2024 & 2025, BTC's last mega cycle: The theory of BTC's value and price

Original Title: " 2024&2025, BTC's Last Mega Cycle------ A Discussion on BTC's Value and Price "

Original Source: Longye @ x Element

Abstract

As of the writing of this article, in Q4 2024, we are at the beginning of a new bull market in the cryptocurrency space. The value of BTC, in the macro context, can be likened to bonds and stocks in financial history, serving as the "fuel" for a new round of human technological development; in the meso context, it is the currency of the digital world that humanity will inevitably enter in the future, as well as an index; in the micro context, it is the new round of legal regulations being implemented, leading to the compliance of token issuance, thereby attracting global private investment demand. This may be the last "wild" cycle belonging to the crypto industry, and also the last mega cycle where BTC has a significant beta increase. This means that after this cycle, BTC's beta will significantly decrease, but it does not imply that the broader token issuance market will lack opportunities for hundredfold alpha returns. The peak of this bull market for BTC will occur in Q4 2025, with a high point of $160,000 to $220,000. Before that, aside from the "first wave" that has already occurred, there are two significant mid-bull market trends to come. We are currently in the year 1999 of the internet era, which means that after the bull market peaks in the next 12-18 months, the crypto industry will face a long winter, similar to the bursting of the internet bubble in 2000-2001. Of course, this is also an opportunity for industry reshuffling and restructuring. I am looking forward to it.

When I feel the bull market is coming, it is the time when I produce the most content.

About four years ago, at the beginning of the last cycle's bull market, I wrote " How Should We Invest in Digital Currency in 2021? . When we talk about the entire digital currency industry, we inevitably need to first mention the value and price of BTC.

If you already believe in the value of Bitcoin, feel free to jump directly to Section 5, which discusses expectations for Bitcoin's future price trends.

From an industrial perspective, I would like to discuss BTC's value in three dimensions: macro, meso, and micro. From a macro perspective, BTC represents the risk-hedging expectations of the entire human financial market, and is the third capitalizable "financial medium" in human history after bonds and stocks; from a meso perspective, BTC is the best "index" of the future "digital age" or web3 world that humanity will inevitably enter; from a micro perspective, BTC is gradually becoming compliant with regulations, which will attract a large amount of "traditional old money" in mainstream countries like the United States. In third-world countries, it siphons off the unmet local private investment demand.

On a macro level, we view Bitcoin as a revolutionary asset in human financial history, and the most important thing is to understand the changes in financial history. In " How Should We Invest in Digital Currency in 2021? , we start from the perspective of technological history to position digital currency. Behind every technological revolution, important financial infrastructures and entirely new financial "mediums" emerge.

Behind finance is the change of the times. At present, we may be at the most confusing moment in global political and economic situations in the past thirty years, and also the moment when the traditional financial order is the most fragile and likely to undergo a major reshuffle. I can no longer trace whether, during the 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, leading to the bubble ultimately bursting. However, throughout history, every technological innovation remembered by humanity has been accompanied by a transformation of financial paradigms, and the transformation of financial paradigms is an inevitable product of changes in the times. These are mutually causal and mutually beneficial, ultimately writing a significant chapter in human history. I cannot predict whether, without the Civil War that brought about a dramatic change in American social structure, reshaping social classes and encouraging technological innovation to enter industry, the Second Industrial Revolution would have still begun in Britain but ultimately flourished in the United States, becoming a milestone.

At the same time, I have a more radical viewpoint: when everyone is talking about economic stagnation and discussing 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 will not elaborate further. I will expand on this as the most important part in my future article, "Philosophical Musings on Business and Investment in the Four-Part Series of Crypto Capital Theory."

[Excerpt: Discussing business models in the contemporary business and financial environment refers to the general path developed by mainstream business entities over the past century, dominated by the "corporate system": expanding market size, increasing employee numbers, and ultimately going public, with a complete system of stock pricing based on profit * PE. This path may not hold in the future.

