Bitcoin Breaks $110,000: Asymmetric Opportunity for Value Investors

The price of Bitcoin has broken through the $110,000 mark, reigniting market enthusiasm once again. However, for those investors who missed the entry point, this moment feels more like a self-interrogation: Have I missed the opportunity again? Will there be opportunities in the future?

This raises a core question: is there really space for "value investing" in assets as volatile as Bitcoin? Can this strategy, which seems to contradict its "high risk, high volatility" characteristics, capture "asymmetric" opportunities in this tumultuous game?

Asymmetric Opportunities in Bitcoin

Looking back at the history of Bitcoin, it has experienced multiple drops of 80% or even 90% from its peak. During these moments, the market is shrouded in panic and despair, and prices seem to return to square one. However, for investors who deeply understand the long-term logic of Bitcoin, this is precisely the classic "asymmetrical" opportunity - exchanging limited risk for significant potential returns.

The main reasons why Bitcoin provides asymmetric opportunities are three:

1. Deep cycles and extreme emotions lead to price deviations.
2. Price fluctuations are extreme, but the probability of death is extremely low.
3. Intrinsic value exists but is often overlooked, leading to an "oversold" state.

The underlying system of Bitcoin has been operating stably for over a decade, with almost no downtime. Regardless of various crises and scandals, its blockchain has remained stable. This technological resilience provides a strong survival baseline.

Bitcoin Value Investment Framework

Although Bitcoin does not have traditional financial metrics, it possesses an analyzable, modelable, and quantifiable value system. We can explore the intrinsic value of Bitcoin from two dimensions: supply and demand.

Supply Side: Scarcity and Programmatic Deflation Model

The core value proposition of Bitcoin lies in its verifiable scarcity:

• Fixed total supply: 21 million coins
• Halved every four years, annual issuance rate reduced by 50%
• After the halving in 2024, the annual inflation rate will drop to below 1%.

Stock-to-Flow ratio ( S2F ) model is based on the ratio of existing asset stock to annual production, used to predict Bitcoin price trends. The higher the S2F ratio, the theoretically higher the asset value.

Demand Side: Network Effects and Metcalfe's Law

If the S2F has locked the "supply valve", then the network effect determines how high the "water level" can rise. Key indicators include:

• Non-zero balance address count
• Daily Active Addresses
• Lightning Network capacity etc.

According to Metcalfe's Law, the value of a network is proportional to the square of the number of users. This explains why Bitcoin often experiences "exponential" value growth after major adoption events.

The Essence of Value Investing

The core of value investing is not just to "buy cheap", but to find a structure where the gap between price and value presents limited risk but significant potential returns. It creates a natural asymmetric structure: the worst outcome is a controllable loss, while the best case may exceed expectations several times.

True value investors do not shout in a bull market, but quietly lay out their plans in the calm under the storm.

Summary

Bitcoin may be the purest expression of asymmetry in our time. Its logic remains steadfast:

• Scarcity is the bottom line
• The network is the ceiling
• Volatility is opportunity
• Time is a lever

You may never perfectly time the bottom. But you can navigate cycles again and again - buying misunderstood value at reasonable prices. Those who bet in the depths of irrationality are often the most rational. And time - is the most loyal executor of asymmetry.