Authors: 0xSheldon@TPTrade, Jerry@TPDAO
Introduction
Looking at the rise and fall of Athens in the context of the origin of world financial history, we tend to be pessimistic – finance only serves money, allowing money to generate more money; and the prosperity and diversity of finance rely on war, which is bloody and brutal.
However, the tumultuous history of New York gives us hope. The crisis of Wall Street’s impending demise has occurred more than once, but it has not been defeated, instead thriving, because the gene of “optimizing capital allocation” was injected into New York finance from the beginning. It is worth mentioning that in the modern financial development process in New York, funds play an indispensable role, undertaking a very special role.
So, what about the cryptocurrency market?
The Rise and Fall of Athens
Using Athens as a representative of the world’s financial origins, it is easier to see the essence of finance as exploitation. Look at the “Six-One Grain” of Athens – borrowers had to give five-sixths of their harvest as interest, leaving only one-sixth for themselves; if the five-sixths of the harvest was not enough to pay the interest, creditors had the right to sell the debtor and their children into slavery.
Due to its unique geographical location, within the Mediterranean civilization, Athens rose through commerce but was destroyed by finance.
The brilliant and colorful civilization of Athens once represented the light of human civilization. In times of war, Athens, heavily dependent on commercial economy, had to seek financial support – maritime credit emerged, the primary banking industry also appeared, and temples began to engage in lending business… Finance brought economic prosperity to Athens, but under the impact of money, once defeated, the sense of civic duty to participate in wars disappeared. Even more serious, the citizens’ former moral sense was lost. Moral decline follows an irreversible ratchet effect – once consumer habits are formed, they are irreversible, easy to adjust upwards, and difficult to adjust downwards.
It can be said that the destruction of Athens began with internal collapse.
The Turbulence of New York
When it comes to typical representatives of modern financial history, the fluctuating Wall Street is undoubtedly a key player, with one of the most stimulating elements being funds. As the financial market developed, individual investors became less important on Wall Street, with more and more funds entrusted to institutional investors for management. In 1961, individual investors accounted for 51.4% of the trading volume on the New York Stock Exchange, while institutional investors accounted for 26.2%; by 1969, the share of institutional investors had risen to 42.4%, while that of individual investors had dropped to 33.4%.
The ensuing bull market was primarily driven by a significant increase in turnover in institutional investors’ portfolios, which steadily increased trading volume. In 1955, the annual turnover rate of mutual funds was about 1/6; by 1960, a turnover rate of 50% was already normal; institutional investors were also engaging in block trades (buying or selling securities in lots of 10,000 shares or more).
By the late 1960s, the blame for the bear market was placed on Wall Street. Similar to the “Wall Street is about to die” rhetoric of the Great Depression in the 1930s, it resurfaced.
However, Wall Street not only did not die, but on the contrary, it ushered in a new round of victory. Thanks to the timely push from the Securities and Exchange Commission, technology came to the rescue of Wall Street. This could happen because New York finance, rising under the tide of the Industrial Revolution, has excellent genes for “financial empowerment of industry,” with Wall Street playing a role in “optimizing capital allocation.”
This is enough for countries around the world to learn from and will also apply to the crypto ecosystem.
A New Opportunity in Cryptocurrency
Benefiting from the endorsement of Wall Street brought by the Bitcoin ETF, this bull market so far has been only a bull market for Bitcoin. Therefore, we believe that the reason for this “bull market not being bullish” lies in the lack of momentum for “native crypto funds” in the cryptocurrency market.
There are many reasons for the analysis of why the bull market is not bullish, with the most mainstream being the complementarity between VC coins and meme coins. We believe that behind this is still the lack of “native crypto funds” in the cryptocurrency market.
VC institutions that have the ability to discover high-quality projects are extremely rare, with many VC institutions engaging in follow-up investment behavior, leading to overvalued valuations before the listing of VC coins, resulting in a peak as soon as they are listed; and retail investors who have experienced hundredfold gains are still immersed in it, thus enthusiastic about meme coins, but their fate is even more tragic than a matter of life and death, as most meme coins are destined to go to zero, and hundredfold meme coins are even rarer.
Analogous to the turbulent history of New York finance, in the development of the cryptocurrency market, this bull market is a moment where “native crypto funds” stand at the forefront (here, the concept of crypto funds excludes venture capital funds, specifically referring to quantitative hedge funds and value investment funds focused on the secondary market).
Compared to traditional financial market crypto funds, they must have the ability to invest in currencies other than Bitcoin and Ethereum, whether through quantitative investment or value investment, they have their own logic and keen sense.
Clearly, whether in traditional financial market crypto funds or “native crypto funds,” they are passionate about money; but for “native crypto funds,” what is more important is faith. In 2021, a large number of traditional financial funds and excellent traders from traditional institutions full of passion for money flocked to the industry, but after the baptism of 2023, what remains are people who are passionate about this industry.
The activity in the secondary market will bring prosperity to the primary market. Because the market has not withstood the baptism, the development of the expected “crypto applications” in the crypto world has been hindered. With a significant improvement in the performance of public chains, great progress in cross-chain interoperability, and the continuous improvement of basic elements such as NFT and DID, concepts like “AI+Web3,” “DePin,” and gamefi/blockchain games that had a practical basis in the previous cycle are just thunder without rain, constrained by the fact that the role of “financial empowerment of industry” and the role of “financial promotion of capital optimization” in the cryptocurrency market have not yet been fulfilled.
The starting point for all these changes should be in this breaking point of the “bull market not being bullish.” The key factor of the breakthrough lies in “native crypto funds.” We believe that the role, status, and impact of “native crypto funds,” as well as the value opportunities they bring, will gradually become apparent in this cycle. Will you be a part of it?
