Original title: (2024 & 2025, BTC's Last Mega Cycle — A Discussion on the Value and Price of BTC)
Original source: Longye @ x Element
Abstract
As of the writing of this article, during Q4 of 2024, this marks the early stage of a new round of bull market in the crypto space. The value of BTC in the macro realm, analogized from financial history to bonds and stocks, serves as the 'fuel' for the new round of human technological development; in the meso realm, it is the currency of the digital world that humanity will inevitably enter in the future, and also an index; in the micro realm, it represents a new round of legal regulation landing and compliance of token issuance, thereby siphoning off global private investment demand. This could be the last 'grassroots' cycle belonging to the crypto industry, as well as the last mega cycle with significant beta increases for BTC. This means that after this cycle, BTC's beta will significantly decrease, but it does not mean that the broadly defined token issuance market will not have opportunities for hundred-fold alpha increases. The peak of this round's bull market for BTC will occur in Q4 of 2025, with a high point between $160,000 to $220,000. Before that, aside from the already occurring 'first wave', there are still two significant waves in the bull market's mid-term trend. Currently, it is the year 1999 of the internet era, indicating that in the next 12-18 months, after the bull market peaks, the crypto industry will face a long winter, just as the internet bubble burst in 2000-2001. Of course, this also presents an opportunity for industry reshuffling and reorganization. I look forward to it.
When I feel the bull market is coming, that is when the article produces the most output.
About four years ago, at the beginning of the previous cycle's bull market, I wrote ( 'How Should We Invest in Digital Currency in 2021?'). When we discuss the entire digital currency industry, we inevitably need to mention the value and price of BTC.
If you already believe in the value of Bitcoin, feel free to jump directly to Part Five, regarding expectations for Bitcoin's future price trends.
From an industrial perspective, I would like to discuss the value of BTC in three dimensions: macro, meso, and micro. At the macro level, BTC represents the risk hedging expectations of the entire human financial market, as well as the third capitalizable 'financial medium' after bonds and stocks in human history; at the meso level, BTC is the best 'index' for the future human entry into the 'digital age', which is the web3 world; at the micro level, BTC is gradually becoming regulated and compliant, attracting a large amount of 'traditional old money' in mainstream countries like the United States. In third world countries, it has siphoned off the unmet private investment demand.
From a macro perspective, we view Bitcoin as a groundbreaking asset in human financial history, and the most important task is to understand the changes in financial history. (In 'How Should We Invest in Digital Currency in 2021?' Part of a series) I aim to clarify the position of digital currency from a historical perspective. Every technological revolution has produced significant financial infrastructure and new financial 'mediums'.
Behind finance lies a change in circumstances. Standing at the present, it may very well be the most perplexing moment in global political and economic situations over the past thirty years, and also the moment when the traditional financial order is most fragile and most likely to undergo a major reshuffle. I can no longer trace back to whether, at the time of famous financial bubbles like the 'Dutch Tulip', there were financial venues similar to the London Stock Exchange or the New York Stock Exchange, or whether Dutch vendors were accustomed to offline trading, merely speculating without establishing rules and order, allowing this bubble to ultimately burst. However, throughout history, every technological innovation remembered by humanity corresponds to a change in financial paradigms, and this change is an inevitable product of shifts in circumstances. These are mutually causative, yet complement each other, ultimately writing a vivid chapter in human history. I cannot predict how the second industrial revolution would have unfolded had it not been for the Civil War, which transformed the social hierarchy in America and encouraged technological innovation to enter industry, ultimately starting in Britain but flourishing in the United States, becoming a milestone.
At the same time, I have a more radical viewpoint: when everyone is discussing economic stagnation and debating how to find viable business models - why does business itself need a business model? Has the term 'business model' itself lost its meaning?
Here are more of my thoughts, which are somewhat complex, and I won't elaborate further here, but will expand on them in my future article (An Aside from the Four Parts of Crypto Capital Theory — Musings on Business and Investment Philosophy).
[Excerpt: Discussing business models in the contemporary business environment and financial environment, the context behind it refers to the general path developed by mainstream business entities based on 'corporate systems' over the past century: expanding market size, increasing the number of employees, and finally going public, with profits*PE as the method for stock pricing. This path may not hold in the future.
Today, the value held by 'social capital' (or expressed as 'private economy') may account for 95% in equity enterprise forms, while publicly listed companies that use stocks as value anchors hold a large portion of capital value. However, in the future, this value may exist more in 'businesses' (why can't limited partnerships be a thing) and 'tokens' (foundations).
