2024 & 2025, the last Mega cycle of BTC

Author: Ling Ziang (Tony Ling), pen name Long Ye

Abstract:

As of the time of writing this article, 2024Q4, this is the beginning of a new round of bull market in the cryptocurrency industry.

The value of BTC in the macro field, compared with bonds and stocks in financial history, is the ‘fuel’ for the new round of human technological development; in the meso field, it is the currency of the digital world that humanity will inevitably enter in the future, as well as an index; in the micro field, it is the landing of a new round of legal supervision, the compliance of issuing coins, thus siphoning off the investment demand of the whole world.

This may be the last “grassroots” cycle of the crypto industry, and also the last mega-cycle with a huge beta increase for BTC. This means that after this cycle, the beta of BTC will be greatly reduced, but it does not mean that there will be no hundredfold alpha opportunities in the general token issuance market.

The top of this bull market for BTC will appear in Q4 2025, with a high point of $160,000 to $220,000. Before that, apart from the already occurred “first wave,” there are still two significant mid-term trends of the bull market.

It is now the year 1999 of the Internet era, which means that in the next 12-18 months, after the bull market reaches its peak, the crypto industry will experience a long winter, just like the bursting of the Internet bubble in 2000-2001. Of course, this is also an opportunity for industry reshuffling. I am looking forward to it.

When I feel that a bull market is coming, it is the most productive time for writing.

About 4 years ago, at the beginning of the previous bull market cycle, I wrote a piece called ‘How Should We Invest in Digital Currency in 2021?’. When we talk about the entire digital currency industry, it is inevitable to first mention the value and price of BTC.

If you already believe in the value of Bitcoin, feel free to skip to Part V, where we discuss the future price trend of Bitcoin.

One

From the industrial dimension, I would like to divide the value of BTC into three levels: macro, meso, and micro. From a macro point of view, BTC represents the risk-off expectation of the entire human financial market, and the third “financial medium” that can be capitalized after bonds and stocks in human history. From a mesoscopic point of view, BTC is the “digital age” that mankind will inevitably enter in the future, that is, the “index” with the best output value in the Web3 world; From a micro point of view, BTC is gradually improving in terms of compliance supervision, which will attract a large number of “traditional old money” in mainstream countries such as the United States. In third world countries, the demand for private investment is siphoned off that cannot be met locally.

On a macro level, we see Bitcoin as a groundbreaking asset in the history of human finance. The most important thing is to understand the changes in financial history. In ‘How to Invest in Digital Currency in 2021? Part One,’ we start from a perspective of technological history to set the position of digital currency. Behind each technological revolution, important financial infrastructure and brand-new financial ‘mediums’ are created.

Behind finance lies the change of the times. Standing at the present, it may be the most chaotic moment in the global political and economic situation in the past thirty years, and also the most fragile moment of the traditional financial order, most likely to undergo a major reshuffle. Now I cannot trace back whether there were financial exchanges similar to the London Stock Exchange and the New York Stock Exchange at the time of famous financial bubbles like the ‘Dutch tulip’ hundreds of years ago, or whether Dutch vendors were accustomed to offline transactions, but speculation without establishing rules and order caused the bubble to eventually burst. However, in the long history, every technological innovation remembered by humanity is accompanied by a change in financial paradigm, and a change in financial paradigm is an inevitable result of the change of the times. These are mutually causal, but also complement each other, and finally write a vivid chapter in human history. I cannot imagine what would have happened if the dramatic changes in the social structure brought about by the American Civil War had not reshaped the social classes and encouraged technological innovation to enter industry. Would the Second Industrial Revolution still have originated in England but ultimately flourished in the United States, becoming a milestone?

At the same time, I have a more radical view: when everyone is talking about economic downturn and how to find viable business models, 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 will not be elaborated on here. They will be expanded upon in another article titled ‘An Extra Chapter of Cryptocurrency Capital Theory: A Brief Discussion on Business and Investment Philosophy’ (Related reading: ‘Cryptocurrency Capital Theory: Part One - Token Issuance, a New Paradigm of Financing’).

[Excerpt: When discussing business models in the contemporary business and financial environment, the context behind it refers to the common path developed by the mainstream business entities based on the ‘corporate system’ in the past hundred years: expanding market size, increasing the number of employees, and ultimately going public, and then pricing stocks through the profit*PE system. This path may not necessarily hold true in the future.

