We re-examine the market in March

So now, three months later, both the external environment and the market have undergone some changes. Some previous judgments also need to be corrected in time. Today is the first day of March. Let’s re-examine the market. I will try my best to explain my views with simple arguments.

Macroeconomics & Monetary Policy

1. The view on the U.S. economic recession remains unchanged

Previous articles believed that the United States will experience a recession this year or next year. Currently, the United Kingdom and Japan have already fallen into a technical recession. my country has actually entered a technical recession. Countries in Europe and Southeast Asia are not having a good time, and the same is true for the United States. There are hidden dangers in the current banking industry, commercial real estate, and credit in the United States.

Looking for generals among the dwarves, the United States is still relatively good compared to other countries. The employment data is relatively strong, and the return of manufacturing is beginning to bear fruit, so several key indicators of the U.S. economy look relatively good, but as high interest rates are maintained, the damage to the economy will continue.

Expectations of interest rate cuts in February, March and even May may come true

Previously, the market expected that the United States would start cutting interest rates in March, and I also held this view myself. It is believed that the Federal Reserve may make a precautionary interest rate cut. However, judging from the CPI data released in January and the speeches of Federal Reserve officials, there is a high probability that interest rates will not be cut in March, or even in May. The Federal Reserve is now worried that its lack of decisiveness in fighting inflation will turn into the stagflation of the 1970s, and is also worried about the impact of excessive interest rate hikes on the economy. At present, the former is more consistent.

In addition, from the perspective of conspiracy theories, there has not yet been a large economy that has been added to the U.S. The crisis is over, the United States has not yet achieved its goals, and the whole world is struggling.

3. The first quarter should be safer

As for when the crisis will come, at the end of last year I thought there might be obvious crisis signals in the Q1 or Q2 quarter of this year. Thanks to the outstanding performance of technology companies such as NVIDIA, which has played a good role in guiding the US stock market sentiment, small-cap stocks have also begun to recover.

The market somewhat ignored the failure to cut interest rates and began to favor medium- and long-term U.S. bonds. Moreover, the Federal Reserve seems to be paying close attention to the hidden dangers in credit and real estate, and may adopt tools and measures similar to BTFP to deal with potential crises that may arise. Even if they occur, they may be resolved quickly.

In summary, judging from the information currently given, whether it is economic data or financial markets The data are still relatively healthy. Here we take a step-by-step approach and temporarily judge that the macroeconomic outlook in the first quarter is still a safe period.

Some say that residents’ excess savings are about to be exhausted, some say that the US data is falsified to whitewash the situation, and some say I think all kinds of doubts are reasonable. However, we cannot place bets based on subjective guesses, but should refer to published data.

Crypto Market

When I wrote the article at the end of last year, I made it clear that it was already a bull market. At that time, Bitcoin was more than 30,000. It has only been 64,000 in the past three months. No one should doubt whether it is a bull market or a bear market. .

What are the characteristics of the current market:

1. Changes in narrative logic

The current market trend that started at the end of October last year was driven by the BTC ETF. After the ETF was approved, except for the gray sales in the first few days, there were net inflows at other times, proving that the OTC Money keeps falling. Old Leek has been severely beaten by the 22-year bear market. Many people have conservative risk preferences and are short-term and dare not buy BTC. New funds do not have these concerns, and the assets managed by these asset management institutions often amount to tens or tens of billions of dollars. Any leakage can push BTC to a very high price, so we can have some insights into the price of Bitcoin in this round of market conditions. Higher expectations.

2. Limited capital spillover

The market this time also has obvious differentiation. Because currently only BTC ETF has passed, those funds entering the market through ETF can only buy BTC and cannot be converted into purchasing power of other varieties.

We can see that many times BTC outshines others, and the copycats that perform better in this bull market usually It is driven by hot spots and institutional market makers. In the past, as long as it started, all coins would bloom and rise almost never happened.

The market speculates on the new rather than the old. Although this is the case in every bull market, the previous bull market Among them, old coins may have good gains or even reach new highs under the conditions of capital overflow. We have seen in this bull market that the capital spillover is extremely limited. The endless new coins and hot spots emerging every day have absorbed a lot of funds. A large number of old coins are still lying at the bottom and barely moving, losing more than 80% compared with the high point of the previous bull market.

Perhaps people who are deeply stuck will never have a chance to unwind and give up their illusions. Recognize reality. Maybe if the new currency rises three times, the old currency will rise by 30%.

3. The market is more professional

Since the last bull market, more and more professional institutions and personnel have participated in the market, whether it is team financial strength, resources, technology, The investment and research capabilities are incomparable to Xiaolee. In addition to investments in the primary market, competition in secondary market transactions and even participation in new projects on the chain has become fierce, and the living space and rate of return of small investors will continue to be compressed. It would be better for us as a small investor to choose to participate in some subdivided areas that institutions are not willing to participate in, such as staking and early project interaction, so as to avoid directly fighting with institutions in the secondary market.

4. Projects are generally overvalued

The same is true in 2017 and 2021. In the bull market, funds are abundant, and the market's expectations for projects are relatively high, so valuations are also high, and projects are launched frequently. The secondary market has a market value of hundreds of millions or even billions. Therefore, at this stage of market development, it is still difficult to buy ten times the currency in the secondary market. And once the adjustment starts or the upward trend ends, the adjustment will not be small.

We try our best to choose some deterministic tracks, such as AI, RWA, SOL, Bitcoin ecology, chain games, modularization, choose 1-2 leading projects for each track to participate. Or it is also a good choice to delve into a track, study it thoroughly, participate in early projects, and earn excess returns.

You can't see this one going up today and cut your own position if it doesn't go up, and change the position tomorrow. When the price goes up, positions are changed again. Frequent position changes lead to nothing in the end.

5. AI narrative

If BTC ETF’s ability to bring a steady stream of capital inflows to the crypto market is the main axis of this bull market, then AI is the market’s largest sector narrative. The seven technology giants support the U.S. stock market, and the most outstanding performer among them is NVIDIA, which benefits from AI. The stock prices of Tesla, Apple and other companies that did not perform well in the AI ​​narrative began to lag behind.

Whether you think AI will eventually burst like the Internet in 2000, it is currently This is the main rising logic of the market. As long as the momentum of AI in US stocks does not end, the story of AI in the crypto market will not end either. This is the most certain logic.

Summary

I still believe that the United States will fall into recession in the fourth quarter of this year or early next year. Sentiment in financial markets is like a pendulum, always swinging between extreme optimism and pessimism. When problems are exposed in the economy, the market will also become pessimistic, which will definitely drive the risk market down.

It’s okay to prepare for the worst, but don’t prepare for what hasn’t happened yet Crisis betting. Black swans cannot be guessed. It is not too late to wait for certain signals to appear before making a decision. There must be various signs before a real big crisis breaks out. When the external environment is relatively safe, you should appropriately increase your risk appetite.

Reflecting on the past few months, I have been worried about Regarding the impact of interest rates on the economy and financial markets, I have always been timid and did not dare to increase my position too much. If it rose a little, I would miss out on a lot of gains. The only good thing is that I did not go short.

I typically preset a conclusion and then follow it Path to predict the market. The idea is too far ahead of the market. In fact, it is completely unnecessary to think about it now. We must learn lessons in the future.