Volume 4 Crazy Growth 2017 Chapter 826 Excess Returns
Although the relevant Chinese authorities have only ordered the closure of the three major exchanges for ten days, this is still a very important period for a market that operates 24-hour non-stop and does not close on weekends.
These ten days are sufficient trading time. As for how much impact China's unilateral ban will have on the entire market, that is naturally a matter of opinion.
The fact that the market only fell by more than 7 points that day may be a reference answer, that is, this decentralized virtual currency is indeed "second to none" in its risk resistance.
You should know that the entire virtual currency market actually does not only have Bitcoin as a currency. With the rise of the blockchain concept, Bitcoin's strong performance has supported the entire virtual currency market.
As the market value of Bitcoin continues to rise, its high threshold has become prohibitive for some retail investors, but they are really interested in virtual currency, so they have to settle for some more affordable alternatives.
Other altcoins naturally came into being. After all, although the concept of blockchain is novel, as long as it can make money, there is never a shortage of people in the world who are willing to study the technology. There will always be people who can fully understand it and quickly copy it.
The first to be affected are naturally the major exchanges that mainly engage in virtual currency transactions. Among them, the most outstanding one is perhaps Ethereum, which innovates on the basis of Bitcoin and is hailed as the leader of the second-generation cryptocurrency platform.
The currency it launched, Ethereum, is also very popular in the entire market. Many people believe that it is the second most valuable virtual currency after Bitcoin. Some even think that it is only a matter of time before it surpasses Bitcoin.
Although Bitcoin is a pioneer in this field and has sufficient first-mover advantage, it is precisely because of this that some deficiencies in its technical protocols will naturally become its flaws.
But this does not prevent Bitcoin from becoming a giant in the blockchain field. It is natural that Ethereum and its ilk can surpass their predecessors by virtue of their advantage of standing on the shoulders of giants.
Of course, in addition to Ethereum, the top student, such a large blockchain is naturally full of poor imitators. This is undoubtedly the charm of blockchain technology. Even if you don’t know much about it, it does not prevent you from using it as a tool.
As long as you give it a random name and put it on the market, you can create a new virtual currency. As for whether it will be recognized by the market and circulated in the market, that is a market issue.
As for exchanges, they will just accept as many as possible and open the door to various altcoins. After all, they only provide trading services and have no regulatory responsibility or obligation.
On the contrary, as long as there are enough types of transactions and the frequency is high enough, the income from handling fees alone is enough for them to get a share of the entire market. There is naturally no reason to interfere in such a good thing that they can just sit back and enjoy.
Even if you want to intervene, you can't. After all, this is the characteristic of blockchain and the concept of decentralization. No rules are the rule here.
However, it is worth mentioning that because the Bitcoin algorithm is open source, anyone can easily download the source code, so most of the altcoins are slightly modified on this basis to become a new virtual currency.
However, Bitcoin has one thing that is difficult for many copycats to surpass, and that is the huge algorithmic network accumulated from the first-mover advantage.
Since the core concept of blockchain technology is to store information in a distributed form to achieve a decentralized effect, each participant is a subject, and the information they hold is regarded as a block, forming a complete chain in chronological order.
In this chain, as long as there is one subject, the entire chain is safe. As time goes by, there are more and more participants, and the chain will naturally grow stronger, gradually reaching a height that is difficult to destroy.
To a certain extent, the Internet will continue to exist unless it is eliminated on the physical level, which is also a major point for its value.
Bitcoin, which is developed based on blockchain technology, has become an extremely robust currency network over time. The lack of a center means it cannot be shut down, but its huge currency network is enough to ensure that it will not disappear.
This is Bitcoin’s greatest strength, but also its biggest weakness, because there is not enough time for the algorithm to grow. Therefore, as long as someone controls 51% of the computing power of the currency network, they can manipulate transactions and the value of virtual currency.
