​​PART 1:
The financial perspective of the Era we are in now.
As you all know, the US dollar is the international currency. The Treasury bond yield of the US dollar basically represents the benchmark value of the monetary interest rates of all countries in the world. However, you can see from the figure that the Treasury bond yield of the US dollar has been declining, declining and declining since the mid-1980s.
Take Indonesia as example. In 1994, when you deposited money, there was 17%+ interest in one year. Now when you go to the bank to deposit money, how much is the interest in one year?
This picture represents the overall changes of the international financial environment from the mid-1980s to the present days. That is to say, the interest rates in the world are falling lower and lower. Now, European countries, the United States and Japan have all moved to zero or even negative interest rates.
What do you want to do when the interest rate is low? Do you want to borrow? (loan)
That's it. The government and the central bank are encouraging people to loan with the sustained low interest rates.
For example, before 1998, most Chinese people didn't have any debt. However, since the housing reform in 1998, most people began to borrow money to buy houses. Moreover, people begin to borrow money from P2P company for daily life nowadays. Well, the interest rate is getting lower and lower, and houses are becoming more and more expensive. So, whoever that can borrow money will make a lot of money and whoever that can't borrow money will be pulled down in the wealth competition.
Governments and central bank manipulators have lower and lower global interest rates, so assets such as houses, stock markets and bonds are more and more expensive. Is there an end to this wealth race?
YES
However, please note that the reason why the asset price has become so expensive is that the government and the central bank encourage everyone to borrow money. Therefore, all of our expensive asset prices today, including houses, stock markets, bonds and so on are purchased through the money that is borrowed from banks. That is to say, the core of modern finance is the huge debt.
Therefore, we are in the era of the end of the 35 year global debt expansion cycle, zero interest rate era and the most expensive era of financial assets in human history.
Of course, as you all know, the current US dollar is the world currency, and the entire rules of the financial system are also set up by the US stock market. All other countries are complying with the US financial rules. This is an era in where the US dominates the world. The interest rate of the international financial market has dropped for 35 consecutive years, from 20% annually to 0% now. Low interest rate had given birth to governments and enterprises all over the world, and for personal debt; a continuous increase in 35 years. Through unlimited debt, the government and the central bank can fully manipulate the market economy era and can arbitrarily manipulate the amount of money and the economy.
This is the era we live in now and after we understand this, let's look at bitcoin.
PART 2:
What is the position of bitcoin in the history of Currency?
To be honest, what's the use of money? We can't eat it can't drink it and we do not even use it to wipe our buttocks because we don't think that it is clean. So why is it valuable?
In the beginning of human society, there are dozens of small tribes, all of whom are familiar with each other. You make shoes for me, I make axes for you, you go hunting, I collect at home; they cooperate with each other and don't need money but the problem is that the amount limit is too small. We can get familiar with the people around us and the maximum number is about 150 people and this is called the "Deng Ba" number.
How can I trust people outside the tribe, as human society expands, that I'm not familiar with?
Why should I make shoes and axes for him? Even though he has something I like very much, I don't trust him. It's a big trouble!
As a result, money is created - the essence of money is a credit intermediary, a third party outside the transaction. Just like you need to find a real estate intermediary when you buy a house, so is money a credit intermediary for people to trade. Don't you trust me? Then I'll give you a piece of gold. This is the collateral. It's the credit agency that allow us to exchange things with others.
Slowly, we all know that gold and silver are good and valuable things, everyone will want them. So, by convention, we can use gold or silver as money. Then human cooperation can go far beyond the scale of 150 people, which leads to the so-called "social economy"
A larger level of cooperation than the state is religion. You're the bishop, I'm the people and we believe in one God. We say the same thing and we believe in the same religious teaching.
At the macro level, there are several levels of human cooperation
The first level is the country. For example, if all of us think that we are Indonesian, then we can cooperate. If some of us are soldiers, some of us are farmers, and some of us are workers, we can accomplish many things and become a strong collective;
A larger level of cooperation than the state is religion. You're the bishop, I'm the people and we believe in one God. We say the same thing and we believe in the same religious teaching.
But today, the biggest level of cooperation in the world is money - Islam, Christianity, Buddhism, even Chinese Confucian culture, all of us use US dollars and are willing to work for US dollars.
In short, the development of human money itself has gone through two stages:
Gold and silver, and now paper money.
Gold is made by God. No one can say how much gold there is the world. However, paper money is not because it is controlled by governments and central banks.
In fact, many people don't know that before 1973, gold was still used as currency in the world. Paper money issued by governments of all countries can be converted into gold at a fixed price, which was a substitute for gold;
But from 1973 to today, under the leadership of the United States, our paper money has become pure credit paper money that can no longer be converted into gold of a certain amount.
