Owning a Bitcoin is more and more a luxury for ordinary people

In yesterday's article, I suggested that you keep a little bitcoin in your hands anyway, because it will perform miracles in the future.

Speaking of the miracle created by Bitcoin, the first thing we think of is that it has increased by at least one million times in 11 years since its launch. In the process, it has been brought back to life countless times. In each of these reincarnations, the price of Bitcoin fluctuates quite violently, and this volatility exceeds all other investment products.

It is precisely because of this feature that many people in the traditional financial circle believe that Bitcoin is not an investment product but a speculative product. But precisely because of this feature, in my opinion, as long as you can grasp the rhythm of regular investment in the bear market and selling in the bull market, you can take advantage of each bull-bear cycle to realize wealth gains.

However, such a story is unlikely to be told forever, because as the volume of Bitcoin becomes larger and larger, the amount of funds it needs for each rise will inevitably increase, and when Bitcoin is completely out of the circle and enters the traditional financial market When the asset allocation of institutions or even the asset allocation of central banks of various countries, I am afraid that the story of skyrocketing and plummeting will end. At that time, Bitcoin will still rise and fall, but its magnitude may not fall by more than 80% and increase by more than 10 times like today.

So once Bitcoin no longer fluctuates violently in the future, how much will it rise or fall? We can look at the historical rise and fall of investment products of comparable size.

In the process of Bitcoin rising all the way this time, its market value has surpassed a series of high-tech companies such as Facebook and Tencent. Then let's take a look at the historical rise and fall of Facebook and Tencent's stock prices.

Since Facebook went public, there have been two relatively large declines: one in July 2018 and one in January 2020. These two declines were 40% and 30%, respectively.

The biggest decline since Tencent’s listing occurred in the 2008 financial crisis. At that time, Tencent’s stock price fell from a maximum of 7.8 Hong Kong dollars to a minimum of 2.4 Hong Kong dollars, a drop of 69%. After that, even if Tencent's stock price plummeted, its decline was rarely greater than 40%.

Therefore, the two stock assets, which are smaller than Bitcoin but very close, have a drop of about 30%-70%.

If we look at the longer term, when the volume of Bitcoin reaches the market value of gold in the future, how much will it fluctuate?

Let's take a look at the decline of gold in history. There have been two relatively large bull markets in modern gold.

In the bear market after these two big bull markets, the first time gold fell from a maximum of $750 to a minimum of around $300, a drop of 47%; the second time gold fell from a maximum of $1920 to a minimum of $1050, a drop of 45%. Both times the declines were less than 50%.

From the above examples, we can see that most of the declines of these major asset classes have only been around 40% in recent decades.

I believe that when the volume of Bitcoin reaches that level in the future, its decline in the bear market may only be about 40%, and the trend in the bull market will become a slow slow bull, and it will be difficult to appear in the same period as in the past. In the case of an increase of 10 times or more within a year.

Since the biggest promoters of the Bitcoin market this time are institutions, Bitcoin's step-by-step out of the circle and its entry into traditional financial institutions is happening now. How long will this bull market last? How much speed and strength will traditional financial institutions intervene in the end? We don't know yet, at least we won't know until next year or even later when this round of bull market ends.

But I estimate that the last chance for Bitcoin to get out of the skyrocketing market is this round or the next round in 4 years. Therefore, there are very few opportunities for us to use the bull and bear alternately to achieve a surge in wealth. time, or at most the next time.

Therefore, in the future, owning a Bitcoin will not only be a luxury for ordinary investors, but also the story of wealth miracles that rely on it will become history forever.