In today’s “social capital” (or expressed as “private economy”), the value owned by equity enterprises may account for 95%, and the value anchored by stocks in listed companies may account for the majority of capital value. However, in the future, these values may exist more in “business” (why not limited partnership) and “token” (foundation).】

Two

Take some more time to talk about the mid-term view of the BTC industry. At the end of my book published in 2021, the first of the eight predictions mentioned that BTC is unbeatable. Refer to the e-book version of my book “Unlocking the New Code-From Blockchain to Digital Currency” Afterword 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 economic terms, it should be called “currency”. In the barter era, gold was the most common “currency”, and in the modern national 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 aspects of life in the digital world will require a new form of “currency”.

So, some people cling to the meaningless idea of ‘how can what you invest in be a token’. Blockchain and crypto need ‘+’ - just like when someone asks you what you’re investing in now, and you say ‘I want to invest in an equity enterprise’ or ‘I want to invest in an internet enterprise’. As a special industry, Web3, and as a new market tool and financial medium, crypto has gradually combined 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 very clear, but what does it have to do with us? Or rather, how do we increase our wealth after seeing the trend clearly?

Now let’s turn our attention to AI.

The main theme of the commercial society in recent years is one bright and the other dark. AI is undoubtedly the hot spot that capital has been pursuing and can be put on the table. Crypto is surging in the dark, where various legends and myths of getting rich gather, but it is also restricted in many ways, making it inaccessible to many people.

The potential of the AI market is indeed widely believed to be in the trillion-dollar range, 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 should they invest in? Can they now invest in AI ETF index funds to comprehensively cover the AI ecosystem and effectively track industry growth?

No. In 2024, NVIDIA’s stock price nearly tripled, while most AI-themed ETFs performed averagely during the same period. Looking ahead, NVIDIA’s stock performance will not be positively correlated with the overall growth of the AI industry. As a chip company, it is impossible for NVIDIA to be the only one forever.

Comparison of the performance of mainstream AI ETF and Nvidia stocks in 2024

AI is the main theme, but will there be a product that can anchor the future AI industry market value development, and as the industry value of AI rises, the value of this ETF can also rise? Just like the Dow Jones Index/S&P 500 ETF represents the development of Web 0 (equity enterprises), the Nasdaq ETF represents the investment opportunities of Web 1 and Web 2, there is no index representation. In the Web3 world, or the value of the entire digital world of future human beings, the most appropriate index is BTC.

Why is the value of the Web3 world necessarily measured in 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 to visit Yellowstone National Park at home, experience the palaces of the Tang Dynasty in China, enter the virtual meeting room you set up and have coffee face-to-face with friends on the other side of the world… The boundary between reality and virtuality will become increasingly blurred, this is the future digital world, or the appearance of the metaverse. And there, you need to decorate the virtual space, if you want the digital people there to dance for you, you will always need to pay - it cannot be US dollars, Renminbi, or physical assets. The most suitable and only widely accepted currency in the entire digital world that I can think of is Bitcoin.

In the movie ‘The Revolution of 1911’, Dr. Sun Yat-sen held a 10 yuan bond, saying, ‘When the revolution succeeds, this bond can be exchanged for 100 yuan’.

Three

Back to the present.

We live in a country with a stable economy, and the fiat currency can be trusted. However, this does not mean that the financial systems of the whole world are 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 cancellation of the Argentine fiat currency system—anyway, no one in Argentina trusts the government-issued fiat currency, so why bother. In 2023, the inflation rate in Turkey reached +127%, and correspondingly, 52% of its citizens own digital currency. Especially in third world countries, in recent years, as the information technology infrastructure has gradually improved, the traditional fiat currency mobile payment and digital currency payment methods have developed almost simultaneously. In contrast, just like in the period of vigorous development of information technology in China around 2010, skipping the 1.0 era of POS machines and bank card payments directly entered the 2.0 era of mobile payment, third world countries have begun to develop in recent years, and the 3.0 era of digital currency payment has directly replaced the 2.0 era of mobile payment methods, making digital currency payment a common scene in daily payments.

Here is an interesting debate: Bitcoin has no controller, so as a currency or “currency”, it cannot achieve the macro-control function of fiat currency by the government. In fact, the US dollar is also issued by enterprises, so-called government macro-control must give way to the interest groups behind it, and capital is the driving force of the world. If you insist that fiat currency has macro-control, then the interest groups that profit from Bitcoin mining are the biggest controllers.

Changes in inflation rates of major economies in recent years

In recent years, the inflation rate in Argentina has changed

From a micro perspective, with the acceleration of capital flow, the technology and financial cycles are becoming shorter. In an environment with weak economic antifragility, the traditional equity market requires a lock-up period of 8-10 years. The characteristic of long-term investment raises concerns about liquidity for many people. However, token rights provide the possibility of early realization, which not only attracts more retail funds, but also provides early investors with more flexible exit expectations.

