Throughout the ages, people have been trying to make various predictions.
In the past, prophets and diviners used special items such as tarot cards and crystal balls to predict what has not happened. Later, science fiction writers used words and extremely curious imagination to let humans perceive the real future in advance. And the investment institutions that have insight into the opportunities in the changing market are undoubtedly “foretellers”, they will bet on future earnings, looking for the next round of technology leaders and dark horse products.
With the full progress bar in 2020, how do those “fortune-tellers” active in the crypto market view the ups and downs of the past year? How to step on the market rhythm and grasp investment opportunities? What reference value does their prediction for 2021 have for investors? PANews interviewed eight investment institutions, let us listen to their insights.
The magical year of ice and fire, Bitcoin ushered in the certification of major institutions
“The world is fickle.” Looking back on the thrilling and magical 2020, X-ORDER founder Tao Rongqi and Fenbushi Capital partner Huang Lingbo told PANews at the same time.
This year, we have witnessed the tremendous changes in the world and the vicissitudes of the capital market. In the first half of the year, oil prices plummeted to negative numbers, U.S. stocks melted several times, and the currency market fell in panic mode. In the second half of the year, the global financial market “jedi rebounded” and ushered in a carnival surge. Among them, Bitcoin, which has repeatedly hit new highs, has performed far ahead of others assets.
“This situation of rapid recovery and repeated record highs is both pleasant and unexpected. What is pleasantly surprised is that the cryptocurrency market continues to attract external incremental funds and is favored by more institutional investors. Bitcoin has become a kind of The new global safe-haven asset category. What is expected is the performance of the cryptocurrency market, accompanied by the halving of Bitcoin, the outbreak of DeFi (decentralized finance), and changes in the global macroeconomic environment are bound to be not far away Climb higher mountains in the future.” Qianfeng Capital Investment Manager Ivy said.
As Ivy said, this round of gains benefited from the large-scale entry of listed companies and traditional financial institutions into the Bitcoin market. From questioning to wait-and-see, and then to admission, the attitude of mainstream institutions towards encrypted assets has undergone a huge change. Du Jun, the founding partner of Node Capital, explained that the gradual emergence of institutional investors as the dominant force in the market does not happen overnight. This change is mainly due to the great progress made in the compliance of encrypted assets. For example, Wall Street institutions including Fidelity and JP Morgan Chase have opened up encrypted asset trust services, and the anti-inflation characteristics of encrypted assets such as Bitcoin have begun to be used by institutions. Recognize and accept that the demand for encryption by institutional investors is increasing.
Yu Zongmin, investment director of Hashkey Capital, also predicted that as the crypto industry gradually enters the mainstream financial circle, Bitcoin is expected to become a commodity at the same level as gold and crude oil.
The entry of traditional institutions has not only brought soaring prices, but also provided more complete and convenient solutions for more users in terms of purchase, use, storage, and compliance. The reason is that in the past, the user threshold and cognitive threshold of cryptocurrencies were relatively high. As more financial institutions provide cryptocurrency investment tools (such as mutual funds, ETFs) in a way that investors are familiar with, and platforms such as Paypal continue to improve cryptocurrencies Entrance. Based on their existing customer base, these institutions can bring Bitcoin to a wide range of mainstream people.
As Bitcoin has gradually become an effective hedging tool against macroeconomic trends, and Ethereum has grafted more financial innovation and application creation, Taihe Capital founder Wang Xiaochen believes that more and more institutional investors will invest in this asset , Is concerned and adopted by the mainstream financial world.
In addition to the power of traditional institutions, Huang Lingbo noted that community power is also one of the reasons for the rapid growth of the crypto market. For example, the DeFi fire has benefited from the rise of mobile mining, and mobile mining is inseparable from the power of the community; the fire of Polkadot is also inseparable from a large number of technical community personnel actively participating in various ecological projects.
After rapid growth, are these hot sectors still worth paying attention to?
