Author: Tony Ling; Source: Foresight News
At the moment of writing this article, 2024Q4, this is the early stage of a new round of bull market in the cryptocurrency circle.
In the macro field, the value of BTC is analogous to bonds and stocks in financial history, and is the "fuel" for the new round of development of human technology; in the meso field, it is the currency and index of the digital world that humans will inevitably enter in the future; in the micro field, it is the implementation of a new round of legal supervision, and the compliance of currency issuance, thereby siphoning private investment demand around the world.
This may be the last "grassroots" cycle belonging to the crypto industry, and the last mega cycle in which BTC has a huge beta increase. This means that after this cycle, BTC's beta will be greatly reduced, but it does not mean that the broad token issuance market will not have a hundred-fold alpha opportunity.
The top of this round of BTC bull market will appear in Q4 2025, with a high point of 160,000-220,000 US dollars. Before that, in addition to the "first wave" that has already occurred, there are two more waves of significant bull market mid-term trends.
Now is 1999 in the Internet era, that is, after the bull market reaches its peak in the next 12-18 months, the crypto industry will usher in a long winter like the bursting of the Internet bubble in 2000-2001. Of course, this is also an opportunity for the industry to reshuffle and reorganize. I am looking forward to it.
When I feel the bull market is coming, it is the time when the article is most productive.
About 4 years ago, at the beginning of the last bull market, I wrote "How should we invest in digital currency in 2021?" When we talk about the entire digital currency industry, it is inevitable to mention the value and price of BTC first.
If you already believe in the value of Bitcoin, you might as well jump directly to the fifth part, which is the expectation of Bitcoin's future price trend.
From the industrial dimension, I would like to talk about the value of BTC at three levels: macro, meso and micro. From a macro perspective, BTC represents the risk aversion expectations of the entire financial market of mankind, and the third "financial medium" that can be capitalized after bonds and stocks in human history; from a meso perspective, BTC is the "digital age" that humans will inevitably enter in the future, that is, the "index" with the best output value in the web3 world; from a micro perspective, BTC is gradually improving in terms of compliance supervision, and will attract a large amount of "traditional old money" in mainstream countries such as the United States. In third world countries, it siphons off the unmet private investment demand in the local area.
At the macro level, we regard Bitcoin as an epoch-making asset in the history of human finance, so the most important thing is to understand the changes in financial history. In "How Should We Invest in Digital Currency in 2021? - Part One of the Four Parts", the status of digital currency is corrected from the perspective of scientific and technological history. Behind every technological revolution, there are important financial infrastructures and brand-new financial "mediums".
Behind finance is the change of the times. Standing at the present moment, it may be the most confusing moment of the global political and economic situation in the past thirty years, and it is also the moment when the traditional financial order is most fragile and most likely to undergo a major reshuffle. Now I can no longer trace whether there were financial venues similar to the London Stock Exchange and the New York Stock Exchange when the famous financial bubbles such as the "Dutch tulips" appeared hundreds of years ago, or whether the Dutch vendors were accustomed to offline transactions, but just hyped but did not establish rules and order, so that this bubble finally turned into a bubble. But in the long river of history, every technological innovation that has been remembered by mankind has a change in the financial paradigm behind it, and the change in the financial paradigm is the inevitable product of the change of the times. These are mutually causal, but also mutually reinforcing, and finally wrote a bold and colorful stroke in human history. I have no way of predicting that if the Civil War had not brought about a dramatic change in the social structure of the United States, reshaping the social class and thus encouraging technological innovation to enter the real industry, would the Second Industrial Revolution still start in Britain, but eventually flourish in the United States and become a milestone.
At the same time, I have a more radical point of view: when everyone is talking about economic malaise and talking about how to find a viable business model - why does business itself need a business model, and has the word "business model" itself lost its meaning?
Here are more of my thoughts, which are a bit complicated. I will not go into details here. I will expand on them as the most important part in my future article "The Extra of the Four Parts of Crypto Capitalism - Philosophical Essays on Business and Investment". (Related reading: "Crypto Capital Theory Four Parts 1: Token issuance, a new financing paradigm")
【Excerpt: In the contemporary business and financial environment, the context behind the discussion of business models refers to the general path developed by the mainstream business entities in the past 100 years, which is to expand the market scale, increase the number of employees, and finally go public, and use the profit * PE method to price stocks. This path may not be established in the future.
Of the value of today's "social capital" (or "private economy"), equity companies may account for 95%, and listed companies with stocks as value anchors account for most of the capital value. But in the future, these values may exist more in "business" (why not limited partnership) and "token" (foundation).