In the traditional equity market, angel or early-stage investors usually seek partial exits through equity transfer or corporate buybacks after about 5 years since the establishment of the enterprise, when the enterprise has entered a relatively mature development stage but still has some time before IPO or acquisition (usually 8-10 years). This model can effectively ease the time cost of investment, but compared with token rights, its liquidity is obviously more restricted.

The attractiveness of the coin rights model lies in allowing early investors to realize the capital withdrawal earlier through token issuance or circulation, while attracting a broader range of market participants, which may have a far-reaching impact on the traditional equity market. This can be referred to in ‘Cryptocurrency Capital Theory Series Part Two (Part Two): The Battlefield Without Gunpowder - VC or token fund?’.

On the other hand, the financial markets of most sovereign countries in the world are extremely fragmented and lack liquidity, while the inherently global financial characteristics of crypto have greatly attracted these funds, including South Korea, Argentina, Russia, and others. In addition, the stock market development of some Southeast Asian countries, mainly Vietnam, cannot keep up with the accumulation speed of the middle class, which has led these emerging classes to skip the stage of participating in the local financial market directly and transition to crypto. Against the background of global digital currency regulation and integration with mainstream financial markets, the investment demand of private assets in these countries cannot be met by weak local financial infrastructure—The main board market (KOSPI) and the secondary board market (KOSDAQ) of the South Korean stock market together have more than 2,500 listed companies, but 80% of the market value of companies is less than $100 million, and the daily trading volume is negligible. In contrast, the digital currency market, which has absorbed funds from global retail investors, has the most abundant liquidity and has become their best target for investment.

Current market value and trading volume of Doge

Samsung’s current market value and trading volume

Note: From the graph, it can be seen that the current market value of Doge is about 60B USD, while Samsung’s market value is about 234B USD, which is about 4 times the market value of Doge. 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 cryptocurrency market—the United States, 2025 may usher in a new era of cryptocurrency legal system reform, with the two most important bills—FIT21 and DAMS, which will impact the future of the currency circle. These two blockchain bills regulated by the Commodity Futures Trading Commission (CFTC) instead of the Securities and Exchange Commission (SEC) focus on treating token issuance (ICO) as commodity trading rather than securities issuance, thus falling under the jurisdiction of the CFTC. Considering that these two bills were proposed by the Republican Party, and the current SEC chairman Gary Gensler represents the Democratic Party’s position, the bills face significant resistance. However, in the event of Trump being re-elected as president, with the Republican Party in control, the likelihood of the bills being passed significantly increases.

To explain this bill in plain terms, it means that issuing coins is treated as a commodity and regulated by the CFTC, making it legal. This can greatly promote the enthusiasm for coin financing. Companies can legally and compliantly raise funds through issuing coins, attracting more capital into the coin market. Moreover, with a stable channel for long-term compliant development, more people will continue to engage in this industry even after making money. Most importantly, after the United States takes the lead in implementing this bill, it will officially unveil the competition between countries in the global digital currency financial market and blockchain technology market, such as ‘project grabbing’ and ‘talent grabbing’, in the fully globalized and freely flowing coin market. In the future, if the U.S. policy becomes more friendly, issuing coins may no longer be a gray industry but a prestigious financial innovation. The founders who currently reside in crypto-friendly countries like Singapore and Switzerland may soon undergo a major migration.

Four

Back in 2016, when the world’s crypto types could be counted on their fingers, and BTC was like a game currency, which could be directly entered into the exchange with RMB to “deposit and buy”. (For details, please refer to “Digital Currencies in 2021, How Should We Invest?”) “One of the Four Parts” at the end of the article)

That is also my dream.

Originally, my plan was to achieve these goals in 8-10 years.

But we only used four years.

It was at that time that I had a new dream - since Bitcoin has been gradually accepted by mainstream society as a monetary asset, then, other digital currencies, or tokens, besides digital equity, should also serve as digital commodities, so that in the digital world of the future, in addition to financial value, utility should also be generated, in order to enable humanity to better enter the digital world.

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

“Digital goods in the metaverse era” is my definition of the ultimate future of NFTs. It is also the most crucial step in realizing the Web3 transformation and digitization of “Internet-era goods” for mass adoption.

Therefore, I firmly built the NFT industry in early 2021. In the series of articles ‘The Road to the Future - Web3 Pentalogy’, I have described my vision for its future.

Five

Of course, the most intuitive way to attract people, or to put it another way, to make more people willing to read my articles, naturally depends on the rise in BTC.

It’s time to get to the point. It’s necessary to mention my prediction for the BTC market: the peak of this round will appear at the end of 2025, and the reasonable range should be between $160,000 and $220,000. After that, in 2026, it is recommended that everyone stay out of the market and recuperate.

