Bitcoin Breaks $110,000 to Set New High: Is it too late to get on board now?

The price of Bitcoin has surpassed the $110,000 mark, reigniting market enthusiasm. For those investors who were previously hesitant, this moment inevitably raises the question: Have I missed the opportunity to get on board again? Will there be opportunities in the future?

This raises a deeper question: Is there really an opportunity for "value investing" in highly volatile assets like Bitcoin? Can this seemingly contradictory strategy capture "asymmetric" returns in a turbulent market?

Bitcoin's Asymmetric Opportunities

Looking back at the history of Bitcoin, we can find that it has experienced multiple drops of 80% or even 90% from its highs. During these moments, the market is shrouded in panic and despair. However, for investors who have a deep understanding of Bitcoin's long-term logic, this is precisely the classic "asymmetric" opportunity - exchanging limited risk for the potential of enormous returns.

For example:

• 2011: Dropped from $33 to $2, a decline of 94%
• From 1160 USD in 2013 to 150 USD in 2015, a decline of 86%
• 2017-2018: Fell from nearly $20,000 to $3,200, a drop of 83%.
• 2021-2022: fell from $69,000 to $15,500, a decrease of 77%

After each "catastrophic" crash, Bitcoin has achieved an astonishing rebound. This asymmetrical opportunity arises from three core mechanisms:

1. Deep cycles and extreme emotions lead to significant deviations of price from value.
2. The price volatility is severe, but the actual "death" probability is extremely low.
3. Intrinsic value exists but is often overlooked, leading to an "oversold" state.

The Value Investment Logic of Bitcoin

Although Bitcoin does not have financial indicators like traditional assets, it has a value system that is analyzable, modelable, and quantifiable. We can explore the intrinsic value of Bitcoin from the dimensions of supply and demand.

Supply Side: Scarcity and Programmatic Deflation Model

• Fixed total supply: 21 million coins
• Halved every four years, inflation rate continues to decline
• Stock-Flow Ratio ( S2F ) Model: A valuation framework based on scarcity.

Demand Side: Network Effects and Metcalfe's Law

• Active addresses and non-zero addresses continue to grow
• Metcalfe's Law: The value of a network is proportional to the square of the number of users.
• Institutional adoption drives demand growth

By combining supply and demand factors, we can build a more comprehensive valuation framework: when S2F shows long-term scarcity and user activity continues to rise, supply and demand mismatches will amplify asymmetric opportunities.

The Essence of Value Investing

The core of value investing is not just about "buying cheap", but rather finding structures with limited risk yet significant potential returns in the gap between price and value. It is a way of thinking based on probability and imbalance, emphasizing:

• Analyze "margin of safety" to assess downside risks
• Study the possibility of mean reversion in "intrinsic value" assessment
• Choose "patient holding" and wait for asymmetric returns to materialize.

True value investing is not a conservative low-risk strategy, but rather pursuing disproportionately huge returns with manageable risks.

Conclusion

The extreme volatility of Bitcoin should not be seen as a risk, but rather as a gift to capture asymmetric opportunities. True value investors do not make noise in bull markets, but quietly position themselves in the depths of panic. They understand:

• Scarcity is the bottom line
• The network effect is the ceiling
• Volatility is opportunity
• Time is the most powerful leverage.

The world does not reward emotions; it rewards understanding. And understanding is ultimately proven to be correct by time.