Original Author: Jordi Visser
_English Translation: Luffy, Foresight News

_

At the age of five, my father took me for the first time to the Monticello Racecourse in upstate New York.

He handed me a horse racing guide and began teaching me how to interpret the information on it: past performances, jockey records, track conditions. Those numbers and symbols felt like a mysterious language to me.

For many years afterward, we often went there. That racecourse became his "classroom." He never asked me to "pick the winner," but always guided me to focus on another question: Is there betting value in this race?

Whenever I completed an odds prediction for a race, he would ask me about the basis of my assessment. Then, using his experience, he would point out the information I had overlooked or the dimensions I should have explored further. He taught me:

• To identify patterns from horse racing records
• To weigh the importance of different influencing factors
• To provide realistic odds rather than those based on speculation
• Most importantly, to continuously reassess odds based on new information

He inadvertently trained me to use Bayesian methods to predict the probability of future outcomes. This skill has been applied in every decision of my life, especially during my 30-plus years on Wall Street.

Today, this analytical framework has led me to identify the most undervalued betting target of my career: Bitcoin.

When I analyzed Bitcoin using the horse racing odds methods my father taught me, I saw an asset with 3:1 odds, while many of the top smart people I knew assigned it 100:1 odds, even considering it worthless.

This valuation discrepancy was not only vast but also represented a rare opportunity that one seldom encounters in a career.

Learning to Bet on the Future

The method my father taught me was rigorous, not casual. Before setting odds for any horse, I had to do my homework. I treated studying the horse racing guide as a homework assignment:

• The past performance of horses under different track conditions
• Jockeys who excel in specific scenarios
• Changes in the horse's competition level, equipment, and race pace predictions
• Bloodlines and training patterns

He even taught me to maintain skepticism and not easily trust human factors. Not every horse will give its all; some are "conserving energy" for future races, and some trainers have fixed tactical routines. All these factors must be considered.

Then came the actual betting phase.

I learned to observe the timing of smart money entering the market and the fluctuations in odds during the last few minutes before the race. But there was only one core rule: I had to write down my predicted odds before looking at the betting display.

This was not about making random guesses but about constructing a sound logic for my judgments. For example, why should this horse have a 20% chance of winning (corresponding to 5:1 odds) rather than 10% (10:1) or 5% (20:1). Only after completing this homework and being able to clearly articulate my reasoning would he allow me, as a novice, to look at the public betting situation.

It was at this moment that wonderful opportunities appeared. Sometimes, I would predict a horse with 5:1 odds, but the actual odds on the betting screen would be 20:1.

This advantage did not come from being smarter than others but from the fact that most people setting the odds had not done their homework, and the biggest opportunities lay in their oversights.

He also repeatedly instilled in me another key principle: If the odds of a race fully reflect its value, then simply forgo betting. "There will always be the next race."

Choosing to stand still when there is no advantage is one of the hardest disciplines to master in the market and a lesson many investors never learn.

Betting-Style Thinking

Years later, I realized that the method my father taught me was, in fact, a professional methodology studied by professional poker players and decision theorists for decades.

Annie Duke's "Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts" provided a theoretical framework for the experiences I learned at the racetrack. Her core insight is simple yet profound: All decisions are bets on an uncertain future; the quality of a decision must be judged separately from the outcome itself.

You might make an extremely wise decision and still lose in the end. Even if the valuation is reasonable, that horse with 5:1 odds has an 80% chance of losing the race.

What truly matters is:

• Whether the decision-making process is rigorous
• Whether the odds setting is well-founded
• Whether there is an advantage when placing the bet

A few years ago, I had a face-to-face conversation with Annie, telling her that her book and the principles my father taught me at the racetrack were in alignment. I always knew this logic helped my investments; it even shaped my thinking about health and happiness.

We talked more about her background in psychology than about poker or the book itself, as all of this is fundamentally interconnected. This framework is not only applicable to poker or investing but also to decision-making in all fields when information is incomplete.

But the core insight is consistent: We live in a world of incomplete information, and learning to make decisions using probabilistic thinking while separating the decision-making process from the outcome is key to achieving long-term progress.

Munger: The Market is Like a Racecourse

Charlie Munger once proposed a viewpoint that ties all the logic together: The stock market is essentially a betting pool system.

In a betting pool system, prices are not determined by some objective intrinsic value but are shaped by the collective betting behavior of all participants. The odds on the betting screen do not tell you how much a horse "is worth," but rather the proportion of each horse's betting amount to the total betting pool.

The logic of market operation is the same.

Stock prices, bond yields, and Bitcoin valuations are not determined by TV commentators or social media narratives but are defined by the actual flow of capital.