Currently, equity enterprises may account for 95% of the value held by "social capital" (or expressed as "private economy"), while publicly listed companies, which use stocks as value anchors, account for a large portion of capital value. However, in the future, this value may exist more in "businesses" (why can't limited partnerships work) and "tokens" (foundations).]

Let's spend a bit more time discussing BTC's meso-level industrial viewpoints. At the end of the book I wrote in 2021, the first of the eight predictions mentioned that BTC is unbeatable. Referencing the electronic version of my book " Unlocking New Passwords - From Blockchain to Digital Currency " postscript four—

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 in economic terms, it should be called "currency." In ancient times, gold was the most common "currency" in barter trade. After the development of modern national and financial systems, national currencies became the most common "currency." In the future, with the advent of the digital age, all life in the virtual space of the metaverse will require a new "currency."

Therefore, it is meaningless for some people to cling to "how can you invest in a token." Blockchain and crypto need a "plus," just like when someone asks 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, crypto, as a new market means and financial medium, has gradually combined 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 seeing the trend clearly?

Let's shift our focus to AI.

In recent years, the main theme of the business society has two tracks, one visible and one hidden. AI is undoubtedly a hot topic that capital has always pursued and can be presented on stage. Crypto is in the shadows, a place where various legends and myths of wealth converge, but it is also limited in many ways, making it an unattainable place for many.

The potential of the AI market is widely regarded as being in the trillion-dollar range, especially in the fields of generative AI, AI chips, and related infrastructure. However, for investors, everyone believes AI is a sunrise industry and is willing to invest their money, but what should they invest in? Is there an AI ETF index fund that can comprehensively cover the AI ecosystem to effectively track industry growth?

No. In 2024, Nvidia's stock price rose nearly threefold, while the performance of most AI-themed ETFs during the same period appeared mediocre. Looking further ahead, Nvidia's stock performance will not necessarily correlate positively with the overall growth of the AI industry—chip companies cannot forever be represented solely by Nvidia.

Comparison of mainstream AI ETFs and Nvidia stock performance 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, where the value of the entire AI industry rises, and the value of this ETF can rise correspondingly? Just as the Dow Jones Index/S&P 500 ETF represents the development of Web0 (equity enterprises), the Nasdaq ETF represents Web1, and investment opportunities in Web2 have not been presented in index form, the most suitable index for the value of the Web3 world, or the entire future digital world of humanity, is BTC.

Why is the value of the Web3 world necessarily measured by BTC?

Because, since the birth of computers and the internet, 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 and visit Yellowstone Park, experience the palaces of the Tang Dynasty in China, or enter a virtual meeting room you set up to have coffee face-to-face with friends on the other side of the Earth… The boundaries between reality and the virtual will become increasingly blurred, and this is what the future digital world or metaverse will look like. And there, if you want to decorate the virtual space, or if you want the digital person there to dance for you, you will need to pay—this cannot be in US dollars, renminbi, 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 up a 10 yuan bond: "Once the revolution succeeds, this bond can be exchanged for 100 yuan."

Back to the present.

We live in economically stable countries where fiat currency 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 announced upon taking office was 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, and correspondingly, the national ownership of digital currency among its citizens is as high as 52%. Especially in third-world countries, in recent years, as information technology infrastructure has gradually improved, traditional fiat currency mobile payments and digital currency payment methods have developed almost simultaneously. In contrast, it is like how China, during its booming information technology development period around 2010, skipped the 1.0 era of POS machines and bank card payments and directly entered the 2.0 era of mobile payments. In recent years, third-world countries have begun to develop, and the 3.0 era of digital currency payments has directly replaced the 2.0 era of mobile payments, making digital currency payments a commonplace scene in daily transactions.

Here, an interesting debate arises: Bitcoin has no controller, and if it cannot fulfill the macro-control functions of fiat currency as a currency or "currency," then in reality, the US dollar is also issued by enterprises, so the so-called government macro-control must yield to the interest groups behind it; capital power is the driving force behind the operation of the world. If we must say that fiat currency has macro-control, then the interest groups of Bitcoin mining are the biggest controllers.

