A value investment framework based on Bitcoin (BTC) technical characteristics, market rules, and long-term value consensus, focusing on its core advantages and strategies as a digital asset, for reference:
1. Anchor on Bitcoin's core value consensus
1. The narrative of digital gold's scarcity
- Fixed total mechanism: The total supply cap of 21 million coins + an inflation control model that halves every four years makes it the world's first algorithm-driven scarce asset, with anti-inflation properties incorporated into asset allocation models by global institutions (like Grayscale, MicroStrategy).
- Historical data validation: In the past 14 years, cumulative growth has exceeded ten million times, outperforming traditional assets like gold and US stocks, becoming a high-risk, high-return value storage target.
2. Infrastructure of Decentralized Finance (DeFi)
- Status of underlying public chains: The security of the Bitcoin blockchain (hash rate hitting new highs) and its decentralized characteristics make it the 'digital cornerstone' of the DeFi ecosystem, with second-layer protocols like the Lightning Network solving transaction efficiency issues and expanding payment scenarios.
- Technical iteration support: The Taproot upgrade enhances privacy and smart contract capabilities, the Ordinals protocol spawns the BRC-20 ecosystem, giving Bitcoin more application dimensions.
3. Global liquidity and institutional trends
- Accelerated compliance process: Approval of the US spot BTC ETF and entry of traditional asset management giants like BlackRock signify Bitcoin's entry into the mainstream financial system, with institutional capital bringing long-term liquidity support.
- Macro hedging tool: In the context of fiat currency over-issuance and increasing geopolitical risks, Bitcoin is viewed as a denationalized global reserve asset, with countries like El Salvador and the Central African Republic attempting to incorporate it into their legal currency systems.
2. Core strategies of value investment
1. 'Accumulation' strategy based on halving cycles
- Application of cyclical patterns: Bitcoin prices are strongly correlated with 'halving cycles'; historically, price peaks often occur within 12-18 months after each halving. We are currently in the 'early bull market' after the 2024 halving, following the logic of **'accumulate in bear markets, harvest in bull markets'**:
- Bottom area judgment: Refer to miner costs (such as hash prices), market fear index (position when below 30), and the relationship between price and 200-week moving average (buy in batches after a drop).
- Target profit-taking range: Gradually reduce holdings when the S/F model indicates a value below 5-8 (historical bubble range), while retaining core positions.
2. Dollar-cost averaging (DCA) to smooth the cost curve
- Applicable scenarios: For investors who cannot accurately determine market bottoms or are optimistic in the long-term but unwilling to bear the risk of concentrated buying.
- Operational suggestions:
- Fixed cycle: Regular investments of a fixed amount weekly/monthly, such as 5%-10% of monthly salary, sustained for 2-4 years (covering one bull-bear cycle).
- Psychological advantage: Avoid emotional trading, use the 'smile curve' to accumulate more chips during downturns, enjoying compound growth during long-term holding.
3. Core-satellite position allocation
- Core position (60%-70%): Long-term holding without movement, anchoring Bitcoin's 'digital gold' attribute to cope with global monetary system changes.
- Satellite position (30%-40%):
- Trend arbitrage: Utilize short-term market fluctuations (such as Federal Reserve policies, ETF redemption data) for swing operations;
- Ecosystem participation: Engage with Bitcoin ecosystem projects through protocols like Stacks and Ordinals to capture the benefits of technological innovation.
4. On-chain data to assist decision-making
- Key indicator monitoring:
- Long-term holders' positions: If continuously increasing, it indicates solid market confidence;
- Exchange inflow and outflow: Large funds entering exchanges may indicate selling pressure, while outflows may signal accumulation;
- MVRV Ratio: Measures market valuation; be cautious of bubbles when above 3, and may enter value range when below 1.
3. Risk control and asset protection
1. Position management principles
- Risk exposure control: The proportion of Bitcoin should not exceed 20% of personal total assets to avoid excessive concentration in a single asset;
- No leverage operations: Firmly avoid using contracts, loans, and other leveraged tools to prevent liquidation in extreme market conditions.
2. Private key security system
- Mainly cold wallet: Store large assets in hardware wallets (like Ledger, Trezor) or offline paper wallets to avoid exchange custody risks;
- Multiple backups: Split private keys stored in different physical locations (such as safes, secure mailboxes) to ensure security.
3. Response to macro events
- Policy sensitivity: Pay attention to the US SEC regulatory policies, as well as the compliance progress of cryptocurrencies in Hong Kong, as favorable policies may open up upside potential;
- Market sentiment indicators: Combine Google search trends and social media discussion volume to avoid chasing highs at the peak of 'FOMO sentiment'.
4. Logic of long-term holding and mindset building
1. Belief support through bull and bear markets
- Technological immutability: The Bitcoin network is maintained by global miners, making the cost of a 51% attack extremely high (requires control of more than half of the hash power), providing long-term underlying assurance.
- Increasing network effects: The number of users, nodes, and hash power continues to grow (by 2025, over 20,000 global nodes and hash power surpassing 500EH/s), in line with Metcalfe's Law, where network value rises exponentially with participant increase.
2. Counterintuitive operational discipline
- Be greedy when others are fearful: When the market crashes (such as a single-day drop over 30%), if on-chain fundamentals have not deteriorated (hash power has not continuously declined), it can be viewed as a 'golden pit' accumulation opportunity;
- Refuse to predict short-term prices: Focus on Bitcoin's long-term narrative (such as de-dollarization, Web3 infrastructure), ignoring intraday fluctuations, and view investment returns from an 'annual perspective'.
5. Summary: The essence of value investment
The value investment in Bitcoin is a long-term bet on the 'decentralized financial revolution', with the core being:
- Believe in the power of technological innovation: Blockchain technology may reshape the global financial order, with Bitcoin as the first successfully deployed decentralized asset, possessing a 'first mover advantage';
- Utilize market irrational cycles: Position during periods of skepticism and harvest during peak consensus, avoiding short-term emotional influences;
- Build a sustainable investment system: Transform volatility risks into long-term returns through disciplined operations (regular investments, position management) and technical fundamental analysis.
Action suggestions: Start by studying the Bitcoin white paper and tracking on-chain data (like Glassnode) to build independent thinking capabilities, and then formulate an investment plan based on personal risk preferences. Remember: True value investment is a process of exchanging 'time' for 'cognitive realization'.
