Answers to Questions About the Market Crash (Part 2)

Some readers have asked why the risk aversion sentiment triggered by the Middle East war leads to capital fleeing from crypto assets.

I have discussed this issue with everyone before.

I believe the main reason for this situation is that, from the perspective of the forces that drive the rise and fall of crypto assets, crypto assets are seen as risk assets rather than safe-haven assets.

Before 2021, crypto assets were largely on the fringes of the entire financial ecosystem. At that time, the main players in this ecosystem were retail investors. Many of these retail investors still viewed Bitcoin as a safe-haven asset, especially as a hedge against fiat currency risk, based on the idealistic descriptions from Bitcoin's predecessors.

However, starting in 2021, traditional capital, led by Wall Street, began to enter this ecosystem and gradually became the dominant force in the market.

From Wall Street's perspective, the characteristics of crypto assets are similar to those of traditional stocks. Therefore, the factors that influence the stock market and how they are affected also transmitted to the crypto market—this phenomenon became increasingly evident in the synchronized rise and fall of U.S. stocks and crypto assets starting in 2021.

Thus, as early as the last bull market, we gradually categorized crypto assets as risk assets similar to U.S. stocks.

However, in recent years, as geopolitical disturbances and the increasing division between the East and West have intensified, I feel that another characteristic of crypto assets has begun to emerge—its ability to communicate globally without barriers makes it increasingly likely to become a potential, default universal asset in an environment of artificial interference.

Its universality is comparable to gold, but its convenience and trading efficiency far exceed that of gold.

Recently, an international news report mentioned a nearly $20 billion transfer of crypto assets to Russia. However, since this transaction was conducted through a centralized exchange, it was ultimately frozen.

But if the transaction were a direct transfer between the two parties, the outcome could have been different—fully demonstrating the convenience and efficiency of crypto assets.

So I am also wondering, if crypto assets are increasingly used in international activities under the conditions of East-West division in the future, will this "bridge effect" become an important factor supporting their price?

Some readers have asked whether to buy CRV, ARB, and MAGIC now that they have fallen within the dollar-cost averaging range.

I have not dollar-cost averaged into ARB; I only bought some when the price was relatively sluggish and exchanged some for Matic.

I am no longer dollar-cost averaging into the coins I previously invested in. The main reason for this is that I want to reserve some funds to participate in potential new projects in the future and to take advantage of some projects.

Speaking of discovering new projects, although it is very difficult and often disappointing, curiosity always drives people to explore.

I remember mentioning the application farcaster.xyz in an article some time ago. My first impression of it was quite ordinary, but I still patiently navigated through it, enduring its many perplexing operations, and eventually registered for an account.

After experiencing this ecosystem, I gradually felt that it differs from existing social applications in several ways:

It is more geeky and has a bit of an "elite" feel.

It is not as noisy, but it is not lacking in enthusiasm or trending topics.

Its members have a strong sense of cohesion; once a new phenomenon or topic forms a new consensus, a new community and network quickly emerge.

It feels more like a social application tailored for the crypto ecosystem.

In the last bull market, we also saw some typical social applications, such as Mask. However, many of those applications merely forced the integration of tokens into traditional social applications, without many characteristics of the crypto ecosystem.

Farcaster is much stronger in this regard. Will some interesting new projects or applications emerge from the Farcaster application?