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Accumulation Is The Best Policy

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@reonarudo
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3 min read

The crypto markets are looking bearish or neutral at best.

Look at this chart:

It seems possible that the May top and the November form a double top signaling the onset of a macro bear phase from which the markets could emerge years from now. That would be consistent with the Fed being under pressure to taper its bond purchasing program and to raise interest rates at least somewhat. But it's impossible to know.

After the 2020 halving, the market did have an explosive growth phase mainly in 2020 while 2021 was a sideways market. Retail investors have been absent since 2021.

I honestly think the only approach that makes sense for relatively unsophisticated investors such as us who are retail is building for the long term. It's best to simply forget short term market fluctuations or even longer cycles because even the long cycles refuse to co-operate with investors by behaving predictably. The only people making any money consistently by trading tend to be much more sophisticated than the average investor.

When it comes to dealing with the price fluctuations of HIVE, it makes sense to keep a portion of one's HIVE in liquid form to sell any sudden pumps and buy sudden dips. But even that strategy is severely limited by the very low liquidity of HIVE particularly on the internal market.

I would advise against using the conversion functions either way because they seem to have been designed with the purpose of discouraging liquidity provision by buyers and sellers to deter manipulation. In converting HIVE to HBD, there is a 5% tax and a 3.5-day delay and the exchange rate seems very bad. The process is very poorly documented on top of everything. In converting HBD to HIVE, there is a 3.5-day delay.

HIVE/HBD liquidity pool

The idea @edicted put forward which is to replace the internal market based on order books with a liquidity pool comprised of both HIVE and HBD makes a ton of sense. As he has pointed out, such a liquidity pool would lock up a ton of both coins, which would be good for the price. It would also increase the liquidity of both HIVE and HBD substantially by encouraging used to provide more liquidity and even without any additional liquidity the process of buying and selling HIVE and HBD would become more painless.

I understand that developer time is valuable but I'm guessing the pool is worth adding to the list of things to be done in the future.

An overlooked additional benefit of an internal HIVE/HBD liquidity pool: bandwidth savings

A great deal of effort has been spent on making the chain more efficient. One way to decrease the operating cost of the internal market is to abandon the order book based model in favor of a liquidity pool based on. The very reason liquidity pools were invented in the first place was the high resource cost of running order books on a blockchain. Order books are best implemented on centralized exchanges.
Hive inherited the internal exchange from Steem, which in turn inherited it from BitShares, all of which are DPoS and thus efficient. But the reality is that these chains have few users at this point. I think it would make sense to look into replacing the internal exchange with a HIVE/HBD liquidity pool at some point.

Conclusion

A bear phase could be ahead given the current macro environment and BTC technicals. BTC and ETH are under their 20-day and 50-day moving averages that generally act as supports during bull phases. But the market might throw a curve ball at us all and the crypto market could decouple from the traditional markets even as soon as this year. It's the adoption that really counts. It's possible for the crypto space to grow in valuation despite the rest of the markets going down so long as adoption is sufficient.

Posted Using LeoFinance Beta