Translated Title: "2024&2025, the last mega cycle of BTC - The value and price of BTC"
Source: Long Ye @ x Element
Summary of the Article
As of the time of writing this article in Q4 2024, this is the early stage of a new bull market cycle in the crypto industry. The value of BTC, from a macro perspective, can be compared to bonds and stocks in financial history, and is the "fuel" for a new round of human technological development; from a meso-level perspective, it is the currency and index of the digital world that humans will inevitably enter in the future; from a micro perspective, it is the landing of a new round of legal and regulatory compliance, token issuance, and the absorption of global grassroots investment demand. This may be the last "grassroots" cycle for the crypto industry, and also the last mega cycle in which BTC has a huge beta upswing. This means that after this cycle, the beta of BTC will be greatly reduced, but it does not mean that the broader token issuance market will no longer have opportunities for 100x alpha.
The top of this BTC bull market will appear in Q4 2025, with a peak of $160,000-$220,000. Before that, in addition to the "first wave" that has already occurred, there will be two more significant mid-term bull market trends. The current period is the 1999 of the Internet era, which means that after the bull market reaches its peak in the next 12-18 months, the crypto industry will experience a prolonged winter, just like the bursting of the Internet bubble in 2000-2001. Of course, this is also an opportunity for the industry to be reshuffled and reorganized.
When I feel the bull market is coming, that is the time when my article output is the most productive.
About 4 years ago, at the beginning of the last bull market cycle, I wrote the article "How should we invest in digital currencies in 2021?". When discussing the entire digital currency industry, it is inevitable to first talk about the value and price of BTC.
If you already believe in the value of Bitcoin, you can skip directly to the fifth part, which discusses the expected future price trend of Bitcoin.
From an industry perspective, I want to discuss the value of BTC at the macro, meso, and micro levels. From a macro perspective, BTC represents the hedging expectations of the entire human financial market, and is the third "financial medium" that can be capitalized after bonds and stocks in human history; from a meso perspective, BTC is the best "index" of the value creation in the "digital age" or web3 world that humans will inevitably enter in the future; from a micro perspective, BTC is gradually improving in terms of compliance and regulation, and will attract a large amount of "traditional old money" in mainstream countries like the United States. In third-world countries, it has absorbed the local unmet grassroots investment demand.
At the macro level, we see Bitcoin as a groundbreaking asset in the history of human finance, so the most important thing is to understand the evolution of financial history.
Behind finance is the change of the times. At the present moment, it may be the most bewildering time in the past thirty years in terms of global political and economic situation, and also the most fragile and likely to undergo a major reshuffle of the traditional financial order. I am unable to trace back whether there were financial venues similar to the London Stock Exchange or the New York Stock Exchange at the time of famous financial bubbles such as the "Dutch Tulip Mania" hundreds of years ago, or whether Dutch peddlers were accustomed to offline trading, and the bubble eventually burst without establishing rules and order. But in the long river of history, every technological innovation remembered by humanity has had a revolution in the financial paradigm behind it, and the revolution of the financial paradigm is the inevitable product of the change of the times. These are causal relationships, yet complementary, and ultimately write a bold stroke in human history.
At the same time, I have a more radical view: when everyone is talking about economic stagnation and discussing how to find viable business models - why does business itself need a business model? Has the word "business model" itself already lost its meaning?
There are more of my thoughts here, which are somewhat complex, and I will not go into further detail here, but will expand on them as an important part in my future article "A Philosophical Essay on Business and Investment - A Supplement to the Crypto Capital Tetralogy".
【Excerpt: In discussing business models in the contemporary business and financial environment, the context behind it refers to the mainstream path of business entities developed over the past century based on the "corporate system": to expand market scale, increase the number of employees, and finally go public, with stock pricing based on profit * PE. This path may not hold true in the future.
Currently, the value held by "social capital" (or expressed as "private economy") may be 95% in the form of equity enterprises, and listed companies using stocks as the value anchor may account for the majority of capital value. But in the future, this value may exist more in "businesses" (why can't limited partnerships work?) and "tokens" (foundations).】
Let me spend a bit more time discussing the meso-level perspective on the BTC industry. In the afterword of the book I wrote in 2021, the first of the eight predictions was that BTC is unbeatable. Refer to the afterword of my book "Unlocking the New Password - From Blockchain to Digital Currency".
