Author: Long Ye
As of the time of writing this article, Q4 2024, this is the early stage of a new bull market in the crypto industry.
The value of BTC in the macro domain, by analogy with bonds and stocks in financial history, is the "fuel" for the next round of human technological development; in the middle domain, it is the currency and index of the digital world that humanity will inevitably enter in the future; in the micro domain, it is the landing of a new round of legal and regulatory compliance, token issuance, and the absorption of investment demand from the general public around the world.
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 100-fold alpha.
The top of this BTC bull market will appear in Q4 2025, with a peak of $160,000 to $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. I look forward to it.
When I feel the bull market is coming, that is the time when my article output is the highest.
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 we discuss the entire digital currency industry, we cannot avoid first discussing the value and price of BTC.
If you have already believed in the value of Bitcoin, you can directly jump to the fifth part, which is about the expected future price trend of Bitcoin.
I. The value of BTC, from an industry perspective, I want to discuss it at the macro, middle, and micro levels
From a macro perspective, BTC represents the hedging expectations of the entire human financial market, as well as the third "financial medium" that can be capitalized in human history after bonds and stocks; from a middle perspective, BTC is the best "index" of the value creation in the "digital age" or the web3 world that humanity will inevitably enter; from a micro perspective, BTC is gradually improving in terms of compliant regulation and will attract a large amount of "traditional old money" in mainstream countries like the United States. In third-world countries, it will absorb the local unmet demand for private investment.
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. In the first part of the "How should we invest in digital currencies in 2021?" series, I started from the perspective of the history of technology to position the status of digital currencies.
Behind finance is the change of the times. At the moment, it may be the most confusing time in the global political and economic situation in the past thirty years, and also the most fragile and most likely to undergo a major reshuffle of the traditional financial order. Now I can no longer 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 the Dutch peddlers were accustomed to offline trading, and the speculation alone did not establish rules and order, causing this bubble to eventually dissipate. But in the long river of history, every technological innovation that has been 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 and mutually reinforcing, and ultimately write a bold stroke in human history. I also cannot imagine whether, if it were not for the Civil War in the United States that restructured the social strata and encouraged technological innovation to enter the real economy, the Second Industrial Revolution would still have started in Britain, but eventually flourished in the United States and become a milestone.
At the same time, I have a more radical view: when everyone is talking about economic stagnation and discussing how to find a viable business model - why does business itself need a business model? Is the word "business model" itself already meaningless?
There are more of my thoughts here, which are somewhat complex, and I will not go into further details here, but will expand on them as the most important part in my future article "Crypto Capital Manifesto Part Four: A Philosophical Essay on Business and Investment" (Related reading: "Crypto Capital Manifesto Part One: Token Issuance, A New Financing Paradigm").
[Excerpt: In discussing business models in the contemporary business and financial environment, the underlying context refers to the mainstream commercial entity model that has developed over the past century: through expanding market size, increasing the number of employees, and finally going public, using profit * PE as a way to price stocks. This path may not hold true in the future.
Currently, "social capital" (or expressed as "private economy") may account for 95% of the total value, and listed companies using stocks as the value anchor may account for the majority of the capital value. But in the future, this value may exist more in "businesses" (why can't limited partnerships work?) and "tokens" (foundations).]
II. Let me spend a little more time talking about the middle-level perspective of 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 e-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 nation-state 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 who insist on "you are investing in a token" are meaningless. Blockchain and crypto need "+", just like now when someone asks you what track you are investing in, you say "I am investing in an equity company" or "I am investing in an Internet company". Web3 as a special industry, crypto as a new market means and financial medium, 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 very 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 mainstream of the business community has been one in the light and one in the dark. AI is undoubtedly a hot spot that capital has been chasing and can be put on the table. Crypto is surging in the dark, where all kinds of legends and get-rich-quick myths are gathered, but it is also restricted in many ways, making it elusive for many people.
The potential of the AI market is indeed widely believed to be in the trillions of dollars, especially in the fields of generative AI, AI chips and related infrastructure. However, for investors, while everyone believes that AI is a sunrise industry and is willing to invest their money in it, what should they invest in? Can we now invest in AI ETF index funds to effectively track the industry growth?
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 may not be positively correlated with the overall growth of AI value - chip companies, Nvidia will certainly not be the only one forever.
Comparison of the performance of mainstream AI ETF and Nvidia stock 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 increase in the total output value of the entire AI industry, the value of this ETF can rise by how much? Just like the Dow Jones Index /S&P 500 ETF represents the development of Web 0 (equity enterprises), the Nasdaq ETF represents Web1, the investment opportunities of web2 have not been presented in the form of an index, the value of the Web3 world, or the future digital world of humanity, 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, humans are destined to spend more and more time in the virtual world, rather than the real world. In the future, when we wear 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, this is the future digital world, or the metaverse. And there, you need to decorate the virtual space, you want the digital people there to dance for you, you always need to pay - this cannot be US dollars, RMB, nor physical assets. The most suitable, and the only one that can be accepted by the entire digital world, is Bitcoin.
