Xu Zhe talks about how to deal with volatility risks before Bitcoin halving

On April 9, Zhoulibo’s live broadcast room invited financial expert and front-line trader Xu Zhe as a guest to discuss how to deal with the huge volatility of Bitcoin.

The live interview was hosted by PayPal Finance COO Mi Xiaoping. In this conversation, Xu Zhe gave his unique and valuable views on Bitcoin:

1. The plunge in Bitcoin is not due to a change in its value fundamentals, but rather to the depletion of U.S. dollar liquidity and the emergence of a "dollar vacuum."

2. The value of Bitcoin does not lie in its safe haven role, but rather in its unique inaccessibility.

3. The difficulty of obtaining gold is based on physics, while the difficulty of obtaining Bitcoin is based on mathematics. If you ask which is harder, mathematics or physics? Mathematics is harder. This is not based on human views. This is a "fact", not a "will".

4. The value of Bitcoin does not lie in consensus, but in the fact that Bitcoin uses some very hard things to ensure its inaccessibility, rather than the number of people who believe in it. This is different, one is hard and the other is soft - people's views are easy to change, but the laws of physics and mathematics cannot be changed by people.

5. No one has the patience to last more than ten years with the market makers manipulating this matter. Market makers do exist, but they only make money from irrational people during the market fluctuations. This is not the fundamental reason why Bitcoin can become the best performing asset within ten years.

6. For miners, since they have chosen heavy asset operation, cash flow management and risk management are of top priority. This is a matter of life and death for miners.

7. The clearing system under the dollar-dominated system is not cracked, but has collapsed by nearly half, so this may be an opportunity for Bitcoin.

The following is an excerpt from Xu Zhe's live Q&A session:

01
Bitcoin plunges as dollar vacuum looms

Question: Please let Mr. Xu Zhe talk to us about his understanding of the reasons for the recent Bitcoin crash.

Xu Zhe: Now the entire market is still priced in US dollars. When you pay attention to the market, you should not only pay attention to BTC, but also pay attention to USD.

On March 12, in fact, there was no significant change in the digital currency market, but the US dollar market was hit hard that day, with the continuous circuit breakers in the US stock market. This could easily lead to the stampede of some derivatives and strategies, creating the effect of a liquidity black hole for the US dollar, and then causing all assets in the market to plummet that day - not just Bitcoin, but all commodities that are priced against the US dollar.

This is not because the value of the asset itself has changed significantly, but because the liquidity of the US dollar has dried up. Simply put, since US stocks are highly derivative, when US stocks are in a short position, it will require us to cover the position in a very short time, otherwise investors will not only have their positions liquidated, but will also have other incidental legal liabilities.

At this time, major investors in US stocks around the world need to convert their assets that can be converted into US dollar cash as soon as possible. On that day, you can see that there were some shocks in the US dollar interest rate market, and the US dollar index was very high. The US dollar index is formulated based on the exchange rate between the US dollar and other major currencies. When the US dollar index reaches more than 100, it means that the global US dollar is flowing back to the United States. There are two main markets for the US dollar. One is the US dollar market - this is where the Federal Reserve can directly intervene, and the other is the offshore US dollar market, which is the eurozone dollar market. So, when we see the sudden explosion of the US dollar index and the rise in the overnight lending rate of the US dollar, this means that the liquidity of the US dollar has become a vacuum, including gold, other commodities, some bonds, and even treasury bonds - because treasury bonds can basically be understood as cash equivalents, and they were also sold on that day.

This is an incredible thing.

Since the Federal Reserve has made Treasury bonds the main asset item in its balance sheet, the security of Treasury bonds is almost equivalent to that of cash. So if even Treasury bonds are being sold off, it can only prove one thing - that is, everyone does not want any assets but only US dollar cash - which is used to cover positions.

When everyone needs US dollar cash, it is definitely too late to sell the house on the spot to cover the position. At this time, I will sell anything that can be turned into US dollars instantly. Gold and Bitcoin are both very liquid assets, so they were all slaughtered.