When I view Bitcoin through this lens, the real odds are never the statements of a few wealthy individuals on CNBC but are reflected in the relative scale of various asset pools:

• Bitcoin compared to fiat currency
• Bitcoin compared to gold
• Bitcoin compared to the total wealth of global households

These ratios and relative performance trends reflect the true views of collective bettors, unrelated to public statements.

Interestingly, if someone says Bitcoin is worthless, from the perspective of the betting pool, they are not entirely wrong.

Despite Bitcoin's impressive performance, its growing user base, and the fact that the world has undergone a monetary experiment and fiat currency devaluation over the past decade, Bitcoin's size remains small. Compared to traditional value storage tools, the capital allocated to Bitcoin is minuscule.

In betting pool terms, the public has shown their attitude through their actions: they have hardly bet on Bitcoin.

And this is precisely the starting point for my odds predictions.

Jones, Druckenmiller, and the Power of Positioning

The two greatest macro traders in history—Paul Tudor Jones and Stanley Druckenmiller—have a core principle in their careers that most investors overlook: Positioning is often more important than fundamentals.

Jones once said, "The public is always one step behind." Druckenmiller's view is even sharper: "Valuation cannot tell you when to enter; positioning can tell you all the risks."

Once everyone is on the same side of a trade, the marginal buyers will disappear. Market movements are never determined by opinions but by passive buying and selling behavior.

This aligns with Munger's insight about betting pools. The key is not just the size of the capital pool but also:

• Who is betting
• Who is watching

When I analyze Bitcoin from this perspective, a noteworthy phenomenon emerges: The wealthiest group within the fiat currency system, those who control the most capital, largely do not have a favorable view of Bitcoin.

Demographic data clearly shows:

• The older you are, the less likely you are to hold Bitcoin
• The higher your level of traditional financial education, the more likely you are to view Bitcoin as a scam
• The more wealth you have, the greater the potential loss from betting on Bitcoin

For this reason, I never discuss Bitcoin at dinner parties on Wall Street; it is as sensitive a topic as politics or religion.

But the experiences of Jones and Druckenmiller tell us: You do not need to be certain about Bitcoin's future.

You only need to realize that the extremely low positioning of global capital holders is creating an asymmetrical opportunity they have been leveraging throughout their careers.

Predicting Bitcoin Like Predicting Racehorses

So, how do I predict Bitcoin's odds?

I start with the first step my father taught me: do your homework before looking at market odds.

Bitcoin was born in an era of exponential technological growth, emerging from the global financial crisis, stemming from people's distrust of government and centralized control.

Since its inception:

• Government debt has exploded
• Traditional system repair solutions have been exhausted
• Future development paths will heavily rely on technological innovations like artificial intelligence

I believe that artificial intelligence is a force accelerating deflation, but paradoxically, it will further compel governments to increase spending and accelerate currency devaluation, especially in the context of the global race with China in AI.

We are moving toward an era of material abundance, but this path will disrupt almost all large institutions.

Those companies built on code, holding current power and wealth, are now forced to act like governments:

• "Printing money" through large-scale capital expenditures on data centers
• Taking on more debt
• Preemptively overspending to seize future dominance
• The shorts focus on bubbles, while I focus on the despair of the wealthy.

Ultimately, artificial intelligence will also make such expenditures deflationary, squeezing corporate profits and triggering large-scale wealth redistribution.

In such a world, the financial regulatory framework needs to keep pace with the operational speed of AI agents, and this is precisely the value of network effects.

But Bitcoin is no longer just an innovation; it has evolved into a belief system.

Innovations may be disrupted by better innovations, but the operational logic of a belief system is entirely different. Once it reaches a critical scale, its performance resembles that of a religion or social movement rather than an ordinary commodity.

When I assign probabilities to different future paths for Bitcoin, its risk-reward ratio is approximately between 3:1 and 5:1, which includes risk factors such as quantum computing threats, shifts in government support, and the emergence of new competitors in the cryptocurrency space.

Only then do I look at the "betting screen."

What I focus on is not the price of Bitcoin itself but the positioning of the group of people I know best—those who hold significant wealth, are well-educated, and have successfully achieved capital compounding for decades.

Most of them still assign Bitcoin 100:1 odds or even lower, with many outright stating it is worthless. Their investment portfolios also confirm this view: either they have no allocation to Bitcoin or an extremely low allocation.

The gap between my odds judgment and theirs is enormous.

According to Druckenmiller's framework, this is precisely a combination of "high-quality target + extremely low positioning," which is exactly the moment worth paying attention to.

Control Betting Size to Avoid Total Loss

Even with favorable odds and extremely low positioning, it does not mean one can act recklessly.

My father never allowed me to bet my entire principal on that horse with 20:1 odds, and this principle applies here as well.