Remember in the movie "Xinhai Revolution", Mr. Sun Yat-sen held a 10-yuan bond: "After the revolution succeeds, this bond can be exchanged for 100 yuan".
III. Back to the present
We live in an economically stable country, and 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 new president of Argentina did after taking office was to announce the cancellation of Argentina's fiat currency system - after all, no one in Argentina trusts the government-issued fiat currency. In 2023, Turkey's inflation rate reached +127%, 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, it directly entered the 2.0 era of mobile payment, bypassing the 1.0 era of POS machines and bank card swiping payment, third-world countries have started to develop in recent years, 3.0 era digital currency payment has directly replaced the 2.0 era mobile payment methods, making digital currency payment a common scenario in daily payment.
Here is an interesting debate, Bitcoin has no controller, if it is used as a currency or "currency" it cannot realize the macroeconomic regulation function of the government's fiat currency. In fact, the US dollar is also issued by enterprises, so the so-called government macroeconomic regulation has to give way to the interest groups behind it, and capital power is the driving force behind the operation of the world. If we have to say that fiat currency has macroeconomic regulation, then the interest groups of Bitcoin mining are the biggest regulators.
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 with relatively weak economic resilience, the traditional equity market requires a lock-up period of 8-10 years, and this long-term investment feature makes many people concerned about liquidity issues. While crypto assets provide the possibility of early realization, not only can it attract more retail funds to enter, but also provide more flexible exit expectations for early investors.
In the traditional equity market, angel or early 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 assets, its liquidity is obviously more limited.
The appeal of the crypto asset 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. This flexibility may have a far-reaching impact on the pattern of the traditional equity market. In this regard, you can refer to "Crypto Capital Theory Tetralogy Part II (下): The Battlefield Without Gunsmoke - VC or Token Fund?".
Another aspect is that the financial markets of most sovereign countries around the world are extremely fragmented and lack liquidity, while the inherent global financial characteristics of crypto greatly attract this pool of funds, including South Korea, Argentina, Russia, etc. And the stock market development in countries dominated by Vietnam in Southeast Asia cannot keep up with the speed of wealth accumulation of the middle class, which has made this emerging class directly transition from local financial markets to crypto, bypassing the stage of local financial market participation. 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. While the digital currency market that has absorbed global retail funds has the most abundant liquidity, becoming their best investment target.
Doge's current market cap and trading volume
Samsung's current market cap and trading volume
Note: From the figures, Doge's current market cap is about $60 billion, and Samsung's market cap is about $234 billion, about 4 times that of Doge. But the 24-hour trading volume of Doge reached $5.5 billion, tens of thousands of times that of Samsung.
And in the strategic territory of the global digital currency market - the United States, 2025 may see a new overhaul of the cryptocurrency legal system, the two most important bills - FIT21 and DAMS, will affect the future of the crypto world. 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 (token launch) as commodity trading rather than securities issuance, thereby falling under CFTC management. Considering that these two bills were proposed by the Republican Party, while the current SEC chairman Gary Gensler represents the Democratic Party's stance, the bills face significant resistance. However, in the event of Donald Trump's re-election as president, the possibility of the bills being passed increases significantly due to the Republican Party's dominance.
To explain this bill, in simple terms, token issuance is treated as a commodity, regulated by the CFTC, thereby legalizing it, which can greatly promote the enthusiasm for token financing. Companies can legally and compliantly raise funds through token issuance, attracting more capital to flow into the crypto world. And with a long-term compliant development channel, more people will firmly engage in this industry even after making money. Most importantly, after the United States takes the lead in introducing this bill, it will officially unveil the competition between countries in the global digital currency financial market and blockchain technology market, "grabbing projects" and "grabbing talents". In the fully globalized and freely flowing crypto world, this may further intensify in the future. If the US policy is more friendly, even if token issuance is no longer a gray area but a respected financial innovation, the founders currently residing in relatively crypto-friendly countries like Singapore and Switzerland may soon experience a major migration.
4. Recalling 2016, when the number of crypto types in the world could be counted on one's fingers
BTC was like a game coin that could be directly "recharged and purchased" on the exchange with RMB, the era of us, the native inhabitants of the crypto circle, and our hopes for the future. (Please refer to the end of the article "How should we invest in digital currencies in 2021?" Part 1)
That was also my dream.
Originally, my idea was to achieve these goals in 8-10 years.
