Written by: Yishi @OneKey
This article was published on November 4, 2023, when the BTC price was $34,522, and the text has not been modified. @mablejiang suggested that I repost this article, so I did. I have not activated the creation plan on X and will not gain any revenue from the readership of this article. I do not have a community and do not provide any investment advice, nor do I have any stance or judgment on future market trends. If you can derive any value from these words, I will sincerely be happy for you.
The main text follows
A storm is brewing. 1284 days ago, I released a video discussing Bitcoin's halving, predicting that the price would rise to $55,000 after the halving.
That day was April 17, 2020, and Bitcoin's closing price was $7,125.
Years have passed, and the halving is about to happen again, specifically at some point in April or May 2024.
This will be the fourth halving in Bitcoin's history and the last opportunity for ordinary investors, like a narrow gap left at the ancient city wall under the setting sun. When this door closes, the last chance to get on board will also disappear.
Xiao Feng's greatest regret was not being able to save Ah Zhu, "I am a Khitan, what great ambitions can I have?"
The golden bottle has fallen into the well, and there is no turning back.
My greatest regret is that after nearly a decade of dedicated entrepreneurship, I haven't accumulated enough coins, and the game is about to end; this is also a kind of fate.
How to Define Scarcity
An Arab scholar named Saifuddin Amous wrote a book called "Bitcoin Standard" in 2018, where he discussed a "stock-to-flow" model, which simply refers to the relationship between stock and annual production.
When we talk about stock, we are counting the total quantity of a commodity.
Annual production is the total amount of that commodity produced in a year.
Dividing the two gives us a ratio called SF.
In the chart, you can see that gold has an SF of 62, and silver has an SF of 22. What does this mean? It means you would need 62 years to produce as much gold as currently exists, 22 years for silver, and 0.4 years for platinum, which all indicates one thing: they are particularly scarce.
We start to wonder, is it because of their scarcity that these things have become currency? In contrast, platinum and palladium have SF values equal to or less than 1, indicating they are not that scarce.
Indeed, gold retains value better than other metals on the list.
The goods we use in our daily lives, such as food, phones, computers, and cars, have SF values far less than 1, meaning they have never been scarce. Why? Because as long as there is demand for a product, it can be produced. Once someone wants to hoard it, the price will rise, prompting more businesses to produce it. The price will definitely fall.
This is the common sense of supply and demand balance.
So we can easily conclude that the higher the SF of a commodity, the better it can maintain its value and the less it will be diluted.
Look at gold; in 1972, it was $46 per ounce, and by 2020, it reached a new high of $1,744 per ounce, a total increase of 37.9 times. So why don't we produce more gold to meet the demand? The reason is that gold mining is constrained by extraction technology and costs. If you spend more on something than you earn, you definitely won't do it.
So what is Bitcoin's SF value? About 19.5 million Bitcoins have been mined worldwide. However, a research report states that over 1.6 million of these Bitcoins are permanently lost.
Therefore, the actual usable Bitcoins are only around 17.9 million, and with Bitcoin's current annual production, its SF is about 54, similar to gold.
In a few months, Bitcoin's SF will rise to 108, with an annual inflation rate of only about 0.9%, which means Bitcoin will become the most scarce asset in human history since gold.
The halving is the underlying reason for changing Bitcoin's supply relationship, not any other factor.
And this supply relationship determines the price of the coin.
Some people hear about Bitcoin ETFs and get overly excited, as if once approved, the price will soar, and it will be a big deal.
I suggest you not pay attention to the media's sensational headlines but rather see the underlying reality.
Whether BlackRock's Bitcoin ETF gets approved or not is not important, nor is when it will be approved.
What matters is the expectation of "Bitcoin ETF approval," which will gradually build momentum as a bait to boost market confidence, unknowingly pushing the price above $45K in the future.
You might think we are still in a bear market, but in reality, the bear market has quietly ended without your awareness.
Moreover, this momentum will continue; it is not like your household water supply.
BlackRock and subsequent approved ETFs are like the Suez Canal, connecting old money and new pools. The scale of these traditional financial risk funds is larger than many can imagine. For them, Bitcoin is not too expensive; it is too cheap, and the market is too small.
