The day before yesterday, after the article was published, 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.

First, let me state my answer: up until now, I still cannot provide a clear valuation. However, I have roughly outlined a thought process for everyone to consider.

Since we need a valuation, we must first establish 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 of the peak value of Bitcoin in the coming 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 similar to gold, but it also has significant differences—its production decreases periodically.

• It is a crypto asset, but unlike other cryptocurrencies (such as Ethereum), it does not have much in the way of 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 have 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 that 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 a conservative estimate for that "future" would be 13 years from now. If we consider a doubling of value every four years, that would mean $250,000 in 2029, $500,000 in 2033, and $1,000,000 in 2037.

This doubling 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 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 closely observed 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 2017 bull market, Bitcoin's market share was about 33%; at the peak of the 2021 bull market, it was about 44%.

So from this perspective, if Bitcoin's price reaches its peak next year, assuming the above market share pattern still applies, 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 numbing ourselves, believing that the dance will continue and the horse will keep running.

Therefore, in summary, the three standards above (two data standards and one intuitive standard) represent a thought process I use for the reasonable valuation of Bitcoin.

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

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