Potential variables of the Bitcoin halving规律

In the comments of our article, readers often ask whether the four-year bull and bear cycle of Bitcoin will be broken.

In this regard, I think there are two references:

One is the price fluctuation pattern of gold, and the other is Bitcoin's own original four-year cycle.

Why take gold as a reference?

Because the characteristics of Bitcoin as "digital gold" are becoming increasingly apparent.

However, there are significant differences when comparing to gold—Bitcoin's halving rule every four years is something that gold does not possess, so I feel that Bitcoin's price trend is unlikely to resemble that of gold.

The remaining reference is its own halving cycle. In this regard, past experiences seem to have consistently repeated this pattern. But I always feel that this pattern lacks theoretical basis, so I gradually believe that this pattern may be broken in the future.

Even so, I am not very certain about this.

In fact, not only for Bitcoin, but for various assets (such as stocks), I have also been pondering whether they have quantifiable bull and bear cycles?

This year, while reading the books of Buffett and Munger, a viewpoint from them has deeply etched itself in my mind:

They buy assets that are severely undervalued but very valuable. Because they believe that the market will eventually bring the severely undervalued prices back to a position that matches their value.

I often share this viewpoint in my articles.

But every time I read the two gentlemen explaining this viewpoint, I always have a question:

How long is this "one day"?

In another senior master's book, Mr. Fisher, his viewpoint is not to speculate on how long this "one day" will be, but as long as he believes the price is undervalued or the stock still has great potential, he will hold onto it.

His holding of several stocks for decades reflects this line of thinking.

However, this still does not answer my question; I still hope to find a quantifiable answer.

Fortunately, I recently read the answer given by the senior Duan Yongping to this question.

He said the following:

Regarding how long the process of price returning to value takes, someone told him (Duan Yongping) that Buffett once said it is 4 years, and he (Buffett) has never seen it exceed 4 years. In his (Duan Yongping's) experience, it has not exceeded 3 years. He (Duan Yongping) believes that a valuable stock will reflect its actual value in less than 3 years, while those companies with major issues will return to their actual value in 3-4 years.

This statement provides a very clear answer.

According to my understanding of this statement:

Duan Yongping believes that when a good stock's price is severely undervalued, it will rise to near its value in no more than 3-4 years; when a bad stock's price is severely overvalued, it will revert to its original form in no more than 3-4 years.

This answer from an experienced senior investor is worth our high regard and reference.

"Other mountains' stones can be used to polish jade"—upon seeing this statement, I immediately thought whether this pattern is also worth observing, referencing, and borrowing for crypto assets?

Upon further reflection, if we categorize crypto assets into two types: one type is pure value storage assets like Bitcoin, and the other type is assets with utility and service value like Ethereum, then this pattern is noteworthy for the second type.

Why?

Because I believe that in the future, crypto projects will definitely develop towards providing real value and services, thus project tokens will increasingly be empowered by the value and services provided by the projects (although this is still very lacking today).

This indicates that project tokens will have a trend towards being stock-like.

Therefore, whether the stock pattern summarized by Duan Yongping applies to the second type of crypto assets is worth our observation.

Now, does this pattern also apply to the first type of assets like Bitcoin?

I think it is also very valuable for reference, because in the future, it is very likely that Bitcoin's price fluctuations will increasingly be driven by the entire crypto ecosystem.

For the entire crypto ecosystem, more and more assets will be of the first type in the future.

In other words, whenever a halving of Bitcoin occurs, if the overall price of crypto assets is severely overvalued, we can observe whether their prices will fall back within the next 3-4 years; and when their falling prices become severely undervalued, we can observe whether their prices will rise again within the next 3-4 years (i.e., in the next halving cycle).

Therefore, in the upcoming market (until next year), if Bitcoin's price shows severe overvaluation, I estimate that the four-year cyclical law will at least continue once more.