Spend more time talking about BTC’s industry-wide arguments. At the end of the book I wrote in 2021, the first of the eight predictions mentioned that BTC is unbeatable. Refer to the e-version of my book "Unlocking New Passwords - From Blockchain to Digital Currency" Postscript 4 –
From the perspective of the technology industry, web3 is an inevitable trend in the future, and Bitcoin is the core asset of the entire web3 world, or in economics, it should be called "currency". In the ancient times of barter, gold was the most common "currency". After the development of the modern national system and financial system, national currency is the most common "currency". In the future, with the advent of the digital age, in the virtual space of the metaverse, all life in the digital world will need a new "currency".
Therefore, it is meaningless for some people to keep asking "Why is your investment a token?". Blockchain and crypto need "+", just like when someone asks you what track to invest in, you say "I want to invest in equity companies" or "I want to invest in an Internet company". Web3, as a special industry, and crypto, as a new market means and financial medium, are gradually combining 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? In other words, how can we gain wealth appreciation after seeing the trend clearly?
Then let's turn our attention to AI.
The main themes of the business society in recent years are one in the light and the other in the dark. AI is undoubtedly a hot spot that has been pursued by capital and can be put on the table. Crypto is surging in the dark, where various legends and myths of getting rich quickly gather, but it is also a place that many people cannot reach due to many restrictions.
The potential of the AI market is indeed widely believed to be at the trillion level, especially in the fields of generative AI, AI chips and related infrastructure. However, for investors, everyone believes that AI is a sunrise industry and is willing to invest their money in it, but what to invest in? Can you invest in AI ETF index funds now to fully cover the AI ecosystem to effectively track industry growth?
No. Nvidia's stock price rose nearly 3 times in 2024, while the performance of most AI-themed ETFs in the same period was mediocre. Looking further ahead, Nvidia's stock price performance will not be positively correlated with the growth of AI's overall output value - chip companies will never be the only Nvidia.
Comparison of the 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's market value? Will the value of this ETF increase as the output value of the entire AI industry increases? Just like the Dow Jones Index/S&P 500 ETF represents the development of Web0 (equity enterprises), the Nasdaq ETF represents Web1, and the investment opportunities of web2 are not presented in an index. The most suitable index for the Web3 world, or the value of the entire digital world of mankind in the future, is BTC.
Why must the value of the Web3 world be measured by BTC?
Because, since 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, we can wear VR/AR glasses, sit at home to visit Yellowstone Park, return to China's Tang Dynasty to experience the palace, enter the virtual conference room you set up and drink coffee face to face with friends on the other side of the earth... The boundary between reality and virtuality will become more and more blurred. This is what the future digital world, or the metaverse, looks like. And there, if you want to decorate the virtual space, and if you want the digital people there to dance for you, you always need to pay - this cannot be US dollars, RMB, or even physical assets. The most suitable and the only one that can be accepted by the entire digital world is Bitcoin.
I remember in the movie "The Revolution of 1911", Mr. 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 a country with a stable economy, and legal tender can be trusted. However, this is far from saying that the financial system of the entire world is as stable as the society we live in: the first thing the new president of Argentina did when he took office was to announce the abolition of Argentina's legal tender system - anyway, no one in Argentina trusts the legal tender issued by the government, so why bother? Turkey's inflation rate in 2023 reached +127%, and correspondingly, its citizens' digital currency ownership rate was as high as 52%. Especially in third world countries, in the process of gradual improvement of information technology infrastructure in recent years, their traditional legal tender mobile payment and digital currency payment methods have developed almost simultaneously. In contrast, just like around 2010, when China's information technology was booming, it skipped the 1.0 era of POS and bank card payment and directly entered the 2.0 era of mobile payment. Third world countries have begun to develop in recent years, and digital currency payment in the 3.0 era has directly replaced the mobile payment methods in the 2.0 era, making digital currency payment a common scene 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 government's macro-control function of legal currency. In fact, the US dollar is also issued by enterprises, so the so-called government macro-control must give way to the interest groups behind it. Capital power is the driving force of the world. If legal currency must be macro-controlled, then the interest groups that mine Bitcoin 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, as the speed of capital flow increases, technology and financial cycles are becoming shorter. In an environment with weak economic anti-fragility, the traditional equity market requires an 8-10 year lock-up period. This long-term investment feature makes many people worry about liquidity issues. Coin rights provide the possibility of early cashing out, which can not only attract more retail funds to enter, but also provide early investors with more flexible exit expectations.
In the traditional equity market, angel round or early investors usually seek to achieve partial exit through equity transfer or corporate repurchase about 5 years after the establishment of the enterprise, that is, when the enterprise has entered a relatively mature development stage but there is still time before IPO or acquisition (usually 8-10 years). This model can effectively alleviate the time cost of investment, but its liquidity is obviously more limited compared with coin rights.
