Narrative Dynamics Lecture 2 "Narrative" refers to how one understands something. "Dynamics" refers to imagining how market participants with capital understand something, which is essentially imagining the sequence in which capital flows into the pool. Price increases stem from the market's expectation of price increases. Every buyer believes that more buyers will enter to push the price higher; however, when all potential buyers at the current price level have already bought in—when the market as a whole becomes extremely optimistic—the price will drop due to a lack of buying pressure. Quantitative signals become self-fulfilling, key propagators' dissemination becomes self-fulfilling, and signals from well-known addresses buying in also become self-fulfilling. When liquidity is abundant, purchases by "leading" addresses and endorsements by KOLs (Key Opinion Leaders) attract a large influx of inexperienced buyers. When liquidity is scarce, purchases by "leading" addresses and endorsements by KOLs indicate that the narrative dissemination has reached its final stage, as most of the buying volume in the market comes from pro traders—in simpler terms, most people have already "front-run." Choosing PvP (Player vs. Player) means earning money from other professional traders. Choosing narrative dynamics means earning money from amateur traders. When there aren't enough amateur traders, it becomes PvP. You exploit me, I exploit you, KOLs exploit their followers, and leading addresses exploit retail investors. Solution: Seek narrative and trading domains dominated by amateur traders: 1. In terms of timing: An increase in macro liquidity itself will bring more amateur traders into the market. Clearly, now is a bad time. 2. In terms of space: Many U.S. retail investors currently have money. We can see this from trading activity times and themes. Afternoons in the Eastern and Western U.S. are more likely to see large-cap memes, with themes revolving around the spiritual and cultural needs of white and Black Americans: $HOUSE, $MOTION, and the TikTok meta. In the Chinese-speaking region, retail funds may have already been exhausted by BNB memes and need time to recover. As a result, we see: Chinese-speaking "leading" addresses busy losing money, KOLs blaming each other, and young P traders arrogantly believing that being faster than everyone else guarantees victory. I hope to predict a market more suitable for the majority. Most people, like me, are somewhere between professional and amateur. Therefore, we must choose the right timing and the right domain to act. Yet, most people are ignorant. Following the law of the jungle, most become the "weak" rather than the "strong." Interestingly, the weak admire the strong more and do not reflect on whether they should exist within this power structure. May one day, the red ocean part a path for us. Sigma Hunter