This practice, which goes against the concept of decentralization, can undoubtedly cause a devastating blow to its existence. This is also a major reason why copycats find it difficult to survive, and it is also the source of continuous crises in the cryptocurrency circle in the future.
On the contrary, as the pioneer of Bitcoin, the network composed of its algorithm has long been spread all over the world. If you want to control 51% of the computing power of its network, the hardware computing power required is undoubtedly an astronomical figure.
Therefore, the possibility of subverting the Bitcoin algorithm is infinitely close to zero.
To sum up, it is not difficult to draw a conclusion that the only possibility to kill blockchain technology is to kill it in its infancy.
Once it grows up, there will be no way to threaten it... emmm? Why does this strange description seem so familiar...
Ahem, let's get back to the topic. Therefore, the role that Bitcoin plays in the entire virtual currency market is just like gold in the currency market, and it has played the role of a stabilizing force.
Although the relevant departments issued a ban, which strangled the soil for its survival in the country and uprooted it in one fell swoop, it also inadvertently gave it a huge advertisement.
From another perspective also a reflection of its value?
Isn’t danger a kind of value?
The ban from China was like a loud speaker on the world channel, which directly attracted the attention of global investors, and they were all filled with curiosity and wanted to find out the truth.
After some understanding, when the entire virtual currency market was in turmoil and many altcoins disappeared in an instant, Bitcoin, like a stabilizing force, naturally became the most eye-catching one in the eyes of many latecomers.
With China's loud propaganda, there will never be a shortage of desperate speculators in the capital market. After all, the famous saying that risk is proportional to return is an eternal truth in any market.
Isn’t this the most risky time to enter the market?
The bigger the waves, the more expensive the fish!
This simple sentence succinctly and vividly explains the relationship between supply and demand.
Therefore, despite a day of plunge, a large amount of hot money still flowed into the market, and many latecomers rushed in to buy at the bottom and grab chips.
Even though the market value of Bitcoin once fell below the US$4,000 mark, it has unexpectedly gone against the trend and risen, driven by a large amount of hot money.
As the market trend changes, the panic in the market dissipates, and investors on the ship are no longer in a hurry to jump off the ship, but choose to follow the wind.
Originally, no one was buying, so they were naturally in a hurry to sell. But now that there are many buyers, they naturally have to increase shipments.
In the ever-changing market, the supply and demand relationship often jumps back and forth, making it difficult to predict.
On the second day after the ban was issued, the Bitcoin market rose by 3.51% against the trend, and the trading volume hit a new high, exceeding 3 billion US dollars, which shows that the market trading enthusiasm is unprecedentedly high.
After that, for several consecutive days, the market trading volume remained stable at around 2 billion US dollars, and the market value fluctuated repeatedly under the tug-of-war between the bulls and the bears, and at one point it even rose to 4,700 US dollars, setting a new historical high.
For a moment, many retail investors who entered the market later couldn't help but smile, and they all admired their own wise move in their hearts. It turned out that they made the right decision to buy at the bottom.
It was simply a textbook-level bottom-picking operation, as precise as a scalpel. It completed the entry at a low level and harvested the profits in the blink of an eye, easily earning more than a dozen points.
The so-called stock god Buffett is no different, he was just born a few decades earlier than me.
After tasting the sweetness, the mentality of retail investors expanded rapidly, and they spontaneously felt a heroic spirit of reaching the top. They easily earned a dozen points, and if they made a few more transactions, wouldn’t it be dozens of points?
However, when the market pulled back to a high level again, a large number of Chinese investors no longer hesitated and decisively chose to cash out at a high level and leave!
If I don’t leave now, I’m afraid I won’t be able to leave once the deadline arrives!
As the ten-day deadline is getting closer, the bears will naturally not miss such a good short-selling opportunity. They will take advantage of the situation to interfere, forming a short-selling force in the market, and the market value of Bitcoin will plummet again.
At one point it even fell directly to the level of 4,000 US dollars, a drop of more than ten points in an instant. This intraday dive was like jumping on the concrete floor, which was so painful.
