Bitcoin New Asset Cycle: The Current Situation and Understanding after the New High
As Bitcoin once again reaches a new high and the epic 6-month high-level consolidation phase is coming to an end, we believe it is necessary to share our views with everyone through this article.
As mentioned in our previous monthly report, a 6-month period is enough to confirm a trend that lasts for years. This article is based on the observations of the management over the past 6 months in the first and second-tier markets, and it has a strong subjective component. It will attempt to guide our future thinking on cryptocurrency asset management.
To summarize the core idea of this article in one sentence:
Bitcoin’s asset properties have completed a new qualitative phase in the past 6 months, with the old and new main funds synchronously completing the transfer of pricing power. A new fund pool, which focuses on Bitcoin as the core asset, uses ETFs and US stocks as channels for fund inflows, and through a Ponzi scheme represented by MSTR, a US-listed company, formally initiates the unlimited inclusion of US dollar liquidity.
Bitcoin has become the most core US dollar asset, second only to industries like AI, with a long-term low volatility and upward trend. However, the trend of traditional digital currency markets (Altcoins) decoupling from Bitcoin will continue to strengthen.
I. Bitcoin has established a turning point in fundamentals during the consolidation phase
Bitcoin has found a clear definition of its asset properties.
This is something that may be overlooked by many, but we consider it particularly important. This definition can be led by BlackRock, but it requires the affirmation of the entire US dollar capital system to be established, which was unexpected in the past.
However, in the past 6 months, we have accumulated enough evidence to confirm:
Bitcoin is an alternative reserve asset that can hedge US dollar debt risks, detached from the traditional financial framework.
This clear definition provides the most important basis for Bitcoin to become the center of the future US dollar asset system. The US debt issue has become the elephant in the room and will long-term be a core problem of the US fiscal and monetary system.
In the current context of the Trump administration, if policies become more aggressive, we may witness further significant fluctuations in US debt 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 debt issue is one of the biggest themes in nearly 10 years.
More importantly, whether the above concepts are accepted is the biggest concern for us in recent months. At this moment, facing Trump’s unexpectedly large government, we have finally observed enough evidence, that is, enough giant Hedge Fund (1B+) founders have started to publicly express their attitudes, including but not limited to Paul Tudor Jones, Verde Asset Management, Brevan Howard, Millennium Management, Schonfeld Strategic Advisors, which represent traditional large-scale Hedge Funds using BTC as a hedging tool for US debt risks (especially in the recent elections).
Bitcoin’s new Ponzi scheme has established its momentum in the past 6 months
Since the approval of ETFs, the new Bitcoin Ponzi model led by BlackRock has taken shape. This system is dominated by ETFs actually controlled by BlackRock and Microstrategy, which is the second-largest shareholder of BlackRock, as the creator and holder of infinite buying orders, with Bitcoin’s overall low volatility and upward trend as the core principle. The possibility of using Bitcoin as a market value management tool through the stock price effect of MSTR and opening up passive buying orders for future US stock ETFs has formed a Bitcoin Ponzi scheme that can achieve infinite self-reinforcement.
We believe that the establishment of the above model in the medium term (3-5 years) and the long-term infinite cycle premise is:
The volatility of Bitcoin decreases;
The US dollar liquidity can maintain an average growth rate since 2008;
The Bitcoin price can achieve annual growth, with the proportion being less important.
The following important facts have already occurred:
Bitcoin’s volatility has reached near-historic lows;
Excluding arbitrage factors, the total market value of Bitcoin held by Bitcoin ETFs (including GBTC) and Microstrategy has exceeded $90 billion. Corresponding to the current daily average spot trading volume across the network (including various ETFs) (actually about $100 billion under the current peak environment of the bull market), it has actually reached the so-called market-making threshold. In the past 6 months, we have truly felt that liquidity has further concentrated towards CME and NYSE, which also confirms the control of the current supply and demand of Bitcoin by the above system;
BlackRock has the complete long-term ability to guarantee the refinancing ability of MSTR’s capital, continuously driving MSTR to play the role of a ballast stone for Bitcoin volatility using long-term capital financing tools.
In conclusion, this perpetual motion machine is expected to become the most outstanding fund game in the next 2-3 years when US dollar liquidity is just beginning to loosen. The total value of Bitcoin held by the BlackRock system will surpass the holdings of gold ETFs, it’s just a matter of time.
Finally, a brief explanation of the observation method of the above fund game, mainly through the reverse deduction of the core conditions mentioned above:
Bitcoin volatility, especially downward volatility, begins to increase;
There is a turning point in US dollar liquidity;
MSTR encounters difficulties in capital-type refinancing, failing to complete the planned $42 billion refinancing task within 3 years, and based on this logic, it is predicted that MSTR’s stock price will peak before Bitcoin’s price.
II. Management’s Outlook on Bitcoin’s Trends in the Next 5 Years
Based on the above, the management believes that the key points to focus on for Bitcoin’s trends in the next 5 years are:
Currently at a real turning point in US dollar liquidity, and the US right-wing conservatism led by the Republican government will further guarantee that the US dollar liquidity will exceed previous expectations;
From the current daily trading volume of Bitcoin and the performance/market value of MSTR’s stock price, the current scale of funds accommodated is still in its early stages, far from a turning point;
Under the first two premises, the on-chain chips are still exiting in large numbers, and the epic turnover of new and old chips near the new highs in the past 6 months has actually been completed.
Therefore, we firmly believe that a new round of Bitcoin’s large asset cycle is just beginning. Specifically, in terms of asset management, we will rely on the understanding and actual trading signals mentioned earlier to enjoy the long-term low-volatility upward trend, that is, the experience of holding core assets in US stocks.
This article is reprinted in cooperation with: Deep Tide