From the perspective of the technology industry, web3 is an inevitable trend, and Bitcoin is the core asset or "currency" of the entire web3 world. In the ancient barter economy, gold was the most common "currency", and in the modern national system and financial system, national currency is the most common "currency". In the future, with the advent of the digital age, a new "currency" will be needed in the virtual space of the metaverse for all digital life.
So some people's insistence on "why are you investing in a token" is meaningless. Blockchain and crypto need "+", just like when someone asks you what track you are investing in, you say "I'm investing in an equity company" or "I'm investing in an internet company". As a special industry, web3, and as a new market means and financial medium, crypto is gradually integrating with other industries - blockchain + AI = DeAI, blockchain + finance = DeFi, blockchain + entertainment/art = NFT + metaverse, blockchain + scientific research = DeSci, blockchain + physical infrastructure = DePIN...
The trend is clear, but what does it have to do with us? Or, how can we gain wealth appreciation after seeing the trend?
Let's turn our attention to AI.
In recent years, the main theme of the business community has been clear on the surface but obscure underneath. AI is undoubtedly a hot topic that capital has been pursuing and can be put on the table. Crypto, on the other hand, is surging in the dark, where all kinds of legends and get-rich-quick myths gather, but it is also restricted in many ways, making it unattainable for many.
The potential of the AI market is widely believed to be in the trillions, especially in the fields of generative AI, AI chips, and related infrastructure. However, for investors, while they believe AI is a sunrise industry and are willing to invest their money in it, what should they invest in? Can they now invest in AI ETF index funds to effectively track the industry's growth by comprehensively covering the AI ecosystem?
No. In 2024, Nvidia's stock price has risen nearly 3 times, while the performance of most AI-themed ETFs during the same period has been mediocre. Looking further ahead, Nvidia's stock performance will not be positively correlated with the overall growth in AI output value - chip companies will not be dominated by Nvidia forever.
Comparison of performance of mainstream AI ETFs and Nvidia stocks in 2024
AI is the main theme, but will there be a product that can anchor the future development of the AI industry market value, and the value of this ETF can rise as much as the overall industry output value increases, just like the Dow Jones Index/S&P 500 ETF representing the development of Web0 (equity enterprises), the Nasdaq ETF representing Web1, and the investment opportunities of Web2 not presented in the form of an index? In the Web3 world, or the future digital world of humanity as a whole, the most suitable index is BTC.
Why should the value of the Web3 world be measured by BTC?
Because, starting from the birth of computers and the Internet, it is destined that humans will spend more and more time in the virtual world rather than the real world. In the future, with VR/AR glasses, we can sit at home and visit Yellowstone National Park, experience the palaces of the Tang Dynasty in China, and enter the virtual conference room you set up and have coffee with friends on the other side of the Earth... The boundary between reality and virtuality will become increasingly blurred, and this is the future of the digital world, or the metaverse. And there, you need to pay to decorate the virtual space, you want the digital people there to dance for you - this cannot be US dollars, RMB, or physical assets. The most suitable, and the only one that can be accepted by the entire digital world, is Bitcoin.
Remember in the movie "The 1911 Revolution", Dr. Sun Yat-sen held up a 10-yuan bond: "When the revolution succeeds, this bond can be exchanged for 100 yuan".
Back to the present.
We live in an economically stable country where the fiat currency is trustworthy. But this does not mean that the entire global financial system is as stable as the society we live in: the first thing the newly elected president of Argentina did was to announce the cancellation of Argentina's fiat currency system - there's no need to bother since no one in Argentina trusts the government-issued fiat currency anyway. Turkey's inflation rate reached +127% in 2023, and correspondingly, the digital currency ownership rate of its citizens reached as high as 52%. Especially in third-world countries, in the process of gradual improvement of information technology infrastructure in recent years, their traditional fiat currency mobile payment and digital currency payment methods have developed almost simultaneously. In comparison, just like the prosperous development of information technology in China around 2010, they have skipped the 1.0 era of POS machines and bank card swiping payments and directly entered the 2.0 era of mobile payments, and the third-world countries in recent years have started to develop, the 3.0 era of digital currency payments has directly replaced the 2.0 era of mobile payment methods, making digital currency payments a common scenario in daily payments.
An interesting debate arises here - Bitcoin has no controller, and if it is to serve as a currency or "currency" it cannot fulfill the government's macroeconomic control function of fiat currency. In fact, the US dollar is also issued by enterprises, so-called government macroeconomic control must give way to the interest groups behind it, and capital power is the real driving force behind the world. If we have to say that fiat currency has macroeconomic control, then the mining interest groups of Bitcoin are the biggest controllers.