Let me spend a bit more time discussing the industrial view of BTC in the medium perspective. At the end of the book I authored in 2021, the first point among my eight predictions mentioned that BTC is unbeatable. Referencing my book's electronic version (Unlocking New Passwords - From Blockchain to Digital Currency) Afterword IV -
From the perspective of the technology industry, web3 is an inevitable trend for the future, and Bitcoin is the core asset of the entire web3 world, or economically speaking, it should be called 'currency'. In ancient times of barter, gold was the most common 'currency'; as modern nation-states and financial systems developed, national currencies became the most common 'currency'. In the future, as the digital age approaches, a new 'currency' will be needed for all life in the virtual space of the Metaverse.
Therefore, it is meaningless for some people to keep insisting, 'Why are you investing in a token?' Blockchain and crypto need a '+', just as when others ask you what sector you are investing in, you say 'I want to invest in equity enterprises' or 'I want to invest in an internet enterprise'. Web3, as a special industry, and crypto, as a new market means and financial medium, is gradually combining with other industries — blockchain + AI = De AI, 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 rather, how can we gain wealth appreciation after recognizing the trend?
Now let’s shift our focus to AI.
In recent years, the main melody of the business society has been twofold: one visible, and one hidden. AI is undoubtedly a capital darling, a hot topic that can be presented. Crypto is bubbling in the shadows, a place where various legends and myths of wealth converge, yet also a place with many restrictions, making it elusive for many.
The potential of the AI market is indeed widely regarded as being in the trillions, especially in the fields of generative AI, AI chips, and related infrastructure. However, for investors, while everyone believes AI is a sunrise industry and is willing to invest their money, what should they invest in? Is there an AI ETF index fund that covers the AI ecosystem comprehensively to effectively track industry growth?
No. In 2024, NVIDIA's stock price increased nearly 3 times, while the majority of AI-themed ETFs performed rather mediocrely during the same period. Looking further ahead, NVIDIA's stock performance will not necessarily correlate positively with the overall growth of AI output — a chip company can never be the only one forever.
Performance comparison between mainstream AI ETFs and NVIDIA stocks in 2024
AI is the main theme, but will there be a product that can anchor the future market value development of the AI industry? The value of the entire AI industry will rise as much as this ETF does? Just like the Dow Jones Index/S&P 500 ETF represents the development of Web0 (equity enterprises), the Nasdaq ETF represents Web1, the investment opportunities of web2 have not been presented in an index format, the most appropriate index for the Web3 world, or rather, the entire future digital world of humanity, is BTC.
Why must the value of the Web3 world be measured in BTC?
Because, from the moment computers and the internet began to emerge, humanity is 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 to visit Yellowstone National Park, experience the palaces of China's Tang Dynasty, enter the virtual meeting room you set up and enjoy coffee with friends on the other side of the Earth... The boundary between reality and virtual will become increasingly blurred, which is the future of the digital world, or the Metaverse. And in there, if you want to decorate virtual spaces, or if you want digital beings to dance for you, you will need to pay — it cannot be in dollars, yuan, or physical assets. The only thing I can think of that is most suitable and can be accepted by the entire digital world is Bitcoin.
I remember in the movie (The Xinhai Revolution), Mr. Sun Yat-sen held a $10 bond: 'Once the revolution succeeds, this bond can be exchanged for $100.'
Back to the present.
We live in economically stable countries, where fiat currencies can be trusted. However, this does not mean that the entire world's financial system is as stable as the society we live in: the first thing the new president of Argentina did upon 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, so why bother? Turkey's inflation rate reached +127% in 2023, corresponding to a national digital currency ownership rate of 52%. Especially in third world countries, in recent years, during the gradual improvement of information technology infrastructure, traditional fiat currency mobile payments and digital currency payments have almost developed simultaneously. In comparison, just like during the booming period of information technology in China around 2010, which skipped the POS machine and credit card payment phase of 1.0 and directly entered the mobile payment era of 2.0, third world countries have recently begun developing and directly replacing the 2.0 mobile payment methods with the 3.0 era of digital currency payments, making digital currency payments a commonplace scene in daily transactions.
Here, an interesting debate is mentioned: Bitcoin has no controller; if it cannot fulfill the macro-control function of fiat currency as a form of money or 'currency', then in fact the dollar is also issued by enterprises. Thus, the so-called government macro-control must defer to the interest groups behind it; capital power is the driving force behind the world's operations. If fiat currency is to have macro-control, then the interest groups of Bitcoin mining are the biggest controllers.
In recent years, inflation rate changes across various major economies.
