Original Title: Don't be afraid to dream a little bigger
Original Author: knower
Original Translation: Luccy, BlockBeats
Editor's Note:
The surge in the price of Bitcoin has ignited the market's enthusiasm, and various institutions and researchers have made assumptions about the current bull market phase. Among them, cryptocurrency researcher knower compared the characteristics of past market cycles and pointed out that despite the significant changes in the cryptocurrency market in recent years, there are still many signs indicating that we may still be in the early stages. The original article was translated by BlockBeats as follows:
If you've been active online in the past week or two, you've probably seen dozens of tweets about the current cycle and when the music will stop. Bitcoin's price has now exceeded $60,000, and it has been steadily rising since the launch of some ETFs, with daily capital inflows demonstrating a wonderful scenario of strong demand and insufficient supply. Fidelity recommends individuals to allocate 1-3% of their investment portfolios to cryptocurrencies in a secure and responsible manner, indicating that, after FTX, cryptocurrencies are no longer something to be afraid of, but something to accept and embrace.
From March 2023 to around October 2023, the price of Bitcoin fluctuated between $27,000 and $30,000. If you were trying to hold on for the long term and hoping for a breakthrough, you might have been very frustrated. During this period, there were occasional bright spots, but there wasn't much happening in the public market if you were expecting to make a fortune similar to 2021. We were lucky in PEPE, Friend Tech, Telegram Bots, and some other activities, but most of these activities were just temporary diversions, and the entire market was still readjusting. There was a lot of discussion about interest rate hikes, soft landings, and other macroeconomic issues, but honestly, these issues were too far away, and I can't recall them.
The bear market likely ended in March 2023, with Bitcoin soaring from $20,000 to $28,000 in just a few weeks, which was a moment I longed for, even though it was only about a year ago. At that time, we finally left FTX's collapse behind us, and the media largely stopped persecuting cryptocurrencies politically, and some solid price action finally emerged, allowing cryptocurrency Twitter to regain its footing.
Fast forward to now, a year later. The historical highs of Bitcoin and Ethereum are within reach, alternative tokens are generally surging, the storyline is beginning to take shape, private markets are rampant again, and disconnected from reality. It's easy to observe the recent behavior of cryptocurrencies and think that we are closer to the finish line than the starting line, but I think this is extremely short-sighted and naive. Not only have we not surpassed historical highs, but there really aren't many signs indicating that we are approaching some kind of climax.
If you only look at the price trend of Bitcoin, you might think it's a bit overbought. But we no longer live in that world. Larry Fink took a risk by betting his reputation on a Bitcoin ETF, while the media and traditional financial industry people looked at him in a shocking and perplexing way.
How could an asset manager with trillions of dollars in assets be so humble? This isn't even real money, there's no support at all! Didn't you see SBF being tried for allegedly defrauding and ruining lives with cryptocurrencies?
This article will not discuss why Bitcoin is essential or why it deserves respect from the traditional financial system. If you are reading this article, you probably already realize these reasons and firmly believe in them. Instead, I want to talk about why we may still be relatively early, or why there are multiple reasons to remain optimistic for a longer time.
The emergence of ETFs has fundamentally differentiated this cycle from previous cycles, as there is now an accessible liquidity channel between cryptocurrencies and traditional finance. Unless you've been living under a rock or deliberately ignoring the obvious, traditional financial institutions and participants have been present since the last cycle. Cryptocurrencies have become more mainstream and socially accepted, and people are looking to invest or provide investment opportunities in digital assets for their clients. Coupled with the obvious fact that volatile markets in an upward trend will attract more liquidity and attention. Blackrock, Fidelity, and VanEck can now market Bitcoin to clients without any regulatory or legal concerns, the door has been opened, and there are no signs that it will close again.
Because this is an extremely new, unique, and unprecedented event, it is difficult to build a realistic model around ETF inflows. When was the last time a completely new asset class was introduced to the public? Well, it was probably when the gold ETF was launched, which means it has been about 20 years. You can search online and find the performance of gold ETFs in the first 5-10 years and draw your own conclusions.