But we only took four years.
It was at that time that I had a new dream - since BTC as a digital asset has been gradually accepted by the mainstream society, then other digital currencies, or tokens, in addition to 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, in order to better enable humanity to cross over into the digital world.
Oh yes, this thing, later on, everyone gave it a new name - NFT.
"Digital commodities in the metaverse era", this is my definition of the ultimate future of NFT, and it is also the most important link in the web3 transformation, digitization, 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 Series on web3", I have described my vision for its future.
5. Of course, the most intuitive way to attract people, or to get more people to read the articles I write, is still to rely on the rise of BTC
Of course, the most intuitive way to attract people, or to get more people to read the articles I write, is still to rely on the rise of BTC.
It's time to get to the point. I need to mention my forecast for the BTC market: The peak of this round of BTC will appear at the end of 2025, with a reasonable range between $160,000 and $220,000, and after that, in 2026, I suggest everyone go short and take a rest.
In my paper "Bitcoin Valuation Model under Miner Market Equilibrium - Based on Derivative Pricing Theory" published on January 1, 2019, I mentioned the bottom of the 2018-2021 four-year cycle,
as well as the bottom of the 2022-2025 four-year cycle that I mentioned in 2022.
From the current perspective, the entire crypto circle is at a critical crossroads. Today's digital currency industry is like the Internet industry at the turn of the century, and the window period of the next 1 to 2 years, the bubble burst is not far away. With the passage of crypto-friendly laws such as the US FIT21, the regulatory compliance of crypto assets will be completed, and a large number of traditional old money that once lacked understanding of crypto or even sneered at it will begin to accept BTC and make 1%-10% allocations. However, after that, if blockchain and digital currencies cannot gradually integrate with traditional industries and truly usher in the "blockchain + industry" revolution, just like the way the Internet industry has integrated with and transformed consumption, social media, and other industries, I really can't see any new influx of capital, and this industry will have no reason to see another astonishing growth opportunity. DeFi in 2020, NFT and metaverse in 2021, these are all in the right direction and have sparked a wave of innovation at the time. But throughout 2024, while BTC hits new highs, the entire blockchain industry has not had enough truly innovative "business concept innovations", and the market is just flooded with more meme and Layer 1&2&3, without any new ones. Moreover, in the 2025 that I can foresee, the overall atmosphere of the industry has determined that I am pessimistic about the emergence of any milestone "business concept innovations".
As the tide rises, the small wooden rafts are everywhere, and the boatmen are all competing to row faster, even mocking the heavy, engine-powered iron ships. But when the big waves recede, the wooden boats will all be stranded, only the enduring engine power can sail out of the port and into the open sea.
Even, to make an interesting prediction, the sign that the crypto bubble has reached its peak will be when Warren Buffett, the world's biggest opponent of BTC, starts to change his tune and even participate in the industry. The stage victory of the revolution is often the moment when the crisis is most latent.
The current crypto circle can be compared to the Internet era of 1999. After experiencing 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. Looking back at history, the Internet industry reached its peak on March 10, 2000, with the Nasdaq index reaching a historic high of 5,408.6 points. However, the bubble then burst rapidly, and the market entered a winter period by 2001. Although the general winter period lasted until 2004, the real bottom was in October 2002, when the Nasdaq index almost fell below 1,000 points, marking the industry's lowest point from a financial perspective.
In 2020, MicroStrategy's purchase of BTC successfully drove the appreciation of the company's stock, realizing a significant stock-coin linkage effect for the first time. By February 2021, Tesla's announcement of BTC investment became a landmark event of major players officially entering the market. These historical moments inevitably make people think of the "1995-1996" of the blockchain industry - the dawn of the Internet boom.
Looking to the future, I believe that at the end of 2025, the price of BTC may reach a long-term stage peak, but it may touch a new low in early 2027. And once the FIT21 bill is passed, it may trigger a wave of mass token issuance, just like the unprecedented prosperity of the ".com" era.
If the threshold for token financing is lowered to 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 between supply and demand in the market and the depletion of capital, the industry will inevitably face a comprehensive collapse.
But before that, in the next 12 months, we still have the potential for BTC to rise nearly 2 times, and for ordinary people, due to the gathering of global liquidity, countless opportunities to "multiply by hundreds or thousands" in the short term - why not participate?
And, looking back at the Internet industry, which was once accused by many media of being a "bubble". Today, the Nasdaq index has broken through the 20,000-point mark. Looking back, what seemed like a mountain peak in 2000 is now just a small hill. Even if you had entered 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 3,202 days since I bought my first BTC on March 7, 2016.
I still remember the price displayed when I clicked the mouse, which was 2,807 RMB, 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 over the 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.