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 accelerates, the cycles of technology and finance are becoming shorter and shorter. In an environment with weak economic anti-fragility, traditional equity markets require an 8-10 year lock-up period, and this characteristic of long-term investment raises concerns about liquidity for many. In contrast, token rights provide the possibility of early monetization, which not only attracts more retail funds but also offers early investors more flexible exit expectations.

In traditional equity markets, angel round or early investors typically seek partial exits through equity transfers or company buybacks around five years after the establishment of the enterprise, 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 investment, 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 earlier through token issuance or circulation, while attracting a broader range of market participants. This flexibility may have a profound impact on the landscape of traditional equity markets.

On another front, the financial markets of most sovereign countries globally are extremely fragmented and lack liquidity, while the inherent global financial characteristics of crypto have greatly attracted this pool of funds, including those from South Korea, Argentina, Russia, and others. Moreover, in some Southeast Asian countries led by Vietnam, the development of their stock markets cannot keep pace with the speed of wealth accumulation among the middle class, leading these emerging classes to directly skip the stage of participation in local financial markets and transition 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 the weak local financial infrastructure—South Korea's main board market (KOSPI) and the KOSDAQ have over 2,500 listed companies, but 80% of these companies have a market value of less than $100 million, and their daily trading volume can be negligible. In contrast, the digital currency market, which attracts global retail funds, has the most abundant liquidity, making it 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 about $60 billion, while Samsung's market value is about $234 billion, roughly four times that of Doge. However, the 24h trading volume of Doge reached $5.5 billion, which is tens of thousands of times that of Samsung.

In the strategic hub of the global digital currency market—America, a new legal framework for cryptocurrencies is likely to emerge in 2025, with two key bills—FIT21 and DAMS—set to influence the future of the crypto space. These two blockchain bills, regulated by the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC), focus on treating token issuance (token creation) as commodity trading rather than securities issuance, thus falling under CFTC 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 significant resistance. However, if Trump is re-elected, with the Republican Party in control, the likelihood of these bills passing significantly increases.

To explain this bill simply, it means that token issuance is treated as a commodity, 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 engaged in this industry even after making money. Most importantly, after the U.S. takes the lead in introducing this bill, it will officially open up competition in the global 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 evolve in the future. If U.S. policies become more favorable, token issuance may no longer be a gray industry but a respectable financial innovation, leading founders currently residing in crypto-friendly countries like Singapore and Switzerland to migrate en masse.

Looking back to 2016, when the types of crypto around the world could be counted on one hand, BTC was like a game currency that could be directly "recharged" into exchanges with RMB. Our generation of crypto natives had high hopes for the future.

That was also my dream.

Originally, I envisioned that these goals would take 8-10 years to achieve.

However, we only took four years.

It was at that time that I had a new dream—since Bitcoin as a monetary asset has been gradually accepted by mainstream society, then other digital currencies, or tokens, should also serve as digital commodities, in addition to digital equity, to create utility in the future digital world of humanity, allowing for a better transition into the digital world.

Oh right, this thing later got a new name—NFT.

"The digital commodities of the metaverse era" is my definition of the future endpoint of NFTs, and it is the most important part of realizing the web3 transformation and digitization of "commodities in the internet era," leading to mass adoption.

For this reason, I resolutely began to build the NFT industry in early 2021. In the series of articles "The Road to the Future—Five-Part Series on Web3," I described my vision for its future.

Of course, the most visually appealing aspect, or the one that makes more people willing to read my articles, is still the rise of BTC.

It's time to get to the point. I need to mention my prediction for BTC's market: the peak of this cycle will occur at the end of 2025, with a reasonable range between $160,000 and $220,000, and after that, in 2026, I suggest everyone to go into cash and rest.

In my paper written on January 1, 2019, titled "Bitcoin Valuation Model Under the Equilibrium of the Miner Market—Based on Derivative Pricing Theory," I mentioned the bottom of the four-year cycle from 2018-2021,

and the bottom of the four-year cycle from 2022-2025 that I mentioned in 2022.