Changes in inflation rates of major economies in recent years
Changes in Argentina's inflation rate in recent years
From a micro perspective, with the acceleration of capital flow, technology and financial cycles are becoming shorter and shorter. In an environment of weak economic resilience, the traditional equity market requires a lock-up period of 8-10 years, and this characteristic of long-term investment makes many people concerned about liquidity issues. Crypto, on the other hand, provides the possibility of early realization, which can not only attract more retail funds to enter, but also provide more flexible exit expectations for early investors.
In the traditional equity market, angel or early-stage investors usually seek to realize partial exit through equity transfer or corporate buyback around 5 years after the company's establishment, when the company has entered a relatively mature development stage but still has some time before IPO or acquisition (usually 8-10 years). This model can effectively alleviate the time cost of investment, but compared to crypto, its liquidity is obviously more limited.
The appeal of the crypto model lies in the fact that it allows early investors to realize capital recovery earlier through token issuance or circulation, while attracting a wider range of market participants, and this flexibility may have a far-reaching impact on the pattern of the traditional equity market.
Another aspect is that the financial markets of most sovereign countries are extremely fragmented and lack liquidity, while the inherent global financial characteristics of crypto have greatly attracted this pool of funds, including South Korea, Argentina, Russia, etc. And the stock market development in some Southeast Asian countries led by Vietnam cannot keep up with the speed of wealth accumulation of the middle class, which has led these emerging classes to directly transition their investment demand to crypto without going through the stage of local financial markets. Against the background of global digital currency compliance and integration with the mainstream financial market, the investment demand of these countries' private assets cannot be met by the weak local financial infrastructure - the KOSPI and KOSDAQ markets in South Korea have more than 2,500 listed companies, but 80% of the companies have a market value of less than $100 million, and the daily trading volume is negligible. The digital currency market, which has absorbed global retail funds, has the most abundant liquidity, becoming the best investment target for them.
Current market cap and trading volume of Doge
Current market cap and trading volume of Samsung
Note: From the figures, we can see that the current market cap of Doge is about $60B, while Samsung's market cap is about $234B, about 4 times that of Doge. However, the 24-hour trading volume of Doge reached $5.5B, tens of thousands of times that of Samsung.
Here is the English translation of the text, with the specified terms translated as requested: In the strategic location of the global digital currency market - the United States, 2025 will likely see a new overhaul of the crypto legal system. The two most important bills - FIT21 and DAMS - will affect the future of the crypto industry. These two blockchain bills, regulated by the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC), are core to treating token issuance as commodity trading, not securities issuance, thereby falling under CFTC management. Considering these bills were proposed by the Republicans, and the current SEC Chair Gary Gensler represents the Democratic stance, the bills face significant resistance. However, if Donald Trump is re-elected as president, with the Republicans in control, the likelihood of the bills passing increases significantly. Explaining the bills simply, token issuance is treated as a commodity, legalized under CFTC regulation, which can greatly promote the enthusiasm for token financing. Enterprises can legally and compliantly raise funds through token issuance, attracting more capital into the crypto industry. With a stable, compliant development channel, more people will firmly remain in the industry even after making profits. Most importantly, after the US introduces these bills, it will officially kick off the global competition in the digital currency financial market and blockchain technology market - "grabbing projects" and "grabbing talents". If the US policies become more crypto-friendly, and token issuance is no longer a gray area but a respectable financial innovation, the founders currently residing in crypto-friendly countries like Singapore and Switzerland may soon see a major migration. Recalling 2016, when the entire crypto world could be counted on one's fingers, and BTC was like a game token that could be directly "recharged and purchased" on exchanges with RMB, we, the native crypto residents of that era, have high hopes for the future. That was also my dream. My original plan was to achieve these goals in 8-10 years. But we only took four years. It was then that I had a new dream - since BTC as a digital asset has been gradually accepted by the mainstream society, other digital currencies or tokens, besides digital equity, should also play the role of digital commodities, so that in the future digital world of humanity, in addition to financial value, they should also generate utility, allowing humans to better enter the digital world. Oh yes, this thing was later given a new name by everyone - NFT. "Digital commodities in