Recent changes in Argentina's inflation rate
From a micro perspective, as the speed of capital flow accelerates, the technology and financial cycles are becoming shorter. In an environment with relatively weak economic anti-fragility, traditional equity markets require an 8-10 year lock-in period, and this characteristic of long-term investment raises concerns about liquidity. Token rights provide the possibility for early realization of value, not only attracting more retail funds but also offering early investors more flexible exit expectations.
In the traditional equity market, angel rounds or early investors usually seek partial exits through equity transfers or company buybacks after about 5 years post-establishment, when the company has entered a relatively mature development stage but is still some time away from an IPO or acquisition (usually 8-10 years). This model can effectively alleviate the time cost of investments, but compared to token rights, its liquidity is obviously more limited.
The appeal of the token rights model lies in its ability to allow early investors to realize capital recovery sooner through token issuance or circulation, while also attracting a wider range of market participants. This flexibility may have a profound impact on the traditional equity market landscape.
On the other hand, the financial markets of most sovereign countries are extremely fragmented and lack liquidity, while the inherently global financial characteristics of crypto have greatly attracted these funds, including those from South Korea, Argentina, Russia, etc. Moreover, the stock market development in some Southeast Asian countries, primarily Vietnam, cannot keep up with the pace of wealth accumulation among the middle class, leading these emerging classes to skip the local financial market phase and transition directly to crypto. In the context of global digital currency compliance and integration with mainstream financial markets, the investment demand for private assets in these countries cannot be met by weakened local financial infrastructures — the South Korean main board market (KOSPI) and the KOSDAQ have over 2,500 listed companies, but 80% of them have market values of less than $100 million, with daily trading volumes that are negligible. In contrast, the digital currency market, which has absorbed global retail investor funds, offers the most abundant liquidity, becoming the best target for their investment participation.
Current market value and trading volume of Doge
Current market value and trading volume of Samsung
Note: From the chart, we can see that Doge's current market value is approximately $60B, while Samsung's market value is about $234B, roughly 4 times that of Doge. However, the 24h trading volume of Doge reached $5.5B, which is tens of thousands of times that of Samsung.
In the strategic stronghold of the global digital currency market — the United States, 2025 is likely to welcome a complete transformation of the cryptocurrency legal system, with two key bills — FIT21 and DAMS — affecting the future fate of the crypto space. These two blockchain bills, regulated by the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC), fundamentally treat token issuance as commodity trading rather than securities issuance, thus placing it under CFTC's management. Considering that these bills are proposed by the Republican Party, while the current SEC chairman Gary Gensler represents the Democratic stance, the bills face substantial resistance. However, in the event of Trump being re-elected, with the Republican Party holding the dominant power, the likelihood of the bills passing will significantly increase.
To explain this bill simply, it means that issuing tokens is treated as a commodity and regulated by the CFTC, thus legalizing it, which can greatly promote the enthusiasm for token financing. Companies will be able to legally and compliantly raise funds through token issuance, attracting more capital into the crypto space. Furthermore, with a stable channel for long-term compliant development, more people will remain committed to this industry even after making money. Most importantly, after the US introduces this bill, it will formally open up global competition for the digital currency financial market and blockchain technology market, with countries competing for 'projects' and 'talents'. In a fully globalized and freely flowing crypto space, this may further unfold in the future. If US policies become more friendly, even if token issuance is no longer a gray industry but a respectable financial innovation, founders residing in crypto-friendly countries like Singapore and Switzerland will soon undergo a major migration.
Looking back to 2016, when the world could count the types of crypto on one hand, BTC was like a game currency, which could be directly 'recharged' with RMB on exchanges; our generation of crypto natives held hopes for the future.
That is also my dream.
Originally, my plan was to achieve these goals over 8-10 years.
But we only took four years.
It was around that time that I had a new dream — since Bitcoin has been gradually accepted by mainstream society as a monetary asset, other digital currencies, or tokens, should also play the role of digital goods aside from digital equity, thereby generating utility in the future digital world of humanity, allowing people to better enter the digital world in addition to financial value.
Oh right, this thing later got a new name — NFT.
‘Digital goods in the era of the Metaverse’, this is my definition of the future of NFTs, and is truly the realization of ‘internet-age goods’ in web3, digitalization, thus the most crucial link for mass adoption.
Therefore, I firmly began to build the NFT industry in early 2021. In the series of articles (The Path to the Future — The Five Movements of web3), there’s my description of its future.
Of course, the most straightforward thing to attract people, or rather, to get more people to read the articles I write, naturally relies on the price increase of BTC.
It's time to get to the point. It's necessary to mention my prediction for BTC's market: the peak of this round will occur at the end of 2025, with a reasonable range between $160,000 to $220,000; thereafter, in 2026, I suggest everyone to go cash and recuperate.