The Suez Canal flows robustly, connecting the north-south waterway between Europe and Asia. Since then, ships no longer need to navigate around the Cape of Good Hope at the southern tip of Africa; fleets departing from London or Marseille head to Mumbai, India, returning laden with gold, silk, and spices.
King Darius I of the Persian Empire completed the last section of the Suez Canal around 500 BC. He erected a granite stele in one of the river areas, inscribed with:
I am a Persian. I set out from Persia and conquered Egypt. I ordered this canal to be dug from the river called the Nile that flows in Egypt to the sea that begins in Persia. When the canal had been dug as I ordered, ships went from Egypt through this canal to Persia, even as I intended.
Cool and impressive, this is the charm of the passage.
The approval of Bitcoin ETFs will not only affect the present but also the next decade. Once the channels for fiat currency are unobstructed, the rest is left to time.
By 2025, we may truly see Bitcoin surpassing $100K.
Bitcoin is gradually evolving into the land of Manhattan, becoming a social status symbol. People choose Bitcoin not because it transfers faster than other coins, but because it is expensive.
It is expensive because it embodies the core consensus of the entire crypto game, serving as a vehicle for value storage and as an object to flaunt in social relations, sought after by all.
Bitcoin showcases your strength, stability, loyalty, and faith; it is like your courtyard in the second ring of Beijing, an old Western-style house on Hengshan Road in Shanghai, or a villa on the Peak in Hong Kong.
Its value is determined by the truly purchasing power-rich upper class, just like Berkshire Hathaway's Class A shares, which can reach $530,000 per share, attracting a flood of capital, remaining evergreen, while retail investors find it nearly impossible to buy even one share.
Ten coins can be called a marquis.
Price Anchoring Game
If a person does not understand how coin prices are anchored, they do not truly understand Bitcoin.
Let me first talk about land, then return to Bitcoin.
Everyone has played "Monopoly," but I rarely see anyone articulate its essence.
You need to understand that the role of the Federal Reserve is similar to the bank in the board game "Monopoly"; its goal is not to win but to provide enough funds to maintain the game's progress.
For the Federal Reserve, the appropriate amount of assets is the quantity that best allows it to fulfill its responsibilities.
Monopoly is essentially a land speculation game, where the core is to monopolize resources, and there can only be one winner at the end of the game; all other players are merely collateral damage.
Victory does not come from competition but from monopoly.
Ask, where does a central empire's fiscal revenue come from?
Answer: It is no different from Monopoly, merely:
State-owned enterprises
Publicly owned land
A monopolized financial system
For a centralized government, this game only cares about two points:
1) How to control the entire society with a top-down bureaucratic system;
2) How to extract commissions through land, taxes, and the financial system to sustain this bureaucratic system.
Countries around the world are similar; the differences between ancient and modern times are not significant.
Take the Tang Dynasty as an example; the government implemented the equal-field system, distributing 80 acres of public land to every male born and an additional 20 acres of permanent private land. When men reached adulthood, they would cultivate the land and pay taxes, with harvests submitted to the government proportionally, and upon death, the land would be reclaimed. At the same time, the emperor allowed local governments and offices to own operational land and funds.
This system ultimately collapsed because land increasingly concentrated in the hands of bureaucrats and nobles.
For instance, during the reign of Emperor Gaozong of Tang, a man named Wang Fangyi owned a vast amount of land, about dozens of hectares. By the time of Emperor Zhongzong of Tang, Princess Taiping owned a significant amount of land in fertile areas, renting it out to poor farmers, who would give a large portion of their harvest to the powerful, with the government taking another cut. Many people fled to the countryside to escape forced labor. The government first registered the names of these escapees, and later simply ordered them to pay taxes; they either sold their land and houses or transferred them to neighbors, repeating this cycle until there was nowhere left to escape.
What to do when the game fails? Start a new round.
Thus, dynasties change, peasant uprisings occur, completing the redistribution of resources.
The modern situation is similar; the asset values promoted by East Asian countries are mostly tied to land. This is the game rule set by the government, with the vehicle being houses.
In contrast, the United States promotes capital efficiency, so their national game is the stock market, with the purchasing power represented by citizens' 401K pensions serving as a reservoir.
