Bitcoin halving, ten coins await

Ten Coins Await the Bitcoin Halving

The wind is howling and the rain is coming.

1284 days ago, I made a video talking about Bitcoin halving, predicting that the price would rise to $55,000 after halving.

That day was April 17, 2020, and the closing price of Bitcoin was $7,125.

Several years have passed, and halving is about to happen again, specifically in April or May of 2024.

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This is the 4th halving in Bitcoin’s history, and it is the last opportunity for ordinary investors, like a narrow crack left on the ancient city wall under the setting sun.

When this door closes, the last chance to get on board will also disappear.

What Xiaofeng regretted the most was not being able to save Azhu. “I am a Khitan, what great ambition can I have?”

Once the gold bottle falls into the well, the arrow cannot be recovered.

My biggest regret is that after nearly ten years of entrepreneurship, I haven’t accumulated enough coins, but the game is going to end. It’s also a kind of destiny.

How to define scarcity

A scholar named Safdeen Amos from Arabia wrote a book called “Bitcoin Standard” in 2018, in which he discussed a model called “Stock-to-Flow,” which is a simple relationship between stock and annual production.

When we talk about stock, we are counting the total quantity of a commodity.

The annual production is the total quantity of the commodity produced in a year.

Dividing the two gives us a ratio called SF.

In the graph, you can see that the SF of gold is 62, and silver’s is 22. What does this mean? It means it would take 62 years to produce as much gold as there is now, and 22 years for silver. Platinum only needs 0.4 years. This all indicates one thing: they are particularly scarce.

We started to think, are these things considered currency because they are scarce? On the contrary, for platinum and palladium, their SF values are equal to or less than 1, which means they are not as scarce.

In fact, gold has stronger store of value than other metals on the surface.

The goods we use in our daily lives, such as food, mobile phones, computers, and cars, all have SF values much less than 1, which means they have never been scarce. Why? Because as long as someone wants them, they can be produced. When someone wants to hoard them, the price will rise, and more companies will start to produce. The price will certainly fall.

This is common sense about supply and demand balance.

So we can easily conclude that the higher the Stock-to-Flow ratio of a commodity, the more it can maintain its value and the less diluted it will be.

Take gold for example, in 1972 it was $46 per ounce, and in 2020 it reached a new high of $1744 per ounce, a total increase of 37.9 times. So why don’t we produce more gold to meet the demand? The reason lies in the limited mining capacity of gold, determined by mining technology and costs. If you spend more on something than you can earn from it, you definitely won’t do it.

So what is the Stock-to-Flow ratio of Bitcoin? There are already 18.3 million bitcoins in the world. However, a research report says that more than 1.6 million of these 18.3 million bitcoins have been permanently lost.

Therefore, there are only about 16.7 million bitcoins that can actually be used, and based on Bitcoin’s current annual production, its Stock-to-Flow ratio is about 54, which is similar to gold.

In a few months, Bitcoin’s Stock-to-Flow ratio will rise to 108, with an annual inflation rate of only about 0.9%. This means that Bitcoin has become the scarcest asset in human history after gold.

The halving is the underlying reason for changing Bitcoin’s supply relationship, nothing else.

And this supply relationship determines the price of the coin.

When some people hear about Bitcoin ETFs, they get excited, as if once approved, the price will skyrocket and it will be a huge deal.

I suggest you don’t pay attention to the media hype and see the essence clearly.

Whether the BlackRock Bitcoin ETF is approved or not is not important, and when it is approved is not important either.

What’s important is the expectation of “Bitcoin ETF approval” as a bait to boost market confidence, which will gradually accumulate momentum and eventually push the price above $45K.

You think it’s still a bear market, but the bear market has quietly ended without your knowledge.

And this momentum will continue, it’s not like the water pipe in your house.

The BlackRock ETF and the subsequent approved ETFs, just like the Suez Canal, connect the old money with the new pool. The tremendous amount of venture capital from traditional finance exceeds many people’s imagination. Bitcoin is not too expensive for them, it’s too cheap, and the plate is too small.

The Suez Canal is vast and magnificent, connecting north and south water transport between Europe and Asia. Since then, ships no longer have to bypass Cape of Good Hope at the southern tip of Africa. Fleets can now depart from London, England or Marseille, France, and sail to Mumbai, India, laden with gold, silk, and spices.

King Darius I of the Persian Empire completed the final segment of the Suez Canal in 500 BC. He erected a granite monument in one of the riverbeds, with an inscription that read:

“I am a Persian. Setting out from Persia, I conquered Egypt. I ordered this canal dug from the river called the Nile that flows in Egypt, to the sea that begins in Persia. When the canal had been dug as I ordered, ships went from Egypt through this canal to Persia, even as I intended.”

Cool, awesome, and mind-blowing. That’s the charm of a canal.

