The new asset cycle of Bitcoin: The current situation and understanding after this new high
As Bitcoin hits new highs again, and the epic 6-month high consolidation is approaching its end this weekend, we believe it is necessary to share our views in this article.
As we mentioned previously in our monthly report, 6 months is sufficient to confirm the arrival of a trend measured in years. This article is based on the manager's observations in the primary and secondary markets over the past 6 months and contains strong subjective components, attempting to guide our future thoughts on crypto asset management.
Below is a summary of the core idea of this article in one sentence:
The asset attributes of Bitcoin have been qualitatively redefined over the past 6 months. The old and new major funds have simultaneously completed the transfer of pricing power. A new fund scheme centered on Bitcoin, utilizing ETFs and US stocks as channels for capital inflow, has officially started incorporating new funds in US dollars through a Ponzi model represented by US-listed companies like MSTR.
Bitcoin has become the most core dollar asset outside of the dollar industry cycle (such as AI); a long-term low volatility upward situation has basically taken shape. However, at the same time, the decoupling trend between the traditional digital currency market (Altcoins) and Bitcoin will continue to strengthen.
1. Bitcoin has established a fundamental inflection point during the consolidation.
Bitcoin has found a clear definition of its asset attributes.
This is something that everyone may overlook, but in our view, it is especially important. This definition can be led by BlackRock, but requires affirmation from the entire US dollar capital system to be established, which was previously an unexpected task.
However, over the past 6 months, we have sufficient evidence to clarify:
Bitcoin is an alternative reserve asset that can hedge against US dollar debt risk, detached from the traditional financial framework.
This definition succinctly provides the most important basis for Bitcoin to become the center of the future US dollar asset system. The issue of US bonds has already become the elephant in the room and will long remain a core issue in the US fiscal and monetary system.
Against the backdrop of the current Trump administration, if the policy direction becomes radical again, we may witness further significant fluctuations in US bonds and the US dollar exchange rate in the next three years. We believe that, under the backdrop of the shrinking global influence of the US dollar, the US bond issue is one of the biggest storylines of the past decade.
At the same time, more importantly, whether the above concepts are accepted is the most concerning issue for us in recent months. At this moment, facing Trump's unexpectedly large government, we have finally observed enough evidence, as many large Hedge Fund founders (1B+) have begun to publicly express their stance, including but not limited to Paul Tudor Jones, Verde Asset Management, Brevan Howard, Millennium Management, Schonfeld Strategic Advisors, and other traditional hedge funds representing old money at the billion-dollar level, using BTC as a hedging tool in risk trading for US bonds (especially in the recent elections).
The new Ponzi model of Bitcoin has established momentum over the past 6 months.
Since the approval of the ETF, the new Bitcoin Ponzi model dominated by BlackRock has taken shape. This system is practically controlled by ETFs managed by BlackRock and Microstrategy, where BlackRock is the second-largest shareholder, acting as an infinite buyer and holder, with the core principle being the overall low volatility of Bitcoin trending upwards. Through the stock price effect of MSTR, the possibility of establishing Bitcoin as a market value management tool and opening up future passive buying from US stock ETFs has created a Bitcoin Ponzi model capable of achieving infinite self-positive reinforcement.
We believe that the premise for the above model to be established in the medium term (3-5 years) and to enter an infinite long-term cycle is:
Bitcoin's volatility is decreasing;
The liquidity of the US dollar can maintain an average growth rate since 2008;
The price of Bitcoin can achieve annual growth; the ratio is not important.
And the following important facts have already occurred:
Bitcoin's volatility is nearing historical lows;
Excluding arbitrage factors, the total market value of Bitcoin held by Bitcoin ETFs (including GBTC) and Microstrategy has exceeded $90 billion. Its holdings correspond to the current daily average spot trading volume across the network (actually effective at around $100 billion, at the peak of the current bull market), effectively reaching the so-called market-making threshold. Over the past 6 months, we have practically felt the liquidity further concentrating towards CME and the New York Stock Exchange, which supports the aforementioned system's control over the current supply and demand for Bitcoin.
BlackRock has the long-term capability to guarantee MSTR's equity refinancing ability, continuously pushing MSTR to use equity financing tools to play the role of ballast for BTC volatility.
In summary, this infinite perpetual motion machine is expected to become the best capital game in the next 2-3 years as the US dollar liquidity easing has just begun. It is only a matter of time before the total value of Bitcoin held by the BlackRock system surpasses the holdings of gold ETFs.
Finally, a simple explanation of the observation method for the inflection point of the aforementioned capital scheme, which is mainly a reverse deduction of the core conditions mentioned above:
BTC volatility, especially downward volatility, is beginning to amplify;
The liquidity of the US dollar has reached an inflection point;
MSTR is facing difficulties in equity refinancing and has failed to complete the current plan of $42 billion in refinancing over 3 years. Based on this logic, we predict that MSTR's stock price will peak before Bitcoin's price.
2. The manager's outlook on Bitcoin's trend over the next 5 years
Based on the aforementioned, the manager believes that the key points to grasp regarding Bitcoin's trend over the next 5 years are:
Currently at a real inflection point of US dollar liquidity, and the right-leaning policies led by the Republican government will further ensure that US dollar liquidity will be more lenient than previously expected;
From the current daily trading volume of Bitcoin and the performance/market value of MSTR, the current capacity for accommodating funds is still in the early stage, far from reaching an inflection point;
The chips in the market are still exiting like a tide under the previous two premises. The horizontal trading period near the new high over the past 6 months has actually completed an epic turnover of old and new chips.
Therefore, we firmly believe that the new round of the asset cycle for Bitcoin has just begun. Specifically in terms of asset management, we will accompany everyone to enjoy a long-term low-volatility upward experience based on the previous understanding and actual trading signals, namely the experience of holding core US stock assets.
This article is a collaborative reprint from: Deep Tide
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