In my paper “Bitcoin Valuation Model under Miner Market Equilibrium-Based on Derivative Pricing Theory” published on January 1, 2019, I mentioned the bottoms 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 cryptocurrency circle is at a critical crossroads. Today’s digital currency industry is like the Internet industry at the turn of the century, and the bubble burst is not far off in the next 1 to 2 year window. With the passage of crypto-friendly laws such as FIT21 in the United States, and the completion of compliance supervision of assets such as currency rights, a large number of very traditional old money that once lacked understanding of crypto, or even completely scoffed at it, will begin to accept BTC and carry out 1%-10% level allocation. However, after that, if blockchain and digital currency cannot be gradually combined with traditional industries, and truly usher in the transformation of “blockchain + industry”, just like the combination of the Internet industry and consumption, social networking, media, etc., and change them, I really don’t see any new funds, and there is any reason for this industry to have amazing growth opportunities. DeFi in 2020, NFT and metaverse in 2021, these are all in the right direction, and they also set off a wave of innovation at that time. And throughout 2024, BTC has repeatedly hit new highs, but the entire blockchain industry has not been completely devoid of enough innovation to talk about, and the market is just flooded with more memes and Layer 1&2&3, and there is no new “business concept innovation”. Moreover, in 2025, as far as I can see, the atmosphere of the entire industry dictates that I am pessimistic about the emergence of milestone “business concept innovation”.

When the water rises, now the flood is flooding, and small rafts are everywhere, competing and the boatmen are competing to see who can row faster, even mocking the heavy, machine-powered iron boats. But when the big waves recede, the wooden boats will all run aground, only by maintaining constant mechanical power can they sail out of the port and into the sea.

Even an interesting prediction is that the sign of the peak of the cryptocurrency bubble will be when Buffett, the world’s biggest opponent of Bitcoin, starts to change his mind and even get involved in the industry. The phase of revolutionary victory is often the moment of greatest crisis.

The current cryptocurrency market can be compared to the Internet era of 1999. After experiencing a rapid and healthy growth, the digital currency industry may face a severe adjustment due to a huge bubble since the end of 2025. Looking back at history, the Internet industry welcomed Netscape’s initial public offering (IPO) in December 1995, and the market frenzy was ignited by Yahoo’s listing in April 1996. On March 10, 2000, the Nasdaq index reached a historical peak of 5408.6 points. However, the bubble quickly burst, and the market entered a cold winter period in 2001. Although the broad cold winter continued until 2004, the true low point was in October 2002, when the Nasdaq index almost fell below 1000 points, marking the industry’s lowest point from a financial perspective.

In 2020, MicroStrategy successfully drove the appreciation of the company’s stock by purchasing BTC, achieving a significant stock-currency linkage effect for the first time. By February 2021, Tesla’s announcement of purchasing Bitcoin became a significant event marking the official entry of a giant. These historical moments inevitably bring to mind the “1995-1996” of the blockchain industry—the early days of the internet boom.

Looking ahead, I think that by the end of 2025, the price of Bitcoin may reach a long-term cyclical peak, but in early 2027, it may touch a new low. And once the FIT21 bill is passed, it may trigger a wave of mass issuance of coins, just like the unprecedented boom of the “.com” era.

If the threshold for token financing is lowered to almost zero, and even ordinary people can issue their own tokens as easily as high school students can create a website, then the limited capital in the market will be quickly diluted by various tokens rushing in. In such an environment, the final ‘crazy bull market’ for token issuers may not last for more than three months. Subsequently, due to the imbalance of market supply and demand and capital depletion, the industry will inevitably face a comprehensive collapse.

However, in the next 12 months, we still have the potential for BTC to nearly double in beta, and for ordinary people, there are countless opportunities for early coins to multiply by hundreds or even thousands in a very short period of time due to global liquidity aggregation. Why not participate?

And looking back at the surging waves of the past, the internet industry was also criticized as a ‘bubble’ by many media outlets. Today, the NASDAQ index has broken through the 20,000 mark. Looking back, in the year 2000, it seemed like a mountain peak, but now it’s just a small hill. Even if one entered the internet industry in 2000 and persisted until today, it is still almost the most correct choice.

BTC, one small mountain bag after another.

It has been 3202 days since I bought my first BTC on March 7, 2016.

I still remember that when I clicked the mouse, the price displayed was 2807RMB, which is less than 400 US dollars.

Many people have asked me, how high do you think BTC can rise to?

This question is meaningless. The price of gold has been reaching new highs in recent days and years.

A meaningful question is, how high can the price of BTC rise before a certain point in time?

Wait and see.

The best is yet to come.

December 12, 2024