The “out of the circle” of the crypto market is inseparable from the continuous expansion of application boundaries with various new gameplay. In the second half of 2020, DeFi, Filecoin, NFT (non-homogeneous tokens), ETH 2.0, Polkadot and other hotspots were overwhelming. There was a round of crazy investment boom in the market, which was very lively.
DeFi
DeFi is undoubtedly the loudest chapter of 2020.
Among many DeFi projects, Uniswap, which perfectly implements decentralized transactions with extremely streamlined underlying logic, really surprised Wang Xiaochen. It directly drove the ecological development and prosperity of AMM (automated market maker) type DEX. In Wang Xiaochen’s view, DEX (decentralized exchange) will eventually replace CEX (centralized exchange. The reason is that decentralized transactions have no barriers to entry (no permission required), no counterparty, and direct transactions with the pool. All transactions are completed on the chain to ensure transparency and fairness, etc. At the same time, the DeFi lending project Aave Lightning Loan reconstructs the logic of borrowing. The borrowing logic on the chain is impossible to achieve in the real financial world. “If you can pay back, you will borrow.” , The tools on the chain give people new ideas and solutions.
Cai Yan, the managing director of NGC Ventures, is very optimistic about DeFi projects such as Aave, YFI, Uniswap, and Synthetix. He believes that these top projects have become the cornerstone of the industry and set up a framework for the development of the industry.
But in the view of Axia8 Ventures founder Lin Weihao, after more than half a year of simple and rude mining with a high annualized return ratio (APY), this model of purely relying on APY subsidies will obviously not last long, so the market has also appeared a lot. Innovative and complex attempts, such as mortgage lending based on LP Token (liquidity pool certificate), on-chain insurance, decentralized derivatives, asset management, robo-advisor, NFT and DeFi protocol combination, etc. After a round of elimination and iteration, I believe there will be more incremental market entry next year. At present, DeFi faces more challenges in the security of each module of the protocol, and the expansion of the DeFi protocol on the technical level requires the actual implementation of related Roll up solutions such as Layer 2.
In addition, Ivy believes that the DeFi market still has problems such as lack of user education and AMM impermanence. But with the launch of ETH 2.0 phase1, it is undoubtedly ready for the future performance improvement of DeFi. For these industry pain points, DeFi will also have more innovative projects emerging.
In this regard, Du Jun also holds the same view. He pointed out that the current bottleneck of DeFi lies in the low throughput performance of the underlying chain. At the same time, DeFi still has many security challenges. Hackers caused by various smart contract vulnerabilities are not uncommon. Only when the infrastructure is upgraded between generations, the application boundary of DeFi will be further expanded next year and enter the DeFi 2.0 era.
Before the security issue has been effectively resolved, Tao Rongqi believes that the further development of DeFi is inseparable from supervision, and DeFi can enter the mainstream market only after passing the regulatory hurdle.
When all kinds of problems are solved, as DeFi completes the reconstruction and deconstruction of finance, Huang Lingbo predicts that DeFi will modularize more financial functions, and the combination of these modular agreements will form a new financial model. And DeFi is still mainly a single ecological combination, and a combination of cross-ecological contract calls based on cross-chain technology may appear next year.
Filecoin
Filecoin is the most expensive ICO project in history and one of the most controversial projects. In 2017, Filecoin completed a $257 million ICO (Initial Coin Offering), setting a historical record in the circle. In October this year, its mainnet plan was finally launched after twists and turns.
“Filecoin’s overall technical implementation details are highly complex, which affects the time for the project to go online.” Du Jun explained.
Nevertheless, in the past few years, Filecoin has gained a high degree of promotion and exposure, and even set off a crazy “gold rush” this year. Regarding the popularity of this star project, Ivy explained that Filecoin, as the incentive layer of IPFS, can provide low-cost storage space, and the storage mining system and economic model have gradually stabilized. Its demand side is widely used, and there are already many projects ready to use Filecoin as a distributed storage to provide storage space on the chain, and traditional industries can also achieve rapid integration.
