Competition facing crypto assets

Source: Daoshuo Blockchain

My articles have not been related to crypto assets for some time, but some readers still asked some questions about crypto assets in the comment area, such as the following two:

- The Fed cuts interest rates, and some funds will definitely flow back to China. Will this have any impact on the future market of US stocks and the cryptocurrency market?

- The Fed has already cut interest rates, but crypto assets don’t seem to be very active. What is the reason?

Both questions mentioned the possible impact of the Fed’s interest rate cut on crypto assets.

Regarding the possible impact of the interest rate cut on crypto assets, I shared my views in my article on September 20:

"I tend to think that for the crypto ecosystem, we should not take the impact of the interest rate cut too seriously, especially not to deviate from the focus and focus. The focus and focus of the crypto ecosystem are still innovation and invention within the ecosystem. The easing of the external environment is icing on the cake, but not timely help."

To this day, I still maintain this view.

My basic logic is:

The current size of the crypto ecosystem has reached a certain scale. For an ecosystem of this size, the amount of funds required for assets to usher in a more obvious bull market is no longer the same as in the past, and it needs to compete with other investment markets for funds.

Previously, I believed that the main competitor of crypto assets was the US stock market.

When users choose between the two, the asset with greater appeal will absorb the main funds, and the remaining funds will spill over to the other object.

In this case, only when the crypto ecosystem has a large collective innovation in application can it attract a wide influx of new users and eventually attract a considerable amount of funds.

It is difficult to attract new users to enter by relying solely on a bunch of emotion-driven MEME coins and a bunch of infrastructure (second-layer expansion, protocols, cross-chain...) that do not directly attract users, let alone attract large-scale funds.

However, now, even this situation has become a thing of the past, because today's situation is more complicated:

Crypto assets are now facing not only competition from US stocks, but also competition from Chinese assets.

Today I noticed a piece of inconspicuous news:

Foreign media reported that in recent days, a large amount of international funds withdrew from the previously hot Indian financial market, but it did not flow back to the US stock market, let alone the crypto market, but to Chinese assets.

Although this news did not specifically point out the size of this fund, the movement of this fund can well explain the idea of ​​capital.

Is it just this fund that has such ideas and movements?

If Chinese assets continue to heat up, I think more funds, even including US funds, may continue to flow to Chinese assets rather than crypto assets.

Therefore, the trend of Chinese assets in the next year (by the end of 2025) will most likely affect the trend of US stocks and crypto assets.

Coincidentally, on the first day after the holiday (October 8), the National Development and Reform Commission held an important press conference for domestic and foreign media. The information revealed in this press conference can give us a glimpse into the possible trend of Chinese assets in the next year (until the end of 2025).

For this press conference, many economists are concerned about whether it will give unexpected fiscal stimulus policies, but my focus is not on this, but on: in the central government's thinking, it cannot allow China's assets to deteriorate to the bottom line.

In this regard, my understanding is that the central government must ensure the smooth conclusion of the "14th Five-Year Plan" and lay a good foundation for a good start of the "15th Five-Year Plan". Under this premise, the central government will stimulate economic development and recovery in all aspects, and the capital market is an important part that cannot be ignored. Throughout the press conference, leaders repeatedly mentioned that policies should have an "effect" and be "sustainable".

What does it mean to have an "effect"? My understanding is that if the existing policies do not have an "effect", they will continue to increase.

What does it mean to be "sustainable"? My understanding is that if the market weakens again, it is not sustainable enough, and we need to find a way to make it "sustainable" again.

From this perspective, after carefully reading the speech of the National Development and Reform Commission, I think the situation of Chinese assets in 2025 will not be too bad, and the central government will try every means to maintain it.

Therefore, the performance of Chinese assets in 2025 will definitely attract the attention and attention of international capital.

Under this situation, if crypto assets do not have innovations in applications in the next year and cannot attract the attention and attention of incremental funds, then their performance from now to 2025 cannot be too optimistic. Even if there is a bull market, it will only be a very reluctant small market