"The Bull Market Returns Quickly" has been the theme for the past month.

"I heard the news that the price of Bitcoin has surged recently. Do you know the current website of XX exchange? It's been a long time since I logged in. Where can I download it?" This is a common question among those who participated in blockchain investments during the previous bull markets. From these questions, we can obtain two key pieces of information for making investment decisions: 1. The train of Bitcoin has left behind those who only held it for speculative purposes, and the train is very light; 2. Rising prices are the best marketing, and people's arrogance and prejudice cannot resist the desire to make money.

The intuitive feelings and objective data all reflect a fact: the concentration of Bitcoin holdings is increasing. Although its awareness is becoming more widespread, the number of people holding it is decreasing. The so-called "leek mentality" is because it is too expensive, and buying a few cannot make much money, while the so-called "wealthy mentality" is to only buy expensive things, not the right things. This is the watershed between leeks and reapers: leeks make choices based on absolute value, thinking that something that goes from 1 to 10 is easier than something that goes from 400,000 to 4 million; while reapers make choices based on proportion, whether it's going from 1 to 10 or from 400,000 to 4 million, it's still a 1000% increase, right? However, the strong always become stronger, just like the houses in prime areas always rise in value. It is expensive for a reason. If something wants to shoulder a greater mission and have greater carrying capacity, it must reach a higher price or a larger market value.

For a price like this, those who are not on the train will have a question in their minds: can we still buy it? And for those on the train, their question is: when to sell? Next, this article will attempt to answer these questions from three different dimensions, from high to low: 1. The mission of Bitcoin and the corresponding valuation; 2. Supply and demand relationship; 3. The game between institutions and retail investors.

1. Mission and Carrying Capacity

Considering the issue of auditing, the first dimension may not be so specific, so let's start with its market value. The current market value of Bitcoin is 1.22 trillion dollars, the market value of Kweichow Moutai is 2.11 trillion RMB, and the market value of Apple Inc. is 2.79 trillion dollars. From a numerical perspective, Bitcoin can compare to a decent multinational company, but in terms of its function and credibility, Bitcoin's ambition and ideal are by no means that of a listed company. Therefore, comparing its market value to that of a listed company is superficial, at least compare it to the market value of Nasdaq, not to mention that Bitcoin's ambition is not limited to this. Regardless of whether Satoshi Nakamoto had such high expectations for it at the beginning, with such a high level of acceptance today, it is destined to be pushed to a position by the times, just like every hero is pushed to the altar by the times, perhaps not because it "wants" to, but because it "can."

So what mission does it actually shoulder? It cannot be detailed here, but readers can think about a few questions: 1. Why can Coinbase obtain a license from the New York Department of Financial Services for its strict attitude towards Bitcoin and be listed on the Nasdaq stock exchange? 2. Why does the Federal Reserve allow the existence of USDT and USDC? 3. Why can Bitcoin ETFs be approved? 4. Faced with the de-dollarization process, can the evil American empire be captured? Friends who can understand these questions will naturally find the mission it needs to shoulder and the corresponding valuation. For friends who cannot understand, please feel free to follow and message for discussion.

2. Supply and Demand Relationship

The approval of the Bitcoin ETF fundamentally changes Bitcoin's status, which means that Bitcoin has gained recognition from the mainstream capital system, marking a new milestone. Gary Gensler, the head of the U.S. Securities and Exchange Commission, and the commission itself, will be forever recorded in the history of Bitcoin's development. This is a significant long-term benefit that affects the fate of humanity. It fundamentally changes Bitcoin's development trajectory, as Bitcoin leaves the small pond and returns to the vast ocean.

Bitcoin's approximately four-year halving mechanism means that the supply is halved each time, leading to an inevitable increase in price under unchanged demand. The lowest point of this cycle was $16,000, which occurred in December 2022. Speculators with low-dimensional thinking have concluded that Bitcoin has a cyclical effect of a 10-fold increase: "According to this inference, the next peak will be $160,000. The price will start to rise a few months before the halving, and it will reach the peak in 6 to 8 months after the halving, followed by a bear market."