At the same time, Huang Lingbo also revealed that two months after Filecoin was launched on the mainnet, although the overall mining system still has problems such as excessive gas fees, the overall mining system has begun to stabilize. In 2021, the official will pay more attention to the development of the overall ecological project.
However, Ivy believes that the development of the cloud storage sector itself needs more infrastructure paving, such as privacy protection, data screening, etc. to contribute to IPFS.
When Du Jun was optimistic about the Filecoin track, he also pointed out that Filecoin still has problems such as complicated technical model, low mining success rate, and gas cost. In the future, it may be necessary to adjust parameters to improve the mining environment of miners’ network, and how to find a suitable one. The landing scene application.
Polka
Polkadot is recognized by the industry as the most anticipated project. In addition to the founder Gavin Wood, who is the former technical leader of Ethereum, the advanced nature of Polkadot’s technical framework and the emphasis on governance modules have caused heated discussions in the industry.
Du Jun believes that Polkadot is a very important infrastructure for the blockchain, which has far-reaching significance for the medium and long-term development of the industry in the future. At present, Polkadot is the leader of the cross-chain track and a strong competitor of the Ethereum ecosystem. The next stage of Polkadot is the launch of the parachain, which is expected to support about 100 parachains.
“In the coming 2021, Polkadot will be an explosion for next year. At present, the underlying infrastructure in the Polkadot ecosystem is constantly improving, and the technology developer community is also very active. With the recent launch of the Rococo v1 parachain test network, Polkadot The track is entering the actual application landing stage, which means that the value discovery bonus period of Polkadot will break out next year.” Lin Weihao pointed out.
Huang Lingbo revealed, “According to statistics, Polkadot’s number of developers is among the best in major blockchain projects. With more developers, as Polkadot’s parallel test network has been launched, next year Polkadot The development of the country will reach a higher level.”
However, Du Jun believes that Polkadot is a heterogeneous block chain combination, and there are multiple block chains, and the cross-chain interaction and other functions to be realized have a certain degree of complexity. In addition, Polkadot has no first-mover advantage compared with Ethereum in terms of ecology.
Ivy also pointed out that due to Polkadot’s high technical difficulty, the slot auction has not been on the agenda, and the secondary market has been tossing and turning in anticipation. Although its theoretical performance has been greatly improved, the current ecological development is still weak. Many old projects that have not had a big wave in the past have also changed their faces to prepare for a wave of dividends on Polkadot, but in fact, the availability and user base are greatly reduced. Therefore, Polkadot still needs to work hard to find and incubate high-quality projects. There are many available projects to realize the circulation and interoperability of various chains, and the barriers of interoperability can be truly broken.
ETH 2.0
The official launch of ETH 2.0 is considered to be a leap forward to push Ethereum into large-scale application adoption.
“ETH 2.0 does not blindly pursue the improvement of TPS, but develops the practicability and feasibility to a greater extent under the premise of ensuring security. Ethereum will be the underlying foundation of the blockchain ecological network for a long time to come. Facilities.” Ivy thought.
As for the advent of ETH 2.0, it will help DeFi further develop. Du Jun believes that ETH 2.0 has an important role in boosting the development of Ethereum DeFi. Ivy pointed out that DeFi will bring more investment opportunities under the blessing of ETH 2.0. For example, the derivatives market, which includes perpetual contracts, options and futures, synthetic assets, etc., these subdivisions have a variety of playing methods, which can meet the financial needs of different users and obtain more financial attributes than native assets.
Layer 2
Although ETH 2.0 needs to be launched in stages in the next few years, the Layer 2 solution is expected to provide the scalability that the industry urgently needs before and after, and become an important part of the blockchain scalability solution.
Cai Yan is very optimistic about Layer 2 related projects. She explained that at this stage, the ecology of Ethereum is already relatively rich, and DeFi’s lock-up funds have reached the level of tens of billions of dollars, but the related infrastructure is somewhat unable to keep up, so more developers are bound to work on solving these problems. problem.
