#8 Deep Dive - Gateway to Asian Capital
Soon the Asian liquidity will flood the markets, how can you profit from it?
Welcome fellow investooors! It’s crypto time so let’s dive right in. To access more content find us here on Twitter. Enjoy!
In today's edition of our Deep Dive, we'll embark on a journey far from the familiar Western world, exploring its market dynamics and narratives. Today, we turn our focus to Asia, a region that may soon host the most compelling narratives of this cycle.
Introduction
In the age of globalization and technological convergence, cultural and regional differences continue to influence how various parts of the world adopt and perceive new technologies. Asia, known for its rapid iteration of innovations and their integration into daily life, shows how swiftly societies can evolve technologically. In countries like China, Japan, and South Korea, technologies such as cryptocurrencies, the metaverse, and other digital initiatives are not just economic tools or entertainment forms but are integral to broader strategies of national development and societal management.
In this context, Hong Kong plays—and continues to play—a significant role by approving Bitcoin Spot ETF and Ethereum Spot ETF applications, paving the way for a massive inflow of Asian capital into the cryptocurrency market, soon initiated by Hong Kong. For months, there have been whispers of Hong Kong becoming the Asian hub for finance and cryptocurrency technology—Asia Crypto Hub, a claim that is now finally being validated with the acceptance of these ETFs.
In today's article, we'll examine the characteristics of the Asian crypto market, how trends are shaped, the major role of social media, and I’ll leave you with some Twitter accounts worth following.
Asian Perspective
The bubble of Western cynicism often leads many to believe that the entire world shares their viewpoint. However, stepping out of our cultural and ideological bubbles can reveal that the majority of the world perceives reality quite differently. Experiences from Asia, where values and perspectives can vastly differ from those in the West, illustrate this point well. Just speaking with people in Seoul or Beijing, or spending some time there, quickly reveals how misguided our previous assumptions can be. Life in these metropolises operates under completely different rules, and the gravity center of the world is located in different regions.
This is why we must strive to expand our intellectual horizons, as this not only introduces us to interesting people but also helps us understand a significant portion of the crypto market—a mystery to many of us. It's worth noting the differing perceptions of gambling in Korea or China compared to our views. I leave you with an interview by DeFiIgnas, who speaks with an expert well-versed in Korean investment culture - originating from Korea. I'm sure many of you will find it as enlightening as I did, and for those interested in delving deeper, I recommend exploring how entities known as "Chaebol"—giant corporations like Samsung—shape the mental landscape of Korea's youth.
Offshoring The Gamble
In January 2023, crypto legend GCR stated that Asia, led by China, would be the frontrunner in the hype for the upcoming bull run. A prediction made over a year ago now seems to be materializing, as Hong Kong has approved the creation of Spot ETFs for Bitcoin and Ether. If you think news of the ETF in Hong Kong is limited to a few Twitter portals, I recommend watching a short video linked below, which shows how awareness among future investors is gradually shaped, or in other words, how the hype is created.
Personally, I agree with GCR's thesis—a view I've long held, although there's a stark difference between accelerating a bull run and starting one. While the introduction of Bitcoin ETFs in the USA triggered initial rallies in prices, the shift of crypto-hype to Asia could fuel the second wave of euphoria, entering the most emotional phase of the bull run.
Why are ETFs being introduced in Hong Kong instead of mainland China?
Chinese have a strong inclination towards gambling, and money holds an extremely high place in their hierarchy of values—just recall that some of the most popular Chinese New Year wishes revolve around money and wealth. However, the propensity for gambling does not positively affect society—nor is it a positive marketing aspect, hence China actively suppresses gambling opportunities domestically while effectively creating the world's largest casinos—literally and metaphorically, through offshoring. If gambling does not occur within China's borders, it poses no problem. This is why we see Macau as Asia's largest casino and soon, Hong Kong as the largest crypto-casino Asia, and perhaps the world, has ever seen.
The thesis is simple—Hong Kong will become for crypto what Macau has become for gambling.
Where China's Attention Is Headed
I hope many of you remember the Chinese narrative from early last year when tokens from Asia dominated the Twitter feed. Trends played out incredibly quickly, prices experienced aggressive rallies, but only a few managed to benefit from these trends without becoming exit liquidity for the average Asian.
One example was a very short trend that lasted two or three days, during which the West tried to predict which tokens Asia would bid on, while Asia tried to anticipate which tokens the West thought Asia would bid on, entering them just a bit earlier.
Another example was the interest in the token 科太币, based on the highly anticipated movie "No More Bets," which also had its rally. But how could a Western crypto player have known that this movie was highly awaited and would be a reason to launch such memecoin?
The lesson from these examples is that suddenly nearly all of crypto Twitter found itself at the end of the food chain, and the hottest trends seemed to bypass it. The time when Asian groups and KOLs were dealing the cards was very difficult for the West to play due to vast cultural differences and understanding what was actually happening, not to mention that most of the information did not appear on Twitter—a Western platform I remind you, but on WeChat. And how many of us actively use WeChat and can access the most interesting Asian groups? Just as I thought…
However, all this took place during the Echo Bubble in bear market, when trends were much shorter and more aggressive in cutting profits. Has the same market play character been seen in recent months? Has anyone even heard of the Chinese playing trends on crypto Twitter? Where did the "Chinese narratives" go?