The approval of a Bitcoin ETF will have an impact not only on the present but also on the next decade. Once the fiat currency channels are unimpeded, we leave the rest to time.

By 2025, we might truly witness a Bitcoin worth over $100K.

Bitcoin is gradually becoming the Manhattan real estate, serving as a status symbol in society. People choose Bitcoin not because it enables faster transactions than other currencies, but because it is valuable.

Its value stems from the core consensus of the entire crypto game. It serves as a vehicle for storing value, as well as an object of flaunting in social relationships, sought after by everyone.

Bitcoin showcases your strength, stability, loyalty, and belief. It is the mansion within Beijing’s second ring road, the old Western-style house on Shanghai’s Hengshan Road, and the villa on Hong Kong’s Mid-Levels.

Its value is determined by the truly affluent class, just like Berkshire Hathaway’s Class A shares, which can reach up to $530,000 per share. Funds flock to it, and it continues to thrive. For small investors, even buying one share is like reaching for the sky, an unreachable dream.

Ten coins can signify nobility.

The Game of Anchored Price

If one does not understand how the price of a coin is anchored, they truly do not understand Bitcoin.

Allow me to talk about land first, then circle back to Bitcoin.

Most people have played the game “Monopoly,” but I rarely hear anyone mention its essence.

You need to understand that the role of the Federal Reserve is similar to the bank in the board game “Monopoly.” Its goal is not to win, but to provide enough funds to sustain the game.

For the Federal Reserve, the appropriate amount of assets is the amount that best enables it to fulfill its responsibilities.

Monopoly is actually a game of land speculation, where the core is monopolizing resources, and there is only one winner at the end of the game, with all other players as mere casualties.

Victory does not come from competition, but from monopoly.

So, where does the fiscal revenue of a central empire come from?

The answer is no different from Monopoly, it’s simply:

• State-owned enterprises

• Public land ownership

• Monopolistic financial system

For a centralized government, this game only cares about two things:

1) How to control the entire society with a top-down bureaucratic system;

2) How to sustain this bureaucratic system by earning from land, taxes, and the financial system.

All countries in the world are similar, with little difference between ancient and modern, and domestic and foreign.

Take the Tang Dynasty as an example. The government implemented the equal field system, where every man who was born received 80 acres of public land and another 20 acres of permanent private land (private land). People of working age would cultivate the land, pay taxes proportionate to the annual harvest to the government, and after their death, the cultivated land would be reclaimed. At the same time, the emperor allowed local government and yamen (government office) to have operating lands and funds.

This system eventually collapsed because land became increasingly concentrated in the hands of the bureaucracy and nobility.

For example, during the reign of Emperor Gaozong of Tang, a man named Wang Fangyi owned a lot of land, probably tens of hectares. By the time of Emperor Zhongzong of Tang, Princess Taiping owned a large amount of land, spread across fertile areas, which were leased to poor farmers for cultivation. Most of the harvest was given to the powerful, and the government also took a cut. Many people fled to the countryside to escape hard labor. The government first registered the names of these labor escapees, and then eventually ordered them to pay taxes. They had to either sell their land and houses, or transfer them to neighbors, repeating this cycle until there was nowhere left to escape.

What to do if the game fails? Start a new one.

So, there is a change of dynasty, peasant uprisings, and a redistribution of resources.

It’s the same in modern times. The value of assets advocated by East Asian countries is mostly tied to land. These are the game rules set by the government, with houses as the platform.

The United States, on the other hand, advocates capital efficiency, so the national game they play is the stock market, and the purchasing power represented by national 401K pension funds is the reservoir.

These are all different price-anchored games, and there are countless similar copies scattered around the world, whether it’s Rolex watches, Hermès platinum bags, Yu-Gi-Oh trading cards, limited edition blind box figurines…it’s all the same.

In the United States, New York City is developed enough, right? But there are still over 25,000 vacant and underutilized plots of land, a whopping 25,000 (the light-colored ones in the picture are all vacant land).

There is even a proposal to impose a 3.5% tax on these lands, bringing in an additional $429.9 million in revenue for the city.

Meanwhile, in Beijing, the city with the highest population density in Northern China, the total area is 16,000 square kilometers, but the actual developed area is only 2,000 square kilometers. The land development rate is only 12.5%, even more stingy than Hong Kong (25%).

If Beijing wanted to have a per capita mansion for everyone, it would be easy. According to China’s planning standards of 10,000 people/square kilometer, after fully developing the city, it could accommodate 160 million people.

So why don’t the governments just open up construction and provide shelter for all?

Because in this game, land is a means of production, and monopolists must maintain its scarcity to keep the game going.

This is what we call price anchoring, yes, price anchoring.

If you want to win, you must understand the position of Bitcoin in the crypto game…

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