The reason why this massacre was so brutal is that there are more Bitcoin trading contracts now, and there are also some leverage effects. For example, the popular futures, forwards, perpetuals, and options in the market all have very high leverage effects. In this case, the leverage effects also trample on each other, which creates a vicious cycle.

When a high-leverage Bitcoin long contract is forcibly liquidated, the market is selling Bitcoin in large quantities, which will detonate the next-level leveraged contracts, and then liquidate other related derivatives, causing a continuous stampede.

Perpetual contracts are popular in the Bitcoin community. Perpetual contracts are actually a type of swap we call SWAP. SWAP means that I exchange Bitcoin for your US dollars now, and then I exchange them back after 8 hours. If you cannot exchange them back after 8 hours, we will add interest. But at a time when the whole world is madly eager for US dollars, you cannot exchange them back, so there will be a lack of collateral, and then interest rates will rise. If interest rates rise, it will trigger arbitrage, and if arbitrage is triggered, it will cause insufficient liquidity, right?

At the critical moment, the IT of several Bitcoin exchanges failed to keep up. Under the impact of relatively large traffic, they stopped trading and suddenly underwent maintenance, which caused the liquidity provided by arbitrage to fail to keep up. This is when the tragedy happened. Therefore, in essence, it is not that there has been a major change in the fundamentals of Bitcoin, but that there is a big problem with the liquidity of USD behind BTC/USD, and because the leverage of derivatives in the currency circle itself is too high - because when it was rising all the way, the optimism of the currency circle about Bitcoin had reached a rather outrageous level, and the forward premium of Bitcoin was already very high.

In the Bitcoin lending market, if you use USDT financing in the Bitcoin lending market to deleverage and go long on Bitcoin, and use leveraged forward contracts, including perpetual futures and over-the-counter swaps to do it, they can all produce a leveraged long Bitcoin effect. The funding costs of the two will not be too different, otherwise it will trigger risk-free arbitrage.

Therefore, we can basically infer from the premium rate of forward contracts on larger exchanges how high the lending rate in the cryptocurrency market is. Such a high premium proves that people are willing to pay a high interest rate to leverage and go long, which means they are bullish on Bitcoin.

The market's blind optimism was very high, and it coincided with the promotion of contracts by major exchanges, which resulted in a huge accumulation of leverage. Therefore, the fuse was the vacuum of US dollar liquidity, and then the amplifier was the excessive use of leverage contracts in the cryptocurrency circle and the rise of blind optimism in the cryptocurrency circle. The final round of slaughter was the selective failure of the servers of the cryptocurrency exchanges.

When these three things happened in sequence, Bitcoin plummeted instantly. That’s basically what happened.

The Federal Reserve did not do a good job in dealing with the liquidity vacuum of the US dollar, because the Federal Reserve also saw at that time that the US dollar vacuum would cause a plunge in global assets, and then they used more traditional tools. One was to cut interest rates, which suddenly lowered the US dollar interest rate to zero; the other was to expand the balance sheet, repurchase US Treasury bonds and MBS, and then reopen the interbank discount window and allow banks to boldly raise funds, which is the Federal Reserve's rediscount window. The Federal Reserve's rediscount window is for primary dealers and banks.

At that time, everyone was quite panicked. The Federal Reserve directly gave money to primary dealers and banks, and they did not dare to put money into the market. Because primary dealers and banks are similar to reverse repurchase of treasury bonds on our A-shares. In order to earn an overnight interest from you, which is almost zero, facing the risk of fund or dealer liquidation, they are unwilling to lend.

On the day when Bitcoin plummeted in March, did anyone lend money to a high-leverage fund? I don’t think any of you would be willing to lend money. It’s the same reason. The Federal Reserve was willing to lend money that day. It expanded its balance sheet very much and provided almost unlimited financing to primary dealers and banks at the rediscount window. However, primary dealers and banks were unwilling to inject money into the market to those funds that were on the verge of liquidation, so the Federal Reserve’s economic operations on that day did not work. This caused the liquidity of the US dollar to be very tight for a period of time.