These are different price anchoring games, and there are countless similar copies scattered around the world, such as Rolex, Hermès platinum bags, Yu-Gi-Oh cards, limited edition blind box figures… all of them.
New York, USA, is quite developed, with a high density of buildings, right?
Yet there are still over 25,000 pieces of idle and underutilized land, a full 25,000 pieces (the light-colored areas in the image are vacant land).
Some even proposed imposing a 3.5% tax on these lands, potentially bringing an additional $429 million in revenue to the city.
In Beijing, the city with the highest population concentration in northern China, the jurisdiction covers an area of 16,000 square kilometers, but the actual built-up area is only 2,000 square kilometers, with a land development rate of just 12.5%, which is even more stingy than Hong Kong (25%).
If Beijing wanted to have a villa for every person, it would actually be quite easy. According to China's planning standard of 10,000 people per square kilometer, if the city were fully developed, it could accommodate 160 million people.
Given this, why haven't these governments opened the floodgates to build and provide shelter for the masses?
Because in this game, land is a means of production, and monopolists must maintain its scarcity to keep the game going.
What is price anchoring? This is price anchoring.
To win, you must understand Bitcoin's position in the crypto game…
Bitcoin is like land; the only difference is that it lacks a supreme will, and the operation of the entire system is maintained by algorithms and consensus.
In other words, it is almost unbreakable.
The biggest anchor of Bitcoin is the consensus on its total supply of 21 million.
We can easily categorize Bitcoin holders as the "coin class" and those without coins as the "no-coin class."
With a global population of 8.045 billion, dividing these 21 million coins means each person would get only 0.0026 BTC, which is hardly enough to distribute.
You might question the consensus, claiming it is just paper-thin, and wonder if you can simply start anew without participating.
In fact, countless people have thought this way in the past, and they have proven themselves wrong through their actions.
The recent wave of Bitcoin forks was just like starting a private server; what is the situation now?
These forked coins today lie scattered like corpses, serving as a monument to those once naive ideas.
If consensus could change so easily, the wealthy in the world wouldn't need to cling to Manhattan; they could simply buy a piece of wasteland in Ohio and build a new capital. But do you think that is realistic?
The establishment of a value coordinate system is a long process, and once established, it is not easily changed for a hundred years.
Who Took Your Coins?
Some people clearly see the golden opportunity but still exit the game hastily.
Hoarding coins is so simple, yet for some, it is harder than reaching the sky.
It is a game, and there are levels to it.
In past cycles, the successful strategy for many was to narrate various altcoins.
People may verbally express love for Bitcoin, but in practice, they buy altcoins.
This plays right into the dealer's trick, obediently handing over chips; you receive junk coins while they acquire Bitcoin, mocking each other in the process.
New public chains, platform tokens, forked coins, MemeCoins, storage, and stable coins… if you count them all, they are all big traps.
When we evaluate something, we should not look at its performance over a few days or months. In a bull market, many can "outperform Bitcoin," but I ask, excluding those KOLs who write small essays to scam money, how many have truly held altcoins for the long term and achieved significant results? Over a year, how many have genuinely outperformed Bitcoin? Listen to their boasts.
In 2017, the narrative around public chains was to surpass Bitcoin; by 2021, it shifted to surpassing Ethereum… the primary market is a PVP mutual slaughter, while the secondary market spins stories.
In this market, apart from Bitcoin, there are no truly decentralized crypto assets.
Buying any altcoin means participating in an unequal game.
Web3 teams, especially anonymous teams issuing tokens, are severely anti-human.
When you can fork a project and tweak the front end to gain huge profits, no one will work long-term.
What is the original intention? The original intention is to make quick money.
Tokens will corrode the mindset of a startup team. Traditional internet startup teams work passionately for several years, going through Series A, B, and C funding rounds, cashing out some money each round to improve their lives, which is understandable.
In the crypto space, the rhythm changes to: start trading and mining today, list tomorrow, and dump the next day, leaving the project to the community.
Expecting to find a truly dedicated team in this environment is as difficult as reaching the sky.
So I say this game is unequal.
To win the game, you must focus on strategy.
Strategy is unrelated to short-term gains or losses, macroeconomics, or even the size of the pot. A successful strategy depends on whether you make the right choices. Every time you buy coins, you should repeatedly ask yourself:
Should I participate in this game?
