. Bitcoin has some similarities with gold, but also many differences. Now the relationship between gold and Bitcoin is more like the relationship between an honest man and a scumbag. When a scumbag is scumbag enough, he will become an honest man one day; and the honest man now may have been a scumbag beyond your imagination. Today, let's make an analysis, taking gold and Bitcoin as examples, to analyze how to achieve wealth freedom based on the long cycle.
First, in recent years, the global total market value of gold has exceeded 10 trillion US dollars, which is a large volume compared to BTC. Calculated at the current price, BTC is about 330 billion US dollars, which is nearly 30 times smaller. When the price peaked at 69,000 per coin, the market value was only about 1 trillion US dollars, which is still a huge difference. Generally speaking, the larger the market value of a market, the smaller its volatility.
Secondly, the volatility of gold in recent years has been relatively small, but in history it has experienced large-scale gains in the main upward trend.
Specifically, its main rising waves can be divided into three stages: the first is the decoupling of gold and the US dollar and the period of great stagflation in the 1970s, when gold rose 16 times; the second is the period from the bursting of the Internet bubble in the early 21st century to the international financial crisis in 2008, when gold rose more than 2 times; the third is the period from the end of 2008 to September 2011, when gold rose more than 2.5 times. These are the three most important main rising waves in the history of gold.
In the first stage, in August 1971, the United States announced the decoupling of the dollar from gold, which liberated both the dollar and gold. The dollar was liberated because the dollar could become more and more unscrupulous, and gold was liberated because the over-issued dollar and rising inflation led gold to enter its first 10-year bull market. Throughout the 1970s and early 1980s, the United States was struggling with inflation, and what was even more terrifying was that when inflation was high, economic growth stagnated. What? Isn't that what the classic economics textbooks say? This is the so-called "stagflation." Especially after 1974, inflation gradually went out of control. Gold was regarded as an anti-inflation asset class because of its relatively fixed supply-side quantity. During the 10-year bull market, gold rose by about 16 times in total. This 16-fold increase also laid the most solid foundation for the large market value of gold. During this decade, many wealth myths were born for those who were long on gold.
In the second stage, in fact, in my opinion, the main logic of gold's rise in this stage is not to resist inflation, but to chase liquidity under loose policies. In the 1980s and 1990s, the then Fed Chairman Volcker, who is now deified, raised interest rates sharply to end stagflation (but in fact, if you compare the current macro environment, you will find that the macro environment at that time was much better than it is now, and my country has joined the wave of globalization, which has relieved a lot of pressure on the United States to share inflation. Therefore, there is no Volcker era, only Volcker in the era). In the 1990s, the Web2 technological revolution arose in the United States. At that time, people's understanding of Web2 was just like people's understanding of Web3 today. It was the beginning of a big industry. In this process, the credit of the US dollar was repaired, the US dollar index and US bond interest rates were very strong overall, and gold experienced a correction and repair. Only in 1985-1988 did it rebound in the medium term due to the Fed's interest rate cuts.
Let me say a few more words about the Web2 Internet bubble in the early 21st century. At that time, the Internet had just achieved a large-scale popularization from To G, To B to To C. When the bubble burst, people were as disappointed with Web2 as they are today with Web3. Yahoo's stock price fell from a high of $433 in March 2000 to $11 in April 2001; Cisco's stock price fell from $60 to $9 in October 2000; Amazon's stock price fell from nearly $70 in January 2000 to $6 in September 2001. The market value of these Internet companies evaporated in a short period of time and suffered a heavy blow. Pet.com, which was sought after by capital in the early stage, announced its closure in November 2000, becoming the first listed website company to go bankrupt. Since then, a large number of Internet companies have gone bankrupt after facing huge losses. Only a few companies have survived the darkest moment of the bubble burst, but this clearance is also a "vote with feet" by the market. After experiencing the bubble and rising from the ashes, Microsoft, Google, Adobe, Cisco, Oracle, Amazon and others continued to write the glorious history of Web2 for nearly twenty years.