After the abolition of gold's monetary status in 1973, the world experienced a decade of chaos. After 1982, it was believed that paper money could also be managed well.
Since then, the government and the central bank can "issue paper money according to the economic needs", thus realizing the era I just mentioned. Interest rates have been falling for decades, from about 20% to the current zero.
Zero interest rate is not put forward until now. In the 2008 financial crisis, the Federal Reserve was the first to reduce the interest rate of the dollar to 0%. As you already know, the dollar is the world currency and when the dollar has dropped to 0%, the other countries currency also dropped to 0%.
It was during this time that BITCOIN was born. The invention of bitcoin, decentralization, mining, full node and so on is totally different from the previous currency. Remember the first sentence of bitcoin chain: the chancellor of the Exchequer is preparing to inject capital to rescue the bank
Bitcoin has been around for 11 years. Bitcoin is a social experiment about money. We don't know if it will succeed or not but this experiment is very important. If it succeeds, it will completely subvert the existing financial model.
So the conclusion of the second part is, bitcoin is a new social experiment which may fail or succeed. All the participants should have a reference for the future. Bitcoin is similar to gold, but it is not just gold. It is totally different from paper money. It is an Internet based value system.
PART 3:
What is the biggest concern in current global society? And, what are the largest wealth components?
As mentioned earlier, the contemporary human society is based on the cooperation of money. What is the most worrying about the cooperation? The worry is that you don't have the money to pay me or I don’t have money to pay you.
The problem is, as mentioned just now, all the money is debt driven. The money I buy a house is borrowed. If I don't have a job, I can't pay the mortgage. It's generated by borrowing from each other. It comes down to the specific problems, which are the most worrying now, the debts.
I counted the main wealth scale of the world in 2018.
Among them, real estate, bonds and stocks are the three largest categories. Their value reach US $280 trillion, US $105 trillion and US $83 trillion respectively at the end of 2017.
So, because the house is generally not sold when there is no last resort, according to liquidity (that is, who can exchange money faster) the best are stocks and bonds. Including almost all the richest people in the world and the richest people in US that we know today, how do we calculate their wealth? Is it all the value of stocks?
PART 4:
Why COVID-19 situation will pierce the asset bubble accumulated by debt?
What does the corona virus affect?
By breathing.
I'll have a face-to-face meeting with you. I may be infected by the virus accidentally and die. How can I cooperate?
So, the new coronavirus is basically breaking down our existing economic system.
The production of real economy such as factories and workshops may be a little less busy now, but the economic structure of consumption type is still completely dependent on the gathering of people.
For example, the catering industry, the film industry and the entertainment industry all have contributed to economy because everyone has to get together. Now, with the virus situation, they are closed down.
For example, do you know what the is biggest part of the American economy? It isn't finance and it isn't high technology; it is culture and entertainment industry; which contributes more than 8 trillion US dollars of GDP to the United States, accounting for more than 40% of its currency.
Do you think that with the spread of the corona virus in the United States, the US economy will suffer a fatal blow?
The new corona epidemic mainly affects supply and demand. First, supply because many things may not be able to be produced (for example: masks), or they can only be produced by large-scale artificial aggregation. We don't think about it now, but on one hand, those products are mainly produced by machines that have a relatively small impact. More example are the production of crude oil and various metal mines.
From the perspective of demand; for an example, if everyone doesn't gather, will there be less travelling and consumption? If I wanted to change an iPhone, I won't change it.
PART 5:
DOW rebounds more than 11%, Is the bear market over?
What do you think makes up the American capital market? It's made up of various companies that produce industrial products and consumer goods. When we see that the virus may spread on a large scale, it will affect these industries. However, the United States can't be regulated like China, so we are afraid and we start to sell.
Even gold is plummeting - Why?
It's because we don't know how long the impact of the new epidemic will be. If the vaccine still can't be found and this epidemic continue, the economy and ecological model of the whole society and the whole mankind will change dramatically. What we need is cash and commodities directly related to consumption like crude oil. Production of copper, other mineral and everything will also plummet. Everything that is easy to be converted into cash is sold in large quantities.
It's because we don't know how long the impact of the new epidemic will be. If the vaccine still can't be found and this epidemic continue, the economy and ecological model of the whole society and the whole mankind will change dramatically. What we need is cash and commodities directly related to consumption like crude oil. Production of copper, other mineral and everything will also plummet. Everything that is easy to be converted into cash is sold in large quantities.
The same goes for Saudi Arabia and Russia. With the outbreak of the corona, there may not be so much demand for crude oil in the future.
What should they do now?
Sell quickly.!!!