Another reason this cycle may be different from previous cycles is that, although many patterns have been repeated time and time again, cryptocurrencies have matured to a considerable extent every year. People on Twitter often point out the top 10 coins from previous cycles, many of which have long been forgotten and completely disappeared from the market, but this is another example of the speed of space movement. If you look at the top 10 stocks by market value since the early 21st century, you will definitely see a lot of drastic changes and power struggles, as any economy needs competition to promote growth and progress. For cryptocurrencies, many parts of this process have accelerated, as the industry has evolved from a white paper written by an anonymous individual to a technology phenomenon increasingly capable of disrupting the entire global financial system. There seem to be more market makers, more cryptocurrency-focused funds, and more venture capital willing to invest in cryptocurrencies. Another observation of mine is that the recent batches of project fundraising are more respected than in any previous cycle, almost as if cryptocurrencies are slowly becoming a legitimate asset class in front of our eyes.
Every bull market provides an opportunity for cryptocurrencies to experiment with new ideas, which has never really been possible on the traditional financial track, using financial speculation as an innovative "Trojan horse". The bear market is a period of purification, where bad ideas, explosions, and tragedies are washed away, hopefully never to happen again. This is healthy because it is clear that cryptocurrencies are far from a mature market, and this will continue for some time, which is very advantageous for us. You usually don't get opportunities like DOGE in the stock market. The closest example of cryptocurrency's price behavior in the real world is the GME phenomenon, although even this cannot compare to the performance of the average token in 2021. This is a special market, and people like Larry Fink decide it's worth pushing and leveraging.
I also want to add that while the entry of institutions into this field may bring negative associations, the emergence of Bitcoin ETFs is more of a positive factor than a negative one. Blackrock is a blessing, and I think this cycle will be the most spectacular one we have seen. It will take the general public longer to forget FTX and accept that cryptocurrencies are much larger than a fraudulent centralized exchange, but that is to be expected. For the average person, it's hard to imagine putting money into such a volatile market, let alone being scared off from buying tokens for months on end by every major media outlet pumping FTX controversies. Just as not everyone left the entire stock market after Bernie Madoff, he was just a bad apple.
I don't know how much longer we need to reach the speculative levels of 2021, but I believe we are definitely far from that point. When I see people on Twitter discussing that we are already in the late stages of this cycle, I wonder what kind of audience they are trying to attract. During the last bull market frenzy, I saved a screenshot. It was a list of popular tokens, names like Dogelon Mars, BabyCare, and Rainbow Token. What are these tokens for? I don't know. What are the trading prices of these tokens today? I'm not sure. I don't see any scams trading like this today; I don't see any tokens attracting the attention of the entire internet and separating fools from their money like Safemoon or Shiba Inu. Of course, proceed with caution and don't get ahead of yourself too early, but is it really that bad to say we are still very early? From an objective perspective, it is entirely debatable that we are still early.
Bitcoin experienced a 20x price increase in 2017. Bitcoin rose 10x from its low point in March 2020 and double-topped. If Bitcoin were to rise 10x from its low point in November 2022, its peak would reach $160,000. When I say this, I know there will be counterarguments. The obvious counterargument is that Bitcoin's market cap was much smaller in 2017 and 2020, which is true. I'm not calling for Bitcoin to rise 25x from here because of ETFs, but it's worth noting how stupid the financial system has become and how rapidly our world is changing due to advances in artificial intelligence. We could very well create AGI in the next twenty to thirty years, which will have an unprecedented impact on our daily lives and what our future might look like. Sam Altman is trying to raise trillions of dollars to prepare for this, which, to me, is more optimistic than anything else you could present to me. The US printed a lot of money during the pandemic, things are out of control, and this is just the beginning.
I believe that in a world where artificial intelligence rapidly overturns all previous assumptions about humans and intelligence, it is not unreasonable to think that Bitcoin could exceed $160,000 in this cycle. The bear market has poisoned many people's minds, and this damage is beginning to show up on my timeline, forming tweets with flawed reasoning. While this may mark a local peak, it doesn't change my view. I'm not afraid to be wrong, although if I didn't believe that, I wouldn't be writing this article. Even if the public and private markets are as hot as they are now, they will only continue to deviate from the realms of expected reality, leaving all non-believers behind. If there is a timeline, and Zhu Su's supercycle theory is proven to be true, if I say I don't believe we are living in it, then I am lying.
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