In recent months, Bitcoin has fluctuated around $100,000 and has even dropped below $90,000. Some people doubt that the bull market has ended, but it's time to recharge some faith.
I tend to think that we are experiencing the final drop now.
The twilight witnesses the true believers.
Bitcoin reaching $100,000 is a certain event and a starting point. I have always believed that BTC is a low-risk, stable return asset, but Bitcoin will not stop there; traditional financial capital will not lack vision.
At this point, we need to understand where we are now and where we will go in the future.
Extending the time dimension, we will review 2024 and look forward to 2025, so we can clearly see the market's direction.
1. How to view Bitcoin's rapid rise in 2024?
A surge in Bitcoin's price is a result of the combination of many factors:
The most direct factor is the ETF and the entry of traditional funds.
An indirect factor is that we are currently in the Federal Reserve's interest rate reduction cycle, and the liquidity in the capital market has improved.
Long-term factors include policy expectations regarding future Trump policies.
Finally, there is also the impact of Bitcoin's own cycle, with the halving of production in April 2024, and the increment speed has already dropped below that of gold.
In summary, 2024 can be said to have gathered favorable timing, geographical advantages, and human factors, not only driven by the external macro environment but also combined with the internal driving force of the industry itself.
2. How to view Bitcoin's future price trends?
The ultimate price of Bitcoin is very vague and cannot guide investment, so do not guess the ultimate price; many institutions predicting Bitcoin will reach $500,000 or $1,000,000 in the future are not valuable.
Therefore, we need to limit our view to the medium and short term, focusing on price trends over the next one to two years.
To answer this question, we must first clarify the current market stage: we are now in the second half of the bull market.
In September 2024, when Bitcoin was over $70,000, everyone was still doubting whether it had really entered a bull market, but no one doubted Bitcoin at $100,000.
According to the theory of cycles, the entire industry is still in the mid-bull market, so after the market sentiment reaches extreme greed, there is no need to panic about the subsequent correction; the main upward trend will still come.
For example, in March 2024, the market was in a state of greed for more than a month, and finally, the BTC price reached a peak of around $73,000, after which corrections began, lasting more than half a year.
If we say that the rise from $16,000 in January 2023 to $72,000 in March 2024 is the first wave of the main upward trend, then after a long intermission, the market entered the second half of the bull market starting in September 2024, entering the big cycle of the second main upward trend.
In this wave of main upward trend, the BTC price may experience a brief decline or several months of sideways movement, but the overall trend is still upward, and this upward cycle will last about a year.
The bull market is conceived in pessimism, born in despair, grows in doubt, matures in optimism, and dies in excitement.
Don't doubt it, welcome to the second half of the bull market.
However, whether there will be a third wave in the future, after BTC's price breaks $100,000, where it will go next remains unknown; no one can predict the peak.
We can only say that after BTC's price breaks $100,000, the ceiling has opened, and the market in 2025 is worth looking forward to.
Don't guess the peak; no one can predict it. The key lies in each person's psychological expectations and profit expectations; for example, with an average cost of $20,000, then $100,000 is already five times.
We only look at cycles and trends. This cycle started early, and the peak for BTC in history may occur around the summer of 2025, expected to be around $150,000.
3. Does the Bitcoin ecosystem have opportunities?
First, let's look at the macro perspective. Where does the industry's liquidity come from? It's essentially old money from traditional financial institutions like ETFs and RWA.
The crypto industry has a multi-level reservoir effect: BTC initially receives external liquidity, which was originally continued by ETH to absorb the overflow liquidity, but this time is different; BTC now has its own ecosystem, so BTCFi has a very large opportunity to absorb the overflow liquidity from BTC.
The direction of the BTC ecosystem is mainly to release the liquidity of BTC, which needs to solve a key problem: how to securely cross-chain BTC? Or, without cross-chain, lock it up and map it to other chains.
BTC is the asset with the strongest consensus and the highest security, making it worthwhile to build a financial system around BTC.
Next, we need to think about a question: where will BTCFi be constructed?
One layer issues assets, another layer does applications, so BTC Layer2 still has opportunities.
Three technical solutions for BTC Layer2: state channels, sidechains, and Rollup.
The most orthodox Layer2 is the Lightning Network, which, combined with Taproot Assets, is very suitable for issuing stablecoins and has payment scenarios.
Interconnection of all chains: taking Ethereum as a reference, solve many problems of liquidity fragmentation among chains in advance.
Which one will emerge?
Apart from technological innovation, good projects generally meet three characteristics: strong product iteration capability, strong marketing ability, and a wealth creation effect.
4. Will there be new narrative opportunities for Bitcoin in the future?
Bitcoin is now called 'digital gold', and for future narratives, I can summarize it with one concept: 'income-generating digital gold'.
If BTC just lies there, like gold in a bank vault, then its advantages and potential are not fully realized. This is quite unfortunate.
Especially if Trump really makes BTC a national strategic reserve in the future, BTC will also become a capital reserve for many companies.
At this point, the key is to combine BTCFi to turn BTC into an income-generating asset (similar to ETH).
In traditional financial markets, income-generating assets account for more than 90% of total assets, so we can see the importance of income-generating assets to financial markets.
For example, Ethereum transitioned from a PoW mechanism to a PoS mechanism. Due to the staking scenario, Ether can generate staking returns, transforming Ether into an income-generating asset, which has spawned a series of financial plays in the Ethereum ecosystem.
The Ethereum ecosystem has seen a series of innovative financial products such as liquid staking, re-staking, and liquidity re-staking, attracting more liquidity into this ecosystem and creating a strong wealth effect.
The Bitcoin ecosystem also needs such income-generating assets as its underlying assets, which can lead to more new plays and accelerate the rejuvenation of the ecosystem.
Now we need to solve this important question: how to turn Bitcoin into an income-generating asset?
Among them, Babylon, Super Bitcoin, and Solv are all valuable attempts.
Imagine a scenario where the Lightning Network is a payment network, using only the interest or future expected returns of BTC, while the principal remains untouched. This is equivalent to utilizing the time value and future returns of BTC.
This is a very valuable and promising scenario.
5. To summarize
(1) Regarding BTC's trend in 2025: we only look at cycles and trends. This cycle started early, and the peak for BTC may occur around the summer of 2025, expected to be around $150,000.
(2) Opportunities in the BTC ecosystem: BTCFi and BTC Layer2. BTCFi will first absorb the overflow liquidity from BTC, and BTCFi is built on BTC Layer2.
(3) Future narratives of BTC: income-generating digital gold; BTC's next narrative is to become an income-generating asset; currently, Babylon, Super Bitcoin, and Solv have made many valuable and relatively successful attempts.
Bitcoin will exploit you the most, but it won't cut you off.