The retail investors who had just entered the market from high levels were even more distressed and felt like crying but had no tears left.
Didn’t we agree to make money with our eyes closed?
Just give me my money back and I won’t play anymore!
People’s joys and sorrows are not the same. When some people make money, others lose money. When some people laugh, others naturally cry. This is how changes in the market are generally.
Lu Sifang, who held a large number of chips, had Zhou Dongsheng's words as a stabilizing force. He felt neither sad nor happy, and saw through the ups and downs of the market and got to the root of the problem.
But it's all just a routine. After shorting, go long again, and harvest twice back and forth. That's called transparency. The ones harvested may not be the same batch of leeks, but the people holding the sickles are probably the same group of people.
To this end, Lu Sifang even formed a tacit understanding with the market. After all, the highly concentrated chips in his hands are enough to make him a major force in the market that cannot be underestimated.
Whatever others can do , he can also do, and he can even do it better!
By repeatedly doing T, Lu Sifang was not only able to profit from it calmly, but he even had the spare capacity to further collect chips and increase the number of chips in his hand.
Although the ultimate goal of a million-coin position has been mostly achieved due to the earlier entry into the market, and although the subsequent position building costs continue to rise, it is still shockingly low compared to the market conditions.
Up to now, the cost of building a position has only reached the range of US$1,800. Compared with Lu Sifang’s small treasury, although the cost has tripled, it is obviously incomparable in terms of size or income.
Even if the current market value of 4,000 US dollars is used as a measuring standard, the value of the chips in hand is now close to 4 billion US dollars. Excluding the cost, the net profit exceeds 2 billion US dollars!
Converted into RMB, the net profit has exceeded 10 billion, and this took less than a year!
Such a jaw-dropping excess return, if it were made public, would inevitably cause an uproar!
Zhou Dongsheng, who completed this wave of god-level operations, will also be pushed to the altar and be in the limelight. Just thinking about it, Lu Sifang feels honored and his heart is surging.
After all, all of this was done by his hands. If Zhou Dongsheng is the hand of God, then he is the glove of God.
From the beginning of the planning last year until this stage, our boss has never wavered from the beginning to the end, and has been unwavering in implementing the decision to invest heavily.
In comparison, the courage and mentality of a trader like myself have been fluctuating, which really shows the difference between them.
If it weren't for my boss' insistence, I might have chosen to take profits and leave at some point, and now I'm afraid I'll regret it...
Of course, with such a huge number of chips in hand, even if you want to complete the cashing out, it is a huge project. For example, at this stage when market sentiment is weak, it is absolutely impossible to accommodate the cashing out of so many chips...
If Zhou Dongsheng chooses to dump the market at this time, it is very likely that Bitcoin will be directly put into a "three-year" cycle, and a new round of reincarnation may begin again.
At the same time, Lu Sifang couldn't help but admire his boss's foresight from the bottom of his heart. If it weren't for his foresight, he would have transferred this business to the overseas market.
Then this official ban will most likely affect Dongsheng Group, which will undoubtedly cause immeasurable losses!
Nowadays, even if the independent overseas investment business is severed from the company, it does not hinder its independent existence.
After all, offshore shells like this, established in the Cayman Islands, are a common tactic in the financial sector...
At the same time, as the ten-day deadline approaches, the dividing point of market sentiment is about to arrive.
A phone call came to Zhou Dongsheng. When he saw the caller ID, Zhou Dongsheng couldn't help but smile knowingly.
The person who came was naturally Mr. Duan, Duan Yongping!
Having said that, Zhou Dongsheng did take 1 billion US dollars from others in the name of private placement.
The main target of investment is also Bitcoin, in addition to stocks such as Tesla.
With such a big commotion now, it was not surprising that it alarmed Mr. Duan. Zhou Dongsheng answered the phone with a smile on his face.
"It's so late, Mr. Duan is still not asleep?"