To get back to the topic, after 2000, the double deficits of the US current account and capital and financial accounts rapidly increased. In order to stimulate employment, the Federal Reserve's monetary policy has been relatively loose from 2002 to 2005. The US dollar once again entered a weak dollar cycle, and gold also ushered in its second major upward wave period. Until the subprime mortgage crisis in 2007 and the international financial crisis it triggered in 2008, which triggered a wave of global asset selling.
After the crisis rescue policy began to show results, gold ushered in the third wave of the main uptrend, and rose 2.6 times in the three years from the end of 2008 to September 2011. During this period, a groundbreaking event happened - the birth of Bitcoin. Opposing centralized fiscal and monetary policies was the original intention of the birth of Bitcoin. Satoshi Nakamoto left a very important sentence in the Bitcoin Genesis Block - "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (January 3, 2009, the Chancellor of the Exchequer was on the verge of implementing a second round of emergency assistance for banks)".
Since Bitcoin was traded for pizza in May 2010, BTC began to be priced by the market. In July 2010, related exchanges began to provide liquidity for it. The maximum increase in 12 years was nearly 700,000 times. In this process, a group of people also achieved wealth freedom by standing at the forefront of the times. Let's also take a look at the main rising wave period of Bitcoin.
The first major uptrend of Bitcoin was in 2013, which was a critical period for Bitcoin to enter the mainstream financial field from the primitive era. In March 2013, the tiny island nation of Cyprus proposed to levy taxes on deposit accounts to raise funds in order to obtain further EU aid, which triggered a bank run in Cyprus. Bitcoin became a way for its residents to avoid taxes and preserve assets. The injection of a large amount of funds caused Bitcoin to soar to $265. In the second half of 2013, Germany recognized Bitcoin as a private currency. As a large economy, Germany's influence is naturally self-evident, which helped push Bitcoin to soar by more than $1,147.
The second major uptrend of Bitcoin was in 2016-2017. The internal reason was that Bitcoin entered the halving cycle again, and the external reason was that globalization was challenged for the first time in 2016. As a 7*24-hour global market, Bitcoin became a weapon to promote globalization. Black swan events such as Brexit, Trump's election as US president, and the failure of Italy's constitutional amendment have repeatedly challenged people's cognition. People are increasingly finding that the previously unbreakable consensus on globalization is shaking. In December 2016, Bitcoin broke through $1,000 again after three years. In addition, the Asian financial market is suffering from an "asset shortage" due to financial repression, and the influx of Asian investors including China, Japan, and South Korea has fueled the outbreak of Bitcoin. In 2017, Bitcoin continued this trend and reached a local high of nearly $20,000 in December.
The third major uptrend of Bitcoin is from March 12, 2020 to the end of 2021. The pandemic in the United States triggered extreme panic in the capital market, which not only caused the U.S. stock market to have multiple circuit breakers, but also brought the 312 incident, which was a living hell for the crypto industry. After March 12, with the massive amount of money released by the Federal Reserve and global listed companies starting to hold Bitcoin, Bitcoin entered its third major uptrend.
Next, let’s compare the sources of value of gold and Bitcoin. Many people complain that Bitcoin is the modern tulip because it has no actual use value, does not generate cash flow, and relies solely on consensus. What they don’t know is that the same is true for gold, and gold is even inferior to Bitcoin in many properties.
First, gold certainly has a certain practical use value, which is mainly reflected in its industrial value, but its industrial value is less than 3% of its market value. In other words, more than 97% of its value comes from the "illusory" consensus. Is consensus important? It is very important. At present, we see that society is fragmenting, and it is difficult to reach a consensus on whether to liberalize and how to liberalize. Consensus is a luxury, just like fairness and justice, because social consensus is the greatest justice.
Second, gold not only does not generate cash flow, but also requires certain costs for storage and transportation. BTC is better in this regard. It is extremely standardized and can be subdivided to eight decimal places, and the storage and transportation costs are extremely low. More importantly, with the birth of DeFi, BTC can generate cash flow as a collateral asset. WBTC is one of them. DeFi based on WBTC can generate cash flow, which greatly enriches the asset attributes of BTC.#Telegram创始人获保释 #英伟达财报 #OpenSea收到韦尔斯通知 