Therefore, the price of Bitcoin has recovered slowly. The Federal Reserve recently fixed this problem, so the price of Bitcoin has cash support. Because the Federal Reserve has actually broken some rules, bypassing the banking system and the primary dealer system, and directly buying US dollar bonds in the market, that is, the Federal Reserve's money is directly created out of thin air and injected into the balance sheets of companies, and the US dollar liquidity in the market has been restored. Therefore, we see that the price of Bitcoin has also recovered - you have to buy it with USD, and the BTC/USD index can go up.

If the US dollars in the world are disappearing, this thing will definitely not be accomplished. Now all the US dollars in the world are created by the Federal Reserve, so if the Federal Reserve channel is blocked, there will be no USD to buy BTC/USD, so the crash will happen.

02
What is the value of Bitcoin?

Question: How do you view the performance of Bitcoin in this crisis? From the time Bitcoin plummeted to now, the price has returned to almost the level before the plummet, which is also very fast among all investment categories.

Xu Zhe: As an asset, Bitcoin's performance is actually not very good in this round, because it basically does not play the role of replacing the traditional monetary and financial markets.

If we want to evaluate an asset, it is irrational to only base it on its rise and fall. The key is to see whether the asset plays the role it should in the allocation process.

For example, when investing in government bonds, I don't actually expect to get rich from government bonds. I either bet that interest rates will continue to fall, or I want to get a fixed return. You can't say that the return on government bonds is not as good as stocks this year, and then say that government bond assets are not performing well, right? This is inappropriate.

We just need to evaluate whether the design of the asset is successfully aligned with its goals.

In terms of evaluating Bitcoin, I think this time Bitcoin did not play a good role in hedging against the traditional financial market. The original intention of Bitcoin was to become a bookkeeping system that allows humans to trade the fruits of their labor without relying on the central bank. In this crash, the original intention of Bitcoin was not achieved.

The myth of gold as a safe haven has also been shattered. Originally, everyone believed that gold had a certain safe haven function, but in this incident, gold also fell all the way, also due to the problem of the US dollar liquidity vacuum. Therefore, the idea that gold is a safe haven is also untenable.

In the context of this round of US dollar liquidity vacuum, a major factor affecting Bitcoin and gold is that the liquidity of the two things is too good. They will be more affected by the speculative market, not by geopolitical risks.

I have always disagreed with classifying gold and Bitcoin as safe-haven assets. This is just everyone's imagination. In risk events, they have never been proven to be safe-havens. I never regard them as safe-haven assets. If they are regarded as safe-haven assets, they are very unsuccessful.

In fact, Bitcoin is not a failure. Since it was first traded 10 years ago, it has grown from less than 1 cent to more than 7,000 US dollars. In these 10 years, it has performed better than any other asset, not by relying on safe havens.

Since 2009, 2010, and 2020, it is rare in human history that GDP growth is very fast, there are no major wars, and no major natural disasters. This can be said to be the best decade in human history, and it is also the decade in which Bitcoin has accumulated wealth crazily. Therefore, I have always disagreed with the view that Bitcoin is classified as a safe-haven asset. The value of Bitcoin does not lie in risk aversion.

Question: Gold and Bitcoin are both consensus-based assets. They do not generate cash flows and have no upward valuations. Is it true that for this kind of quasi-currency, this kind of consensus-based trading asset, they are more of a response to human trade activities, GDP, or M2?

Xu Zhe: M2. Because M2 is actually more affected by the central bank, and is not really related to the total amount of human economy. Comparing the ratio of the M2 of the People's Bank of China to GDP and the ratio of the M2 of the Federal Reserve to the US GDP, you will find that the two ratios are very different. Similarly, under a certain GDP growth situation, the growth rate of M2 can be much faster than GDP, so it is not appropriate to use M2 as an indicator to measure.

Bitcoin is different from gold. It is not pure consensus. It has other things in it. The inaccessibility of Bitcoin is different from that of gold. Its guarantee mechanism is different. The inaccessibility of gold is because in the process of planetary formation, elements with proton numbers greater than 56 are not easy to precipitate. It cannot be formed in a relatively normal environment. Therefore, its inaccessibility is that no one can have alchemy.