The attraction of the coin rights model is that it allows early investors to realize capital recovery earlier through the issuance or circulation of tokens, while attracting a wider range of market participants. This flexibility may have a profound impact on the pattern of the traditional equity market. For this, you can refer to "Crypto Capital Theory Part 2 (Part 2): A Battlefield Without Gunfire - VC or Token Fund?". On the other hand, the financial markets of most sovereign countries in the world are extremely fragmented and lack liquidity, and the inherent global financial characteristics of crypto have greatly attracted this group of funds, including South Korea, Argentina, Russia, etc. The stock market development of some Southeast Asian countries, mainly Vietnam, cannot keep up with the speed of wealth accumulation of the middle class, and it has made these emerging classes skip the stage of local financial markets and complete the transition to crypto in terms of participation in the financial market. In the context of global digital currency compliance and integration with mainstream financial markets, the investment demand of private assets in these countries cannot be met by the weak local financial infrastructure - the main board market (KOSPI) and the start-up market (KOSDAQ) of the Korean stock market have more than 2,500 listed companies, but 80% of the companies have a market value of less than 100 million US dollars, and the daily trading volume is negligible. The digital currency market, which has absorbed global retail funds, has the most sufficient liquidity and has become their best target for investment.
Doge current market value and trading volume
Samsung current market value and trading volume
Note: As can be seen from the figure, Doge’s current market value is about 60B US dollars, and Samsung’s market value is about 234B US dollars, which is Doge The market value is about 4 times. However, the 24h trading volume of Doge has reached 5.5B, which is tens of thousands of times that of Samsung.
In the strategic location of the global digital currency market, the United States is likely to usher in a new cryptocurrency legal system reform in 2025. The two most important bills, FIT21 and DAMS, will affect the future fate of the currency circle. These two blockchain bills, which are regulated by the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC), are centered on treating token issuance (coin issuance) as commodity trading rather than securities issuance, and thus under the management of the CFTC. Considering that these two bills were proposed by the Republicans and the current SEC Chairman Gary Gensler represents the Democratic Party, the bills face great resistance. However, with Trump re-elected as president, the possibility of the bill passing has increased significantly because the Republicans have the dominant power.
To explain this bill, in layman's terms, the issuance of coins is treated as a commodity and is regulated by the CFTC, which is legalized, which can greatly promote the enthusiasm for coin issuance and financing. Enterprises can raise funds through coin issuance legally and compliantly, attracting more capital to flow into the coin circle. In addition, with a stable channel for long-term compliant development, more people will continue to work in this industry after making money. Most importantly, after the United States took the lead in introducing this bill, it will officially open up the global digital currency financial market, blockchain technology market, and competition between countries. "Grabbing projects" and "grabbing talents" may occur further in the future in the completely globalized and free-flowing coin circle. If the US policy is more friendly, even if coin issuance is no longer a gray industry but a prestigious financial innovation, founders who live in relatively crypto-friendly countries such as Singapore and Switzerland will soon have a large migration.
Looking back to 2016, when the types of crypto in the world could be counted on one’s fingers, and BTC was like a game coin, which could be directly deposited into the exchange for “recharge and purchase” with RMB, we, the natives of the token circle, had hopes for the future. (For details, please refer to the end of "How Should We Invest in Digital Currency in 2021? - Part One of Four")
That is also my dream.
Originally, I envisioned that these goals would take 8-10 years to achieve.
However, it only took us four years.
It was at that time that I had a new dream - since Bitcoin has been gradually accepted by the mainstream society as a monetary asset, then other digital currencies, or tokens, in addition to digital equity, must also play the role of digital commodities, so that in the future digital world of mankind, in addition to financial value, they must also generate utility, so that humans can better enter the digital world.
Oh yes, this thing, later everyone gave it a new name - NFT.
"Digital commodities in the metaverse era" is my definition of the future end of NFT, and it is also the most important part of truly realizing the web3ization and digitization of "Internet era commodities" and thus mass adoption.
For this reason, I resolutely built the NFT industry in early 2021. In the series of articles "The Road to the Future - Web3 Five Steps", there is my description of its future.
Of course, the most intuitive way to attract people, or even to make more people willing to read my articles, is to rely on the increase in BTC.
It’s time to talk about the key points. It is necessary to mention my prediction of BTC market: the peak of this round of BTC will appear at the end of 2025, and the reasonable range should be between 160,000 and 220,000 US dollars. After that, in 2026, it is recommended that everyone should be short and recuperate.