How much should I bet?
Is my entry point the best?
Can I force my opponent to fold?
If you can make better decisions than your opponent, then your strategy is viable.
Even if you can't win the biggest pot this time, as long as you persist, your chances of winning will accumulate, ultimately leading to success.
However, in my limited experience, the mathematically expected strategy seems to be just one: accumulate coins in batches during a bear market and escape at the peak during a bull market.
Altcoins excel at making you believe they are as durable as Bitcoin, with narratives and lies intertwined until you genuinely believe it, obediently exchanging your Bitcoin for other tokens that will be worthless in the long run.
In the past year, the exchange rate between Ethereum and Bitcoin has been the perfect trap; beneath every red line lies a pile of corpses.
I have no doubt that one day a bull market will arrive, and Ethereum will stand high again, but if you choose your targets over a ten-year period, you have only one choice in the entire crypto market: Bitcoin.
As long as the crypto market continues to thrive, Bitcoin will not wither.
If Bitcoin is ultimately disproven, then the entire crypto market will cease to exist.
Understanding the Base Layer
To hold onto Bitcoin, you must clearly understand the quality of the assets in your hands.
Two mainstream viewpoints:
1) Bitcoin is a safe-haven asset, first to rise during wars and turmoil.
2) The government protects the retail investors (as individuals).
Both are wrong.
Bitcoin remains a risk asset to this day and will maintain this identity for a long time. In 2020 and 2021, the government printed money and injected massive liquidity, leading to a global asset bull market; its speculative nature aligned with the flood of fiat liquidity.
The government's goal has never been to protect retail investors but to ensure that everyone mines enough before being reclaimed by the system, contributing sufficient tax revenue and providing necessary labor value. The government is not a "person"; it is a machine that maintains its operation through resource monopolization within its jurisdiction.
The most important component of this machine is fiat currency.
In 1260, Kublai Khan began issuing paper money.
They made the paper money from the bark of mulberry trees. They extracted a very thin white inner layer from between the wood and the rough outer bark of the mulberry tree. This inner layer, after processing, became similar to what we now call paper, except it was black.
Once the paper was ready, they would cut it into various sizes.
Each piece of paper represented the solemnity of real gold and silver. Why? Because officials would sign their names on these pieces of paper and stamp them.
Once prepared, the officials appointed by the Khan would take their jade seal, dip it in bright red cinnabar, and then press it onto the paper. Once that red seal appeared, the paper became currency equivalent to real gold and silver.
Anyone who dared to counterfeit such paper money would face the death penalty.
The authority of the state supports the paper currency.
But state authority has a fatal weakness: it lacks constraints.
Question: Who constrains the paper currency issuance mechanism?
Answer: No one.
Once currency enters a credit-based system, issuance relies entirely on the central bank's self-discipline, and even the debt ceiling can be adjusted at will. In my view, the term "ceiling" can also be removed; it can be adjusted freely, so what is the point of calling it a ceiling?
The complex theories and models woven by economists are merely to persuade us to believe that the central bank's issuance of paper money is subject to self-imposed constraints. But if you take a glance at the Federal Reserve's balance sheet, you will find that since the beginning of the credit-based era, the so-called constraints are just empty words.
When material scarcity arises, issuing paper money becomes the primary means of alleviating conflicts. I remember when I was a child, a steamed bun cost only 25 cents, but now in Shenzhen, you need to pay three yuan or even more. The currency has depreciated by 12 times. Since we have become accustomed to the 12-fold increase in the price of buns, what is so unacceptable about the currency depreciating another 12 times in the future?
We have gradually adapted to the current way of paying bills and receiving salaries, accustomed to the numbers on bank balances and credit card statements.
Only when the system collapses do we begin to ponder what the real value behind these numbers represents.
In short, government money printing is borrowing time from all cash holders, hoping that future social productivity can repay this debt; whether it can be done is not a concern for the current government.
Bitcoin plays the role of an anti-inflationary countermeasure.
Its essence is a rug pull against fiat currency.
The long night is coming; from tonight onward, keep watch until death. Devote your life and honor to the night watchman; tonight is like this, and every night will be the same.
Remember, hold onto your Bitcoin.
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