However, all of these experiences are ineffective in the face of the ETF, because the supply and demand relationship has changed, and so have the market participants. The ETF has paved a high-speed highway to the moon for Bitcoin and mainstream capital. The characteristics of the ETF are similar to bonds, with around $2 trillion in market funds. If 1% of the funds enter Bitcoin, it will explode. Statistics show that in the past 40 days, the daily demand for Bitcoin from the ETF has been over 10,000, while the daily output from mining is only over 900. Therefore, all previous Bitcoin trading experiences are no longer reliable, and the ETF has fundamentally changed Bitcoin's technical trend, requiring a reevaluation of previous experiences. Low-dimensional traders are always limited by anchoring to history.

If we must make a speculative analysis, assumptions must be made. Based on the data from the 40-plus days since the approval of the ETF, assuming that the continuous inflow remains unchanged, the ETF's average daily inflow is $800 million, totaling $292 billion in a year, while stablecoin inflow is $29.2 billion. When combined, it is less than two months before the next halving. If 70% of the total Bitcoin in circulation remains untouched in wallets for a year, and assuming that 30% of the circulating Bitcoin in the market is completely exchanged, it would only take $321.2 billion to leverage a market value of $1.2 trillion.

In the previous cycle, the force U that drove the price increase allowed Bitcoin to achieve an 8-fold increase, while the ETF will give Bitcoin funding 10 times that of U. A simple arithmetic calculation shows that if the numerator is increased tenfold and the denominator is halved, the conclusion of whether to buy or sell becomes clear.

3. Game Between Institutions and Retail Investors

After discussing two macro valuation models, let's now analyze with a more down-to-earth approach: is Bitcoin just a tool for the evil whales to harvest leeks?

If it is, readers may want to conduct a survey among their friends to see if the number of Bitcoin holders and the amount held has increased or decreased compared to earlier times. The results I have gathered show that both the number of Bitcoin holders and the amount held have decreased. So, if the institutions want to harvest, do they need to make retail investors buy at high prices to achieve this? But most people don't have Bitcoin. How can they make people willing to buy something at such a high price?

Looking at the daily chart of the past year, Bitcoin has conducted sufficient chip exchanges before each price surge, either in the form of space (such as the market between February and March 2023) or in the form of time (such as the market between December 2023 and January of the following year). Through these oscillations and consolidations, it has eliminated those who do not have high-dimensional cognition, short-term speculators, and those with excessively high leverage. Since it has cleared out retail investors, its temporary goal is not to harvest leeks, because the leeks don't have any Bitcoin.

If it wants to harvest retail investors, it needs to find a way to get them on board, and the higher the price, the less likely retail investors will buy. So the most probable method is to push the price down, which is psychological, it's human nature: nobody likes cheap goods, but everyone likes a bargain. With the expectation of a higher price, in the event of a discount, retail investors will rush in.

Based on this argument, the market can be easily analyzed and inferred. After Bitcoin's price undergoes sufficient chip exchanges, whether in the form of time or space, if it rises again, it means that retail investors have been shaken off the train again, and it is likely to see even more massive price increases. If it undergoes sufficient chip exchanges and then falls, it means that retail investors will once again be standing at high levels for months or even years. The time, amplitude of oscillation, and trading volume required for this kind of chip exchange will be much higher than the data generated during the previous bull and bear market cycles, and the chart will clearly show this.

If Bitcoin is not or temporarily not a tool for the evil whales to harvest leeks? Then you should hold onto your Bitcoin now, because if it doesn't want to harvest you, it won't let you on board until its price and market value are sufficient to shoulder its mission, or until it completes a phase of its mission.

Based on the above three points, the question of whether to buy and when to sell becomes clear. Humanity has entered the era of the internet, and even the era of peer-to-peer connections, but the hierarchical management thinking of the industrial revolution has not been updated. With the entry of technologies such as artificial intelligence and the metaverse, which are decentralized and flattened, the management model of the industrial revolution is no longer suitable for this era. Ultimately, productivity and production relations will be matched.

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