We may be standing on the threshold of an era where valuation models are completely failing!
Andrew Kang (@Rewkang), co-founder of Mechanism Capital, makes a very radical but serious judgment in this article:
We are at one of the most extreme asymmetric moments in history.
The only correct strategy now is to take a longer-term perspective and completely abandon short-termism.
It's worth reading because this article doesn't discuss a specific asset, but rather redefines the way the world changes in the AI era and the shift in investment paradigms themselves from a higher perspective.
1️⃣ He believes: We are currently at an extreme asymmetric moment:
The so-called "asymmetry" does not refer to high risk and high return, but rather: Upside potential far outweighs downside risk, and the two are not on the same order of magnitude.
Downside is limited, and upside may grow exponentially.
This means that using traditional "volatility control" and swing trading strategies may actually cause us to miss the most core sources of returns.
2️⃣ The change is not in the outcome, but in "time density"!
The time density of technological progress has undergone a structural change: the ratio of technological breakthroughs per unit time to the rate of maturation is experiencing a structural leap.
Moreover, this leap is not a single point, but rather multiple main lines accelerating simultaneously: AI, robotics, energy, healthcare, and other main lines are accelerating concurrently.
This is a change in the production function itself, not cyclical fluctuations.
3️⃣ Historical distributions may fail in the next 3–10 years.
He means that historical experience, mean reversion, and valuation anchors are all becoming ineffective; the statistical tools we use to understand the world are becoming obsolete.
The world has entered a new phase that old models cannot explain.
4️⃣ The gap between the expected value of trading and investment will widen dramatically.
In this context, his conclusion is very clear: short-term fluctuations will certainly exist, and corrections will certainly occur, but in the face of exponential trends, these are more like noise.
Therefore: the gap between the expected value of trading and long-term investment will be larger than at any other stage in history. In other words, using trading to fight exponential trends is inherently an activity with a negative expected value.
In summary, Andrew Kang believes that in the exponential era, the real risk isn't volatility, but rather trying to understand a civilization that has begun to grow out of control using the methods of a linear world.
However, his predictions rest on several preconditions:
1) Premise A: Technological diffusion is not a single point, but a systemic phenomenon;
2) Premise B: The capital system will not hinder this diffusion;
3) Premise C: You can "survive" and "hold on." Therefore, I can't truly know what's right in the current rapidly advancing AI landscape, but I think I can say what constitutes a "mistake" under this logic:
1️⃣ Treating BTC as a short-term trading instrument;
2️⃣ Understanding AI × Crypto using "previous cycle valuations";
3️⃣ Frequent portfolio adjustments and constant market timing.
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