In my paper written on January 1, 2019 (Bitcoin Valuation Model Under Miner Market Equilibrium — Based on Derivative Pricing Theory), I mentioned the bottom of the four-year cycle from 2018 to 2021.
As well as the bottom of the four-year cycle from 2022 to 2025 that I mentioned in 2022.
From the current perspective, the entire crypto space is at a critical crossroads. Today's digital currency industry resembles the internet industry at the turn of the century; the bubble burst is not far off in the next 1 to 2 years. With the passing of crypto-friendly laws like the US FIT21, compliance regulation for assets like token rights will be completed, and a large amount of traditional old money, which previously lacked understanding or even had a dismissive attitude towards crypto, will start to accept BTC and begin a 1%-10% level allocation. However, afterwards, if blockchain and digital currencies cannot gradually integrate with traditional industries and truly usher in the transformation of 'blockchain + industry', just like the internet industry did with consumption, socialization, and media, I truly cannot foresee what new capital will enter this industry, nor can I see any reason for remarkable growth opportunities to arise. The DeFi of 2020, the NFTs and metaverse of 2021 were all the right directions and sparked a wave of innovation back then. However, throughout 2024, while BTC has been setting new highs, the entire blockchain industry has failed to present any significant innovations worth discussing, and the market is merely filled with more memes and layer 1, 2, and 3, without any new 'business concept innovation'. Moreover, from what I can see in 2025, the atmosphere of the entire industry leads me to hold a pessimistic attitude towards the emergence of milestone 'business concept innovations'.
As the tide rises, small rafts abound, with countless boats competing to row faster, even mocking the clumsy, machine-powered iron ships. But when the tide recedes, all the wooden boats will run aground, and only those with persistent machine power can sail out of the harbor and greet the ocean.
Moreover, an interesting prediction could be that a sign of the crypto bubble reaching its peak will be when Buffett, the world's biggest opponent of Bitcoin, begins to change his tune and even participates in the industry. The stage victory of revolution often comes at the moment when crises are most latent.
The current crypto space can be compared to the internet era of 1999. After experiencing a rapid boom towards normalization, the digital currency industry may face a severe adjustment due to a massive bubble beginning at the end of 2025. Looking back at history, the internet industry welcomed the IPO of Netscape in December 1995, followed by Yahoo's listing in April 1996, sparking a market frenzy. On March 10, 2000, the Nasdaq index hit a historical peak of 5408.6 points. However, shortly after, the bubble burst, and the market entered a winter period by 2001. Although the broader winter period lasted until 2004, the real bottom occurred in October 2002 when the Nasdaq index nearly fell below 1000 points, marking the industry's lowest point from a financial perspective.
In 2020, MicroStrategy successfully drove up the company's stock value by purchasing BTC, achieving a significant stock-coin linkage effect for the first time. By February 2021, Tesla announced its purchase of Bitcoin, marking a symbolic event for the entry of big players. These historical moments remind one of the blockchain industry in '1995-1996' — the initial rise of the internet wave.
Looking ahead, I believe that by the end of 2025, the price of Bitcoin may reach a long-term phase peak, but by early 2027, it may hit a new low. Once the FIT21 bill is passed, it could trigger a wave of public token issuance, reminiscent of the unprecedented fervor of the '.com' era.
If the threshold for token financing is lowered to nearly zero, so that ordinary people can issue their own tokens as easily as high school students learn to create a website, then the limited capital in the market will be rapidly diluted by a flood of various tokens. In such an environment, the final wave belonging to token issuers' 'frenzied bull market' may not last more than three months. Subsequently, due to market supply and demand imbalance and capital exhaustion, the industry will inevitably face a comprehensive collapse.
However, before that, in the next 12 months, we still have the potential for BTC to nearly double its beta increase, and for ordinary people, due to the global liquidity concentration, countless opportunities for 'hundred-fold or thousand-fold' early tokens in a very short time — why not participate?
Looking back, the internet industry, which once faced numerous media criticism for being a 'bubble', has now seen the Nasdaq index surpass 20,000 points. In hindsight, what seemed like a mountain peak in 2000 is now merely a small hill. Even those who entered the internet industry in 2000 and persisted until today have made one of the best choices.
BTC, just a series of small hills.
It has been 3,202 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 2807 RMB, just under $400.
Many people have asked me, how high do you think BTC can rise?
This question is meaningless. The price of gold has also been continuously setting new highs during these days and years.
A meaningful question is, how high can the price of BTC rise before a certain point in time?
Let's wait and see.
The best is yet to come.
