrency field. What does this mean for Cobo, which has been committed to wallet custody since 2017?

First of all, this is a good thing. For a long time in history, new users in the crypto industry, especially novice users, have been troubled by the question "I know that cryptocurrency may have value and a future, but after purchasing it, how should I store it and how should I store it safely?"

With the development of modular blockchain narratives, the performance of blockchain will be gradually resolved in the next two to three years.The final possible state is that many applications we use use blockchain technology at the bottom layer, but users are not aware of it, such as the development of MPC keyless wallet, Smart Contract Wallet/Account (SCW), and Passkey-based AA wallet.

Users have the key without feeling it, and in a relatively decentralized way. The development of a large number of good experiences on the chain and the keyless wallet technology will eventually allow a large number of users to truly use blockchain technology in various scenarios.

Looking back at the development of the industry, at this point in time, does Shenyu think that the "decentralization" idea of ​​​​parochialism is contradictory?

The development of the cryptocurrency industry has tried many technical routes in the blockchain, from the earliest impossible triangle, to the performance problem of the discovery chain, and then the problem of expensive block space.

After nearly five or six years of trial and development, everyone finally chose the modular blockchain approach, making some compromises and balances at different levels, and finally making the cost of the entire blockchain low enough for end users to adopt.

To some extent, it sacrifices a certain degree of decentralization, but for high-value applications at the top level, which have a great demand for decentralization, you can still choose to go to Layer1. The cost at this level is higher, and it is OK to be willing to pay this price for this freedom and decentralization.

However, most of the messages that are ultimately formed by the value network we transmit will not be of high value. There must be a large number of low-value application-side messages, which can be guaranteed to be safe and transparent through the degree of weak decentralization. It can be said that there are now various choices and combinations to make the blockchain scene richer.

The investment mentality of the giant whale, maintaining mental balance

During the Lunar New Year this year, Shenyu provided encouragement to investors in the crypto circle on the X platform and reviewed his previous "Crypto Asset Accumulation Plan from $1,000 to $100 million." He suggested that when personal assets reach $10 million to $100 million, 10-15% of the assets can be invested in the track you are optimistic about, which can not only keep investors busy, but also prevent unplanned investment behavior. It can also be seen that he is keen on tracking hot spots on the X platform.

Therefore, Dongqu also asked Shenyu, what track has he paid special attention to recently? What trends must be paid attention to this year?

My style is like this, I will try something new and interesting, try and fail, and observe the development of these technical routes. Today in 2024, I pay special attention to the development of "modular blockchain".

From the expansion problem of Bitcoin ecology in 2017 and 2018 to the expansion problem of Ethereum ecology, it took seven or eight years, and the market finally handed in the answer sheet, that is, modular blockchain, and has demonstrated practical application cases. We don't know what its final state and upper-layer applications will be, but the trend is very certain. This market may be the next market of more than 100 billion US dollars, so I personally put more energy and focus on the modular blockchain.

Interestingly, Dongqu also asked Shenyu what his current state of mind is when investing in cryptocurrencies. Is there still Fomo now?

Everyone will definitely have FOMO, because groups have emotions, and the principle of underlying biology is that there will be Fomo. The best thing I did in 2023 was to spend more time reading after the market turned bearish, and then reflect on the pits I stepped on and the places I did not do well. The biggest gain in 2023 is to make the FOMO mentality less.

Many times you only need to do a thought experiment. For example, if you see something new and you are very excited, you have to think about it for a day or two, and this thing will pass, and you may not really execute or try it.

You just need to figure out what its core value is and what value it can capture? Then you may not do it, because you have figured it out, it may just be a short-term thing.

Expand yourself from a local perspective and stand at a higher level to look at the entire market, you will find that many actions are actually meaningless. You will not do those experiences that may seem good in the short term, and sometimes even give you a lot of incentives in the short term, making you feel good, but in the long run, it is actually harmful. When you are used to thinking about things from a larger and farther perspective, you can break away from the FOMO mentality at the time.

During the interview, Shenyu also shared that investors of different generations have different ways of perceiving and reacting to the market, especially the rise of a new generation of investors. Shenyu noticed that especially investors born after 2000, who have lived in a digital and online environment since childhood, are more sensitive and adaptable to market changes.

The new generation of post-00s is more adaptable to the entire process of Internet development, because they have been Internet natives since birth.

They are more sensitive to market sentiment. As old leeks and old currency circles like us, our sensitivity on this side is definitely not as good as everyone thinks. We are also aware of this trait, so we look at it less and pay less attention to short-term market sentiment changes.

You need to be clear about what kind of money you make, whether it is market sentiment money or cycle money.

Different money has different return targets.

For the new and younger generation, they may have less original capital accumulation; but they have a lot of time and a better sense of the Internet. Under these advantages, the path of looking at market sentiment is more suitable for them. This is a big difference between the old and new currency circles. Many post-00s no longer play with us.

I think the new generation of post-00s is also very good. They are more adapted to the entire process of Internet development because they are native to the Internet since birth.