In my paper "Bitcoin Valuation Model under Miner Market Equilibrium—Based on Derivative Pricing Theory" written on January 1, 2019, the bottom of the four-year cycle from 2018 to 2021 was mentioned,
and the bottom of the four-year cycle from 2022 to 2025 mentioned by me in 2022.
From the current perspective, the entire currency circle is at a critical crossroads. Today's digital currency industry is like the Internet industry at the turn of the century. In the next 1 to 2 years, the bubble burst is not far away. With the passage of crypto-friendly laws such as FIT21 in the United States, the compliance supervision of assets such as currency rights has been completed. A large number of very traditional old money that once lacked understanding of crypto, or even completely sneered at it, will begin to accept BTC and make configurations at the 1%-10% level. However, after that, if blockchain and digital currency cannot be gradually combined with traditional industries and truly usher in the "blockchain + industry" transformation, just like the Internet industry combined with consumption, social, media, etc. and transformed them, I really don't see any new funds coming in, and what reason does this industry have to have amazing growth opportunities again. Defi in 2020, NFT and metaverse in 2021, these are the right direction, and they also set off a wave of innovation at the time. Throughout 2024, BTC has repeatedly set new highs, but the entire blockchain industry has not completely lacked enough innovation to talk about. The market is just filled with more memes and Layer1&2&3, but there is no new "business concept innovation". Moreover, in 2025, which I can see, the atmosphere of the entire industry determines that I am pessimistic about the emergence of milestone "business concept innovation".
When the tide rises, all boats rise. Now the water is flooding, and small rafts are everywhere. Boatmen are competing to see who can row faster, and even laugh at those bulky, machine-powered iron boats. But when the big waves recede, wooden boats will run aground. Only by maintaining constant machine power can they sail out of the port and welcome the sea.
Even, to make an interesting prediction, the sign that the bubble in the currency circle has reached its peak will be that Buffett, the world's biggest opponent of Bitcoin, begins to change his tune and even participate in the industry. The staged victory of the revolution is often the moment when the crisis is most lurking.
The current currency circle can be compared to the Internet era in 1999. After a wave of rapid blowouts on the right track, the digital currency industry may usher in drastic adjustments due to huge bubbles starting from the end of 2025. Looking back at history, the Internet industry welcomed Netscape's initial public offering (IPO) in December 1995, followed by Yahoo's listing in April 1996, which triggered a market boom. On March 10, 2000, the Nasdaq index reached its historical peak of 5408.6 points. However, the bubble quickly burst and the market entered a cold winter in 2001. Although the broad cold winter lasted until 2004, the real low point was in October 2002, when the Nasdaq index almost fell below 1,000 points, marking the lowest point of the industry from a financial perspective.
In 2020, MicroStrategy successfully drove the appreciation of the company's stock by purchasing BTC, and achieved a significant stock-to-coin linkage effect for the first time. In February 2021, Tesla announced the purchase of Bitcoin, which became a landmark event for the giant to officially enter the market. These historical moments can't help but remind people of the "1995-1996" of the blockchain industry-when the Internet boom began.
Looking to the future, I think that by the end of 2025, the price of Bitcoin may usher in a long-term peak, but in early 2027, it may hit a new low. Once the FIT21 bill is passed, it may start a wave of universal coin issuance, just like the unprecedented grand occasion of the ".com" era.
If the threshold for token financing is reduced to almost zero, and even ordinary people can issue their own tokens as easily as high school students can learn to make a website, then the limited capital in the market will be quickly diluted by the various tokens that are flocking in. In such an environment, the last wave of "violent bull market" belonging to token issuers may not last more than three months. Subsequently, due to the imbalance of market supply and demand and the depletion of capital, the industry will inevitably usher in a comprehensive collapse.
However, before that, in the next 12 months, we still have a potential beta increase of nearly 2 times for BTC, and for ordinary people, because of the global liquidity aggregation, countless early currency opportunities of "hundreds and thousands of times" in a very short period of time-why not participate?
And, looking back at the Internet industry that was turbulent and criticized by many media as a "bubble". Today, the Nasdaq index has broken through the 20,000 point mark. Looking back, it looked like a mountain in 2000, but now it is just a small hill. Even if you entered the Internet industry in 2000 and persisted until today, it is still almost the right choice.
BTC, one hill after another.
It has been 3202 days since I bought my first BTC on March 7, 2016.
I still remember the price when I clicked the mouse, it was 2807 RMB, which is less than 400 US dollars.
Many people have asked me, how high do you think BTC can rise?
This question is meaningless. The price of gold has been hitting new highs these days and years.
The meaningful question is, how high can the price of BTC rise before a certain point in time?
Let's wait and see.
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