Original: Liu Jiaolian

Overnight, BTC continued to strive upwards, once approaching the historical new high of 95000. With BTC continuously reaching new highs, and the frenzy of memes (memecoin), it makes the friends who hold a lot of ETH feel like their hearts are bleeding every day.

The chart below shows the monthly chart of ETH/BTC in the past 6 years. When the wedge convergence comes to an end, not an upward breakout, but a downward breakout, people's hopes are shattered. At this moment, even the KOLs who scolded bullishETH/BTC at the beginning of the year have no strength (refer to the article "Many encryption people are bullish on ETH/BTC, or will promote the outbreak of the copycat season"**), which can really be called "exhausted".

Jiao Chain is also one of those who have thrown themselves into the pit. It is needless to say that, during the early stage of the 2021 Bull Market, Jiao Chain also dabbled in Decentralized Finance and Non-fungible Tokens, all of which were on the ETH chain at that time, so naturally, it also accumulated a considerable amount of ETH.

There is a kind of cleverness called 'Bull MarketBTC is too expensive, let's buy some altcoin (ETH) instead!' The Jiao Chain is also not spared from this clever curse. In 2021, it stopped adding positions to BTC at high levels and instead bought altcoins including ETH.

Only when the tide recedes do you realize you've been swimming naked.

Although there are still some risk controls in the education chain, from the perspective of the US dollar, the current ETH position is not losing money. However, from the perspective of BTC, buying ETH instead of BTC in the past year really lost BTC.

On ETH, Teach Chain can be described as "knowing that there are tigers in the mountains, yet still heading to the mountains", or it can be said as "tempting the tiger with one's own body".

On the one hand, Jiaolian is well aware and has openly written many articles pointing out that the risk of holding ETH is very high. There are three main theories (judgments) formed over the past three years or so:

1. EIP-1559 burning mechanism softens ETH, causing it to lose its store of value property.

2. Abandoning PoW for PoS significantly reduces the ability of the ETH system to 'absorb negative entropy', thereby damaging its long-term value.

3. The value foundation of ETH—ETH chain is positioned in the midstream of the industry chain as the 'web3 infrastructure' and 'world computer.' In the midstream of the industry chain, the moat is the lowest, and the added value is also the lowest. This is the well-known 'smile curve' in the industry.

Over the past year, or even the past two years, BTC and memes, located at both ends of the smile curve, have been racing each other to rise, which is quite enjoyable. Just thinking of this theory again, Jiaochain casually drew a picture to illustrate the current situation of the two-tier division in the crypto market: institutions are temporarily focused on increasing their holdings of BTC, while retail investors are speculating on meme coins, and no one is playing altcoins.

The left and right ends of the smile curve represent the core technology and brand marketing of the industry chain. One side grasps the "core technology" (PoW) and tightly holds the "core value" (the safest value storage and transmission), such as BTC. The other end grasps the "user mentality" (researching how to get rich quick with shitcoins, with the least tricks being more fair), caters to "user needs" (cryptocurrency speculation for getting rich quick), and only retains "brand value" (besides brand marketing, it has no other value), such as Meme coins. Therefore, these links have relatively high added value. The middle part of the curve represents production and manufacturing, which has been continuously developing, upgrading, and innovating (such as first- and second-layer basic infrastructure of public chains), but due to fierce competition, low moats, easy replication, and strong substitutability, the added value is usually the lowest.

In February of this year, Jiao Lian also discussed the issue of the low moat of ETH (see the screenshot of the chat record below):

The original words in the screenshot are as follows: 'The use of ETH provides an infrastructure for speculation... Although speculation is illusory, the demand generated by speculation is real... So the moat of ETH is not high... '

In the past, when new public chains like Solana were not yet mature, and second layers like Arbitrum and Base had not been widely replicated, Ethereum still held a technological advantage on the left and occupied a high ground in the industry on the right. However, since the Bull Market in 2021, new public chains have caught up, and second-layer chains have proliferated like mushrooms after rain, not only weakening the technological advantage of the Ethereum chain, but also dazzling with a plethora of brands and names, greatly dispersing users' cognitive focus. Ethereum has been 'blocked at both ends,' causing a serious contraction in its value towards the middle of the smile curve!

On the other hand, despite the above-mentioned understanding, JouleChain does not practice what it preaches, but insists on holding ETH, which indicates a lingering fantasy about ETH in its heart, wanting to see if ETH can really maintain its position in the industry and not be overtaken by new public chains. In addition, JouleChain is also doing some development work in the ETH ecosystem, so it still hopes that ETH can ultimately win.

To share these experiences and lessons learned candidly, first, it is a reflection and dissection of oneself, and secondly, to illustrate that although Gate.io has made some gains in the crypto market, it is by no means always correct. On the contrary, Gate.io has made countless mistakes. Fortunately, these mistakes are not fatal and have not brought Gate.io down.

However, reflecting on so much is not necessarily an opinion on any operation. JiaoChain often analyzes its own bearish theory on holdings, BTC is like this, ETH is also like this. This is to put pressure on one's own holdings. If you don't have the courage to withstand the pressure test, maybe you shouldn't have built a position and held it from the beginning!

If you use the most logically rigorous theory to bearish your Position every day, and still hold it firmly without Cut Loss, then it's hard for any superficial bearish voice in the market to shake your firm holding.

The most steadfast Spotlongs are surely experts in various bearish theories.

Since you have built a position, you must have the determination to hold until it drops to zero. This is called 'regarding death as homecoming'.

Jiao Chain will not Cut Loss and change positions at this time.

One principle is to never Cut Loss at the most pessimistic time in the market.

Of course, the teaching chain may be wrong again. But the worst consequence of this mistake is just that your ETH position will be reduced to zero.

Before building a position, you should think clearly, if it drops to zero, can you accept such a large position? Can't accept it? Then reduce it a bit, reduce it a bit more. Until it is acceptable. This is called 'risk control'.

One of the main reasons for losses in the financial market is investing funds that one cannot afford to lose.

Never wait until the loss happens to start regretting.

Jiao Chain said, respect the market.

Never be complacent just because of a little profit. Never think you are smarter than the market. Never think you have the ability to beat the market.

The market is ultimately effective. Trying to outsmart the market will only expose one's ignorance rather than being smarter than the market itself.

You laugh at the market being crazy, and the market laughs at you for not seeing through it.

Desperate Cut Loss can't hold, buying high and selling low loses everything.