In recent months, what has been heating up the Chinese market has not been the same as what has been heating up the crypto Twitter we know. While we focused on various narratives from different ecosystems—including the Solana meme season, Asia focused its gambling potential on an ecosystem many of us have forgotten or have less access to—on Bitcoin. The Ordinals mania would not have been the same mania without the inflow of Asian capital, and it seems that the Bitcoin ecosystem will attract the most interest. While we play memes on Solana, Avalanche, or Base, Asia has a great time on Bitcoin.
Here, I'll also throw in some information about a certain memecoin on Solana, which is somewhat related to Chinese capital—and definitely to Chinese culture. Moutai is the most recognizable Chinese alcohol brand, and people promoting a memecoin created based on this brand—though having nothing to do with it, try to catch the eyes of Chinese degens on the Solana ecosystem, which is currently very Western-centric. Will MOUTAI actually manage to attract Chinese capital to the Solana ecosystem? Probably not, since memecoins related to somewhat controversial topics have trouble breaking through to a higher level of hype—it's much easier to shill dogs and cats than something touching on controversies or negative marketing. In other words, we can't count on such a memecoin being listed by a major exchange, like what happened with PEPE, WIF, or BONK. However, the potential is huge, the question is only whether such an experiment will end in success.
Remember, though, that I'm throwing this out just as an interesting info and not investment advice—I have no exposure to the MOUTAI token myself, but I think it's a very interesting experiment in trying to attract Asian capital to Solana, which is definitely worth watching.
The Forgotten Metaverse
There's something else worth mentioning, something both the crypto world and the broader market seem to have forgotten. The concept of the metaverse, seen through the lens of Western culture, significantly differs from the Asian perspective. For countries like China, Japan, and South Korea, the metaverse is not just a new technology perfect for developing entertainment or office work, but a key element of digital development strategy, supporting the centralization of power and facilitating societal management. In Asia, where digitization permeates every aspect of life, from entertainment to city management, the metaverse is a natural step towards further integration and synchronization of digital infrastructure. Here, digital copies of real cities become commonplace, and the WeChat app, used for almost everything from communication to financial transactions, becomes the hub of digital life. Additionally, the incredibly fast development of 5G technology, which allows even faster and more efficient data exchange, means that Asian societies are a step ahead of the rest of the world in achieving nearly full digitization of daily functioning.
On the other hand, in the West, the metaverse is often seen primarily as a new form of digital entertainment, and its practical applications are neither widely understood nor utilized. This clearly shows how far Asia has gone in integrating digital infrastructure and using metaverse technology to create integrated and intelligent urban environments—I recommend googling "Korean Digital Twin City." However, the example of creating digital twins of cities that facilitate management is just the tip of the iceberg when it comes to integrating the broader concept of the Metaverse. So be prepared for the Metaverse to return in some form or another, and although its name may change, the concept will remain the same. The question is only whether the potential crypto hype in Asia will include this in the coming months, or perhaps only in the distant future.
For those interested, I recommend checking out last year's Deloitte report, which focuses on the digital development of Asia and its individual countries.
Bonus - Twitter Accounts
As an addition, I've decided to share with you a few accounts related to the Asian market that I've been following for a long time. However, I need to clarify a few things I've noticed over time, recognizing differences between Asian and Western crypto-related accounts.
First, shilling activities in the Asian market—especially in China—are on a completely different level than what most of you are used to on our Western Crypto Twitter. So don't believe 100% in any word and always wonder whether someone is looking for exit liquidity, or whether it's a typical pump and dump, where it's hard to be on time.
Second, the language barrier and unfamiliarity with cultural subtleties will always cause some delay in understanding the message—or even drawing the wrong conclusions if we wanted to delve into and play this market. Therefore, building "informational exposure" to Asia as a way to sense the market moods there, understand the general trends, or be reasonably timely with the changes occurring there is valuable.
And third and last, if you're interested in following Asian moods, being present on WeChat groups and following the Chinese version of TikTok is almost mandatory to be "reasonably timely" with the trends played there. It's a piece of hard work if we don't know the language, and the risk of becoming exit liquidity is significantly higher there. However, as mentioned earlier, it's worth incorporating even a few accounts that reflect the broader moods of the Asian crypto market into your analysis—often, a general view of the situation lets us see much more than if we delved into the details.
A Few Closing Words
In summary, technological and cultural development in Asia radically differs from that in the West. The Asian perspective on cryptocurrencies, the metaverse, and other modern technologies shows how deeply society has undergone digital integration—and the difference that separates us. While the West uses the mentioned technologies mainly for entertainment purposes, Asia strives to use them more pragmatically.
So let's try to get to know our market counterparty to best play the coming months, because just like during the so-called Echo Bubble when we had many Asian trends, almost all of them missed a significant part of the people on Western crypto Twitter. Asia is coming, so it's high time to prepare.
That’s all for today, thank you all for reading this week’s Deep Dive and see you in two weeks time! To access more content find us here on Twitter. See you there!
~ ModernEremite & Crypto o’Clock Team
This newsletter is provided for educational purposes only and does not constitute investment advice. It is not intended as a solicitation to buy or sell any assets, and readers are strongly advised to conduct their own research and seek independent financial advice before making any investment decisions. The authors and publishers disclaim any liability for any direct or consequential loss arising from any use of the information contained herein.