Lin Weihao further pointed out that Layer 2 technology is gradually improving, and two-layer solutions such as Optimistic, ZK Rollup, and Validum can greatly increase the speed of expansion. For DeFi, the underlying infrastructure will continue to improve. This makes DeFi a long-term trend.
Mainstream currencies and other tracks
The siphon effect of mainstream digital assets. “As institutions embrace deflationary value reserve assets such as digital assets such as BTC, ETH, LTC, and BCH. At this stage, market conditions have diverged. Institutional funds have mainly flowed into the aforementioned assets, and the rise in these assets has been pulled. If the gap with other assets increases, the wealth effect will attract more incremental capital to flow into these assets and further expand the upside of these assets. The Matthew effect of mainstream assets will become more apparent.” Du Jun told PANews.
And Ivy further pointed out that the crypto market has undergone a qualitative change during the bull-bear transition. When some projects that could not keep up with the market development have stopped before the bull market, Ethereum, Chainlink, Synthetix and other projects that have experienced bear market precipitation can With the flexibility of market demand, it has become a leader in the segmented field.
At the same time, Ivy believes that private computing, cloud storage and other sectors have certain investment opportunities. The Polkadot Web 3.0 Foundation has bridged many private computing, cloud storage and data market projects, with the intention of increasing data utilization while protecting privacy. At the same time, combined with big data and artificial intelligence, it has very broad application scenarios.
Huang Lingbo is also optimistic about the incremental market. On the one hand, there is increase in funds, including institutional funds or overseas personal funds. The deposit channels have begun to become smoother; on the other hand, there is increase in assets. Next year, asset classes will be diversified, such as original assets. It is mainly digital currency, and its main function is speculative. It is relatively simple. As more and more projects begin to focus on putting traditional assets on the chain, including real estate, accounts receivable, etc. At the same time, native assets are becoming more and more diversified, such as the emergence and combination of NFT and other collections and Bond native assets.
In addition, Wang Xiaochen is also very optimistic about the recently launched The Graph. He pointed out that The Graph provides a data interface tool and platform, and everyone can provide their own data display, so that people have a deeper understanding of decentralized underlying infrastructure and decentralized applications.
In addition to the hot investment areas mentioned above, Yu Zongmin believes that institutional services and compliance tracks may become the next potential stocks. In the past 10 years, the retail market has driven the development of the crypto market. A large number of wealth effects have spawned traffic and consensus. Some star projects mainly serve the To C market, but in the next 5-10 years, if you want to use the blockchain or the crypto market To move to the next level, the participation of institutions must be indispensable, and some sub-tracks surrounding institutions such as custody, prime brokers, and legal currency deposits and withdrawals are also topics that cannot be avoided.
What changes have been made in the investment strategy of institutions in the changing market?
In the face of the unpredictable market, making the best plans for more market trend possibilities tests the “internal strength” of investment institutions. With keen tentacles and a forward-looking vision, investment institutions have already grasped investment opportunities.
“In the first half of this year, Fenbushi Capital is more inclined to explore innovative projects with core models, including incentive mechanisms, Token mechanisms, and teams with strong technical capabilities, such as chainsafe. As DeFi, Polkadot, Filecoin and other markets have gradually developed Improvements, we began to pay more attention to ecological projects, such as keep, debank, etc.. With the opening of the incremental market in the second half of the year, compliant legal currency paths, wallets, asset management, and traditional asset chaining and other incremental markets have also become Focus on the direction, such as the public enterprise security chain.” Huang Lingbo revealed.
Yu Zongmin told PANews that the company internally compares the birth and development trajectory of the blockchain with the Internet. Similar business innovations, technological innovations, and social changes will also occur in the blockchain industry. In the face of an industry with such great potential, what Hashkey Capital needs to do is to seize the beta (a strategy of passively tracking the index), invest in high-quality projects in all fields of the industry, and obtain the dividends of the times and industry development.