From the current perspective, the entire crypto space is at a crucial crossroads. Today's digital currency industry resembles the internet industry at the turn of the century, and the bubble burst is not far away within the next 1 to 2 years. With the passage of crypto-friendly laws like FIT21 in the U.S., and the completion of compliance regulations for assets like token rights, a large amount of traditional old money that previously lacked understanding of crypto, or even looked down upon it, will begin to accept BTC and allocate 1%-10% of their portfolios. However, after this, if blockchain and digital currencies cannot gradually integrate with traditional industries and truly usher in the "blockchain + industry" transformation, just as the internet industry did with consumption, social interaction, and media, I really do not see any new capital entering this industry, nor any reason for it to experience astonishing growth opportunities again. The DeFi of 2020, the NFTs and metaverse of 2021—these were the right directions and sparked a wave of innovation at the time. However, throughout 2024, while BTC continues to hit new highs, the entire blockchain industry lacks sufficient innovation to discuss; the market is merely filled with more memes and Layer 1, 2, and 3, without any new "business concept innovations." Moreover, from what I can see in 2025, the atmosphere of the entire industry leads me to hold a pessimistic view on the emergence of milestone "business concept innovations."

As the tide rises, now that the flood is pouring in, small rafts are everywhere, and the boatmen are competing to see who can row faster, even mocking those heavy, machine-powered iron ships. But when the big waves recede, the wooden boats will run aground, and only those with lasting machine power can sail out of the harbor and into the ocean.

In fact, I make an interesting prediction: the peak of the crypto bubble will be marked by Warren Buffett, the world's biggest opponent of Bitcoin, starting to change his tune and even participating in the industry. The stage victory of a revolution often coincides with the moment when the greatest crises are lurking.

We can compare the current crypto space to the internet era of 1999. After experiencing a rapid surge towards normalization, the digital currency industry may face a severe adjustment due to a massive bubble starting from the end of 2025. Looking back at history, the internet industry welcomed the IPO of Netscape in December 1995, which sparked a market frenzy following Yahoo's listing in April 1996. On March 10, 2000, the Nasdaq index reached a historic peak of 5408.6 points. However, the bubble quickly burst, and by 2001, the market entered a winter period. Although the broad winter lasted until 2004, the real low point was in October 2002, when the Nasdaq index nearly fell below 1000 points, marking the industry's lowest valley from a financial perspective.

In 2020, MicroStrategy successfully boosted its stock value by purchasing BTC, achieving a significant stock-coin linkage effect for the first time. By February 2021, Tesla's announcement of purchasing Bitcoin marked a symbolic event for the entry of giants into the market. These historical moments inevitably remind one of the blockchain industry's "1995-1996"—the initial rise of the internet wave.

Looking ahead, I believe that by the end of 2025, Bitcoin's price may reach a long-term peak, but by early 2027, it may touch a new low. Once the FIT21 bill is passed, it may trigger a wave of token issuance similar to the unprecedented spectacle of the ".com" era.

If the threshold for token financing is lowered to almost zero, allowing even ordinary people to issue their tokens as easily as high school students can learn to create a website, then the limited capital in the market will be rapidly diluted by the influx of various tokens. In such an environment, the last wave of "frenzied bull market" for token issuers may not last more than three months. Subsequently, due to market supply-demand imbalances 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 in beta increase, and for ordinary people, due to the global liquidity gathering, there are countless early coin opportunities that could yield "hundredfold or thousandfold" returns in a very short time—why not participate?

Moreover, looking back at the once tumultuous internet industry, which was criticized by many media as a "bubble." Today, the Nasdaq index has surpassed the 20,000-point mark. Looking back at it in 2000, what seemed like a peak is now just a small hill. Even if one entered the internet industry in 2000 and persisted until today, it remains one of the most correct choices.

As for BTC, it may just be another small hill.

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: 2,807 RMB, which was less than $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 reaching new highs over these days and years.

The meaningful question is, how high can BTC's price rise before a certain point in time?

Let’s wait and see.

The best is yet to come.