Reasonable valuation of Bitcoin in this round of market行情

After the article was published the day before yesterday, many readers left comments asking what the reasonable valuation of Bitcoin is.

This is also a question I have been pondering, as it determines the actions I might take next year.

Let me start with my answer: actually, up to now, I still can't provide a clear valuation. However, I have roughly organized a line of thought for everyone's reference.

Since we need to estimate a value, we first need a time frame.

I still believe that the peak of this market cycle will occur next year, so the valuation discussed in today's article is my estimate for the peak value of Bitcoin next year.

With a time frame in place, we need to find a reference point, which is the most challenging part of valuing Bitcoin.

• Based on the characteristics of Bitcoin, it is like gold, but it also has significant differences from gold—its production decreases periodically.

• It is a crypto asset, but unlike other cryptocurrencies (like Ethereum), it does not have various service functions or value empowerment.

The information we currently have is limited to these aspects, so my reference points can only be derived from these two angles.

Some readers mentioned comparing Bitcoin's total market capitalization to that of gold.

When I estimate long-term valuations, I indeed calculate it this way.

In a previous article, I mentioned: in my vision, Bitcoin's market capitalization will eventually exceed that of gold. But that is "in the future," not in the near term.

I think conservatively, that "future" is at least 13 years away. If we consider this 13 years (not counting this year) with a doubling increase every four years, that would mean $250,000 in 2029, $500,000 in 2033, and $1,000,000 in 2037.

This doubling increase refers to the increase from the peak of the previous cycle to the peak of the next cycle.

Looking at the data from the last two cycles: the peak in 2017 exceeded $19,000, and the peak in 2021 was $67,000.

So I believe this pattern has been roughly applicable so far.

From this perspective, if Bitcoin's price reaches or even exceeds $250,000 next year, I think that would clearly indicate a bubble.

From the perspective of crypto assets, during past bear and bull markets, we have been paying close attention to one indicator: the market share of Bitcoin's market capitalization, which is the proportion of Bitcoin's total market capitalization to the total market capitalization of all crypto assets.

At the peak of the bull market in 2017, Bitcoin's market share was about 33%; at the peak of the bull market in 2021, Bitcoin's market share was about 44%.

So from this perspective, if Bitcoin's price reaches a peak next year, assuming the above market share pattern still applies, then Bitcoin's market share would likely be between 30% and 50% (greater than 30%, less than 50%).

The above two standards are purely conclusions drawn from data.

In addition, I believe personal experience and intuition are also very important reference indicators.

Generally speaking, when we clearly see that almost all sectors in the entire ecosystem have rotated, it is likely that this market cycle is nearing its end.

I believe many participants will have this feeling. However, at that euphoric moment, our inner greed will deliberately avoid this feeling, intentionally numb ourselves, thinking that the dance continues and the horse keeps running.

So overall, these three standards (two data standards and one intuitive standard) represent a line of thought I use for the reasonable valuation of Bitcoin.

However, this line of thought has significant limitations, as it only estimates the upper limit of Bitcoin's valuation, not the lower limit. Therefore, it is entirely possible that the peak of Bitcoin may not reach or may be far below the upper limit, leading to a market crash.