A lot of American companies that produce crude oil are financed by issuing bonds. So, as soon as crude oil price falls, these companies may not be able to pay their debts. As mentioned earlier, our modern society is a debt society, so we need to sell the company's shares. In this way, everything will plummet.
You may not have responded to the stock market crash. I will tell you that from crude oil to copper, silver to zinc and all kinds of minerals that can be stored, they have basically fallen near the traditional production cost.
That’s the reason of, 250 billion US dollars are directly paid to individuals and families in the "2 trillion", 350 billion US dollars are used for small business loans, 250 billion US dollars are used for unemployment insurance benefits, and 500 billion US dollars are used to provide loans to companies that are in trouble.
PART 6:
Why does bitcoin price is also affected?
As mentioned just now, all the most liquid assets have been sold and gold is no exception. Then, I think bitcoin is almost the most liquid asset in the world, and of course, it will also be sold.
Remember, for most of the people, the most important assets at present are the house, stock and bond. It's difficult to realize the house. If I think the stock is the most important wealth, then when my stock falls (I bought it by borrowing), I must sell other assets to fill the hole.
On 3.12-3.13, bitcoin was suddenly sold, resulting in a sharp drop in price, and then a large fluctuation happened until now.
Let me tell you a piece of data that you may not believe - just on the day of March 13 (UTC world standard time), can you guess the volume of bitcoins?
The answer is 15 million bitcoin.
We all know that the total volume of bitcoin is only 18 million at present but on that day, it was the highest volume in history, 14.9 million bitcoins.
It is said that the turnover of Huobi reached 200 billion yuan on that day. This is the daily trading volume of bitcoin from February 1, 2019 based on CMC data.
PART 7:
Is bitcoin worth loving in the future? Tips for bitcoin investment?
At February 13, the price of bitcoin was about 10600 dollars. And it was at the lowest point of 3.13, it was 3800 dollars. That is saying that in this month's decline, whenever you go to the bottom of the bargain and as long as you have leverage or even if you have doubled the leverage, this bitcoin price manipulation can also ensure that you break your position.
In other words, as long as trading with leverage, bitcoin can always ensure that you can break your position. In fact, the operators are very clear about the position of bitcoin with leverage in the whole market. They must let almost everybody to break their position, and this price operation direction will end!!!!!
From the currency history I had just mentioned, you should understand that bitcoin (like gold,) is a currency that does not rely on debt expansion. Unlike the dollar legal currency (or any other paper currency) that depends on debt expansion which will be more and more. We know that bitcoin at least, through technology, locks up only 21 million of them. This means that in the long run, the price of bitcoin will increase.
Of course, the core lies in how many people believe in this thing. The more people believe in it, the higher its value will be. The less people believe in it, the lower its value will be. At present, I think that more and more people believe in bitcoin. Although operators can make bitcoin plummet in the short term and let the value of leveraged investors return to zero (think about the 14.9 million bitcoin transactions). But if you don't use leverage and keep your money, I'm sure bitcoin will rise to a higher price soon.
No matter when you buy bitcoin, if you don't have enough ability to deal with the manipulation of the manipulator, you should keep in mind the view that no leverage or any leverage will only increase your risk, it will only let you face the disaster you don't know.
For the manipulator, if you take a leverage, your currency is like a card in the fight against the landlord. As long as you have a little loophole, you will be caught, used and sold out.
I'll send you another picture here. This is the position of the 11 largest bitcoin futures exchanges in the world; the position of futures investors as a whole. Obviously, most of our retail investors are bullish. When do you see the manipulators start to strike down the price of currency?
Yes, it's February 13, when the currency price is the highest and all leveraged futures traders have the highest positions!
You know, there was nothing wrong with US stocks at that time. They were still rising. Our world is in an era of expanding legal currency and I don't think it's easy for ordinary people to protect their wealth.
In the past, the amount of gold and silver is a symbol of one's wealth; In the past 40 years, owning houses, stocks and bonds has been a symbol of one's wealth; But what about the future? Maybe bitcoin will become an alternative target. Bitcoin has been the biggest gainer for seven years.
Bitcoin is something that may represent the future. Now, bitcoin may be more expensive compared 2011-2016. However, look back at Apple's, Google's, Amazon's stock in 2014 and 2015, was it expensive? It was very expensive but then it's becoming more and more expensive even until last two weeks.
Even after this crash, Apple's, Google's and Amazon's shares are still much more expensive than they were in 2014-2015. Why? Because they have more customers, because they have more consensus, because they still represent the future in 2013-2015.
If you buy bitcoin without leverage, bitcoin price manipulators have no temper with you; at most, it will fall to 0, which is basically impossible (unless the exchange runs away or goes bankrupt).
So, my conclusion is, Bitcoin, I still love it. Just remember to love it and do not use leverage!