Druckenmiller has a simple rule of thumb: high-quality target + extremely low positioning = increase the bet, but "increase" should always be tied to the strength of conviction and risk tolerance.

For most people, this tolerance is determined by two factors that are rarely mentioned in discussions about Bitcoin:

• Age and investment horizon
• Future spending needs and obligations

If you are still young and have decades of human capital ahead of you, your ability to cope with volatility is fundamentally different from those in their 70s who need to draw retirement funds from their portfolios. Experiencing a 50% drawdown at age 30 is a growth lesson; however, the same drawdown at age 70 could turn into a crisis.

Therefore, I believe the allocation ratio for Bitcoin should follow a gradient principle:

• The longer the investment horizon, the more future income, and the fewer short-term liabilities → the allocation ratio can be reasonably increased.
• The shorter the investment horizon, the more fixed income, and the presence of actual short-term spending obligations (such as children's tuition, medical expenses, retirement withdrawals, etc.) → the allocation should be more conservative.

In fact, the industry is gradually moving toward a new normal. Institutions like BlackRock and major banks now publicly recommend allocating 3% to 5% of diversified portfolios to Bitcoin or digital assets. I do not believe this number should be blindly adopted by everyone, but it serves as a useful reference—indicating that the market discussion has shifted from "zero allocation" to "how much should be allocated."

My view is clear: everyone needs to do their homework and arrive at an allocation ratio that suits them.

However, I also believe that the "recommended allocation range" proposed by institutions will not remain static. Over time, the exponential disruptive development of artificial intelligence makes it increasingly difficult to predict traditional cash flows for the next three years, forcing asset allocators to seek growth opportunities in a world where business models are continuously rewritten by algorithms.

At that time, the appeal of Bitcoin will not only be limited to digital gold but will also become a near "faith-based moat," rather than a traditional "competitive growth moat."

Competitive growth moats rely on code, products, and business models, which can easily be disrupted by better code, products, and new entrants. In the age of artificial intelligence, the lifespan of such moats will be significantly shortened.

In contrast, a faith-based moat is built on a continuously solidifying collective narrative, representing a collective belief in the value of a particular currency asset in an era of currency devaluation and rapid technological iteration.

As artificial intelligence accelerates, the difficulty of selecting the next top software or platform winner will increase. I expect more asset allocators to shift part of their "growth asset positions" toward those targets that build advantages based on network effects and collective belief, rather than those industries with weakened advantages under the impact of artificial intelligence. The exponential development of artificial intelligence is continuously compressing the lifespan of innovation moats. However, Bitcoin's faith-based moat possesses time defensiveness— the faster artificial intelligence develops, the more powerful it becomes, like a hurricane sweeping through warm waters. It is the purest trading target of the artificial intelligence era.

Therefore, there is no single allocation number that applies to everyone, but the framework is universal:

• The initial position should be small enough to ensure that even a 50% to 80% drawdown will not jeopardize the future.
• Determine positions based on age, investment horizon, and actual needs.
• Recognize that as artificial intelligence makes traditional growth targets harder to predict, and as Bitcoin's faith-based moat deepens, the "acceptable allocation ratio" for Bitcoin in institutional portfolios will likely gradually increase.

You wouldn't bet your entire fortune on a target with 3:1 odds, but you also shouldn't treat such an opportunity as a small $5 wager.

The Eternal Wisdom Beyond Bitcoin

Reflecting on those afternoons at Monticello Racecourse, I cannot recall specific races or horses, only that analytical framework.

My father never taught me how to pick a winner; he taught me a way of thinking that can endure decades of compound growth:

• Do your homework first, then look at market odds.
• Establish an independent probability assessment system rather than blindly following the crowd.
• Focus on position allocation and capital flow, rather than just narratives and headlines.
• Choose to wait when there is no advantage.
• When your research conclusions diverge significantly from the consensus and the target's position allocation is extremely low, decisively increase your bet.

The racetrack taught me how to predict odds, Annie Duke taught me to make decisions using betting thinking while separating process from outcome, Munger made me understand that the market is a betting pool system, and Jones and Druckenmiller taught me that sometimes position allocation is more important than valuation.

Through this framework, when I examine Bitcoin today, it resembles the horse my father described as "actually should be 3 to 1, but is marked as 20 to 1," with the added peculiarity that very few investors with substantial capital are betting on it.

My father often said that not betting when there is no advantage and betting boldly when there is an advantage are equally important.

At this moment, it seems to me that Bitcoin is in one of those rare moments: research conclusions, odds predictions, and position allocations are all perfectly aligned.

The public will eventually enter the market; they always do. And by then, the odds will have changed dramatically.

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