Bitcoin's new asset cycle: the situation and understanding after this new high

Written by: Will, Metrics Ventures

As Bitcoin hits a new high again, and the epic 6-month high consolidation is coming to an end this weekend, we think it is necessary to use this article to talk to you about our views. As we mentioned in the monthly report before, 6 months is enough to confirm the arrival of a trend measured in years. This article is based on the manager's observations of the industry in the first and second levels of the market over the past 6 months. It has a strong subjective component and will try to guide our future crypto asset management ideas.

The following sentence summarizes the core idea of ​​this article:

• The asset attributes of Bitcoin have been newly defined in the past 6 months, and the new and old main funds have simultaneously completed the handover of pricing power. A new fund disk with Bitcoin as the core asset, ETFs and US stocks as the capital inflow channels, and unlimited inclusion of US dollar liquidity through the ponzi model represented by MSTR and US listed companies has been officially launched.

• Bitcoin has become the most core US dollar asset besides the leader of the US dollar industry cycle (such as AI), and the long-term low volatility upward situation has basically taken shape. But 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 turning point in the consolidation

Bitcoin has found a clear definition of its own asset attributes

This is something that everyone may overlook, but it is particularly important in our opinion. This definition can be led by BlackRock, but it needs the affirmation of the entire US dollar capital system to be established. In the past, it was a job that no one expected. However, in the past 6 months, we have enough evidence to make it clear:

Bitcoin is an alternative reserve asset that can hedge the risk of US dollar debt without the traditional financial framework.

This definition concisely gives Bitcoin the most important basis for becoming the center of the future US dollar asset system. The issue of US debt is already the elephant in the room and will be the core issue of the US fiscal and monetary system for a long time.

Under the current background of Trump's big government, if the policy is radical again, we may witness further large fluctuations in the US debt and US dollar exchange rate in the next three years. We believe that under the background of the shrinking global influence of the US dollar, the US debt issue is one of the biggest themes in the past 10 years.

At the same time, more importantly, whether the above ideas are bought by people is also our most concerned issue in recent months. Standing at this moment, facing Trump's unexpected big government, we have finally observed enough evidence that enough giant Hedge Fund (1B+) founders have begun to publicly express their attitudes, including but not limited to Paul Tudor Jones, Verde Asset Management, Brevan Howard, Millennium Management, Schonfeld Strategic Advisors and other billion-dollar old-brand Hedge Funds representing traditional old money use BTC as a hedging tool in risky transactions in US debt (especially in the recent election).

Bitcoin's new Ponzi model has established its momentum in the past 6 months

Since the approval of the ETF, the new Bitcoin Ponzi model led by BlackRock has taken shape. This system consists of ETFs actually controlled by BlackRock and Microstrategy, of which BlackRock is the second largest shareholder, as the creator and locker of unlimited buying orders. It takes Bitcoin's overall low volatility as the core, creates the possibility of Bitcoin as a market value management tool through the stock price effect of MSTR, and opens up future passive buying of US stock ETFs, forming a Bitcoin Ponzi model that can achieve unlimited self-positive reinforcement.

We believe that the above model is established in the medium term (3-5 years) and the premise of long-term infinite cycle is:

1. Bitcoin volatility is reduced;

2. US dollar liquidity can maintain the average growth rate since 2008;

3. Bitcoin price can achieve annual growth, the proportion is not important.

And the following important facts have already occurred:

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1. Bitcoin volatility is close to the lowest in history;

2. Without considering arbitrage factors, the total market value of Bitcoin held only through Bitcoin ETF (including GBTC) and MicroStrategy has exceeded US$90 billion. Its holdings correspond to the current average daily spot (including various ETF) trading volume of the entire network (actually effective about 100 billion US dollars, at the peak of the current bull market), which has actually reached the so-called threshold of being a banker. In the past 6 months, we have truly felt that liquidity has further concentrated on CME and NYSE, which also proves the control of the above system over the current supply and demand of Bitcoin;

3. BlackRock has and is fully capable of guaranteeing MSTR's equity refinancing ability in the long term, and continues to promote MSTR to use equity financing tools to play the role of BTC volatility ballast.

In summary, this infinite perpetual motion machine is expected to become the best capital game in the next 2-3 years at the moment when the US dollar liquidity has just begun to be loosened. It is only a matter of time before the total value of Bitcoin held by the BlackRock system exceeds the gold ETF holdings.

Finally, the turning point observation method of the above-mentioned capital pool is briefly explained, which is mainly the reverse deduction of the aforementioned core conditions:

1. BTC volatility, especially downward volatility begins to amplify;

2. US dollar liquidity has an inflection point;

3. MSTR has difficulty in equity refinancing and has failed to complete the currently planned 3-year US$42 billion refinancing task. Based on this logic, it is predicted that the MSTR stock price will peak ahead of the BTC price.

II. The manager's outlook on Bitcoin's trend in the next five years

Based on the foregoing, the manager believes that the key points to be grasped for Bitcoin's trend in the next five years are:

1. It is currently at a real turning point in US dollar liquidity, and the right-wing US movement led by the Republican government will further ensure that US dollar liquidity will be looser than previously expected;

2. Judging from the current daily trading volume of Bitcoin and MSTR's stock price performance/market value, the current scale of funds accommodated is still in its early stages and is far from the turning point;

3. Under the first two premises, the on-site chips are still leaving the market in large numbers, and the sideways trading time near the new high in the past 6 months has actually completed an epic turnover of new and old chips.

Therefore, we firmly believe that a new round of Bitcoin's big asset cycle has just begun. Specifically in terms of asset management, we will accompany you to enjoy the long-term low-volatility upward trend, that is, the holding experience of the core assets of the US stock market based on the previous understanding and actual trading signals.