the metaverse era" is my definition of the ultimate future of NFT, and the most important step in the web3-ization, digitalization, and mass adoption of "internet-era commodities". Therefore, I resolutely built the NFT industry in early 2021. In the "The Road to the Future - The Five-Part Web3 Series", I have described my vision for its future. Of course, the rise of BTC is still the most intuitive way to attract people, or at least make more people willing to read what I write. It's time to get to the point. I need to mention my forecast for the BTC market: the peak of this BTC cycle will appear at the end of 2025, with a reasonable range between $160,000 and $220,000. After that, in 2026, I suggest everyone goes into cash and takes a break. In my paper "Bitcoin Valuation Model under Miner Market Equilibrium - Based on Derivative Pricing Theory" published on January 1, 2019, I mentioned the bottoms of the 2018-2021 and 2022-2025 four-year cycles. From the current perspective, the entire crypto industry is at a critical crossroads. Today's digital currency industry is like the internet industry at the turn of the century. The bubble burst is not far away in the next 1-2 year window. With the passage of crypto-friendly laws like FIT21 in the US, and the completion of compliant regulation of crypto assets, a large number of traditional "old money" who previously lacked understanding of crypto or even completely dismissed it, will start to accept BTC and make 1%-10% allocations. However, if blockchain and digital currencies cannot gradually integrate with traditional industries and truly usher in the "blockchain + industry" revolution, just as the internet industry revolutionized consumption, social media, and media, I really can't see any new influx of capital or reasons for this industry to experience astonishing growth again. DeFi in 2020, NFT and metaverse in 2021, these are the right directions, and they sparked a wave of innovation at the time. But in the entire 2024, while BTC hits new highs, the entire blockchain industry lacks sufficient "business concept innovation". And in 2025, as the industry atmosphere determines, I am pessimistic about the emergence of milestone "business concept innovations". The tide is rising, and now the big water is flooding in, with small rafts everywhere, all competing to row faster, even mocking the heavy, engine-powered iron ships. But when the big waves recede, the wooden boats will be stranded, only the persistent engine power can sail out of the port and into the open sea. Even an interesting prediction - the sign that the crypto bubble has reached its peak will be when Warren Buffett, the world's biggest Bitcoin opponent, starts to change his tune and even participate in the industry. The phased victory of the revolution is often the moment when the crisis is most latent. The current crypto industry can be compared to the internet era of 1999. After a wave of rapid growth towards the right track, the digital currency industry may experience a violent adjustment due to the huge bubble, starting from the end of 2025. Reviewing history, the internet industry saw the Netscape IPO in December 1995, followed by the Yahoo IPO in April 1996, igniting a market frenzy. On March 10, 2000, the Nasdaq index reached a historic peak of 5,408.6 points. However, the bubble then burst rapidly, and the market entered a winter period until 2001. The real low point was in October 2002, when the Nasdaq index nearly fell below 1,000 points, marking the industry's financial nadir. Looking to the future, I believe that at the end of 2025, the price of Bitcoin may reach a long-term cyclical peak, but in early 2027, it may touch a new low. And once the FIT21 bill is passed, it may trigger a wave of mass token issuance, just like the ".com" era of unprecedented prosperity. If the threshold for token financing is almost zero, and even ordinary people can easily issue their own tokens like high school students learning to build a website, the limited capital in the market will be quickly diluted by the influx of various Tokens. In such an environment, the final "violent bull market" belonging to the token issuers may not last more than three months. Subsequently, due to the imbalance of supply and demand in the market and the depletion of capital, the industry will inevitably face a comprehensive collapse.However, in the next 12 months, we still have a potential upside of nearly 2 times the beta of BTC, and for ordinary people, due to the global liquidity gathering, there are countless "hundred-fold and thousand-fold" opportunities for early cryptocurrencies - why not participate?
Also, looking back at the turbulent internet industry that was once criticized by many media as a "bubble". Today, the Nasdaq index has broken through the 20,000-point mark. Looking back, in 2000, it seemed like a mountain peak, but now it's just a small hill. Even if you had joined the internet industry in 2000 and persisted until today, it would still be one of the most correct choices.
BTC, one small hill after another.
It has been 3202 days since I bought my first BTC on March 7, 2016.
I still remember the price displayed at the moment I clicked the mouse, which was 2807RMB, less than $400.
Many people have asked me, how high do you think BTC can go?
This question is meaningless. The price of gold has also been setting new highs these days and years.
The meaningful question is, how high can the price of BTC go before a certain point in time?
Let's wait and see.
The best is yet to come.