The investment focus of Axia8 Ventures is on the early layout of blockchain native assets and applications on the decentralized financial track. Lin Weihao explained that since 2017, the underlying infrastructure of DeFi has been continuously improved. After the underlying infrastructure of stable tokens is built, various applications such as Compound, Uniswap, MakerDAO, etc. will be produced. At the same time, the flexibility of DeFi products can bring many different possibilities to the blockchain transaction ecology and introduce the needs of traditional finance.
“Our investment idea is to hold some positions in Bitcoin, Ethereum and Polkadot for a long time, and another part will invest in early projects in the primary market, and will also explore some undervalued projects in the secondary market. For funds, Risk control is more inclined to make cyclical adjustments. If it is judged to be a bull market, increase investment in high-risk assets. If it is judged to be a bear market, leave some legal currency in your hands. In fact, as long as you can survive the bear market alive, the bull market There will be good returns.” Cai Yan revealed.
In Ivy’s view, this year’s market fundamentals have undergone great changes. Based on the consensus of the bull market, the logic of capturing one hundred times and one thousand times currency in previous overseas investment projects is difficult to establish. Therefore, Qianfeng Capital has expanded the depth and breadth of market research. It requires not only research on the topic segmentation of sectors, but also refined investment analysis in vertical fields. In terms of target selection, Qianfeng Capital’s investment research system selects high-quality investment targets, and projects that do not conform to the investment logic will not participate. Currently, risk control is an indispensable part, and Qianfeng Capital also has a comprehensive risk control process.
How to master the posture of investment winning? Come to hear the professional “weapon”
In the recent months of the crypto market carnival feast, it can be said that a few are happy and a little sad. Some people have made a lot of money just by relying on “airdrops”, while others have lost money in various operations that chased up and down. Especially with the acceleration of the institutionalization of the Bitcoin market, it will be more difficult for ordinary investors to seize certain investment opportunities.
“There are currently three types of institutions entering the crypto market: short-term Wall Street speculators, institutional investors such as GBTC holders and institutional configurators (microstrategy). Although more and more configuration institutions come in, Bitcoin will More and more institutionalized, the price increase is unimaginable, but ordinary investors still take advantage of the spot and reduce the band. Because according to historical data, 95% of Bitcoin’s rise is completed in 5% of the trading day. Cai Yan pointed out.
Ivy pointed out that we are currently in a bull market, and the bull market is often the biggest loss for retail investors. The main reasons for the losses are chasing the rise and killing the fall and the lack of risk management in trading. Therefore, Ivy suggests that investors can choose professional investment institutions for capital management, or index fixed investment is also a good choice. At the same time, retail investors also need to pay close attention to their own risk exposures, and should not overly pursue returns while ignoring risks.
“The development of the industry has gotten rid of the myth of the earliest savage growth of brainless wealth. The information gap is a huge arbitrage opportunity, but if you want to make a lot of money in this industry, you must maintain continuous learning. The ceiling of investment income comes from you With your own cognitive boundary, the money you can make must be money within the cognitive range, otherwise it will be a matter of time for the same source of profit and loss.” Lin Weihao said.
“The crypto market is an exponential growth and exponential decline market, and ordinary investors should do a good job of psychological construction.” Tao Rongqi emphasized. At the same time, Huang Lingbo pointed out, “Investors can select better projects from two directions, one is the track, and the other is the team. We generally do in-depth industry research and communicate with the overall project of the track to choose from. More understanding of the track and more suitable for the team on the track.”
For individual investors who want to participate in cryptocurrency transactions, Du Jun gives several suggestions. First, spare money is invested, and the amount of funds should not exceed 20% of the total personal assets; secondly, do not buy some without consensus for the lure of huge profits. Don’t touch leverage for your air assets; finally, for ordinary users who don’t have much digital currency fundamental research capabilities, they should invest their funds in two digital assets, Bitcoin and Ethereum.