The difficulty of access to Bitcoin is different. The difficulty of access to Bitcoin lies in the irreversibility of the hash algorithm. Therefore, if we insist on saying that Bitcoin and gold are both based on consensus, I think it is better to say that they have found a relatively hard property that is difficult to obtain, one is based on physics, and the other is based on mathematics.

If you want to say which is harder, mathematics or physics? I think mathematics is harder, that is, the irreversibility of the hash algorithm is much smaller than the probability that humans can change the number of protons. This is not something based on human views, this is a "fact", not a "will".

Everyone thinks that consensus is based on people's views on something, but I don't think so.

I think the reason why Bitcoin and gold are something that people are willing to buy with real money is because they use some very hard things to guarantee their inaccessibility, rather than because many people believe in them. This is different, one is hard and the other is soft - people's views are easy to change, but the laws of physics and mathematics are immutable.

03
How miners use financial tools to deal with uncertainty

Question: Bitcoin is a very niche product, and its volatility is still very high. How can miners or mine owners deal with the high volatility risk of Bitcoin? Do you have any suggestions on options or other methods?

Xu Zhe: Regarding using options to manage Bitcoin price risks, I have always done this and have been doing this for more than half a year.

We can think of mining pools as producers. We often do this in traditional finance. Copper mines, aluminum mines, nickel mines, and even crude oil fields all use options when managing price risks. For producers, they generally use the method of selling call options to increase their profits.

For example, for crude oil, if the production cost of the oil field is $30 per barrel, if the current price is above $35, he may short a $40 put option. If the price does not reach $40 per barrel, the option fee is free income, and if it reaches $40, it will be delivered at a price of 40.

If the price of crude oil drops sharply now, to only about 20 dollars a barrel, the 40-dollar options he sold at the beginning will all be his income. This amount of money will be a lot if accumulated over time.

I transplanted this idea to Bitcoin mining. I also bought a batch of mining machines and put them in a friend's mining pool, and then I took some short positions in call options. In the end, I found that after deducting the electricity bill, the income from options was higher than the income from mining machines, so I was satisfied with my safety point.

Then my friends from the mining pool told me if I could promote this service to other miners so that they could also enjoy the extra benefits. I agreed. Later, Bitcoin rose all the way to 11,000. Since I was shorting, when Bitcoin rose, my options and futures accounts were floating losses. Overall, if denominated in US dollars, the miners' income is much better than not hedging. However, the miners were not satisfied, because they believed in the halving market and believed that the price of Bitcoin would definitely soar. Therefore, many people later said, "Let's not do this anymore, it will affect my wealth." Later, some miners withdrew their short positions, and after a round of Bitcoin plunge, it was difficult for miners to pay their electricity bills.

Therefore, I believe that as an investor in heavy assets, miners should not ignore the risks too much.

This is what I have always said: If you want to buy some Bitcoin for long-term investment, you can ignore the price fluctuations, as long as we don’t have leverage, we won’t get liquidated. However, as a role with a relatively heavy fixed investment, miners have cash flow expenses all the time, and electricity costs are denominated in legal currency, so it is necessary to manage the volatility risk of BTC against legal currency.

The reason why mining is profitable is that it is exchanged for the risk of fixed investment that is difficult to withdraw. Mining does not generate income out of thin air, it has a compensatory effect. Any enterprise with heavy assets as a business model has the need for liquidity risk management. Many miners do not have this awareness. They are simply optimistic about Bitcoin, and mining can bring income from Bitcoin, so they enter the market, but they do not manage liquidity risks. This is wrong.

04
Re-understanding the halving event

Question: 2020 may be a year that witnesses history. What does Mr. Xu Zhe think about the halving market?

Xu Zhe: Halving does not cancel the supply of Bitcoin. Halving only means that the number of mining rewards for each block is halved, but the supply of Bitcoin is still growing. It is not scientific to say that the price of Bitcoin will go up just because the supply growth rate of Bitcoin has slowed down due to halving. We need to look at supply and demand. If the demand has not increased, and the supply is still increasing, but the growth rate of supply has slowed down, then you say that this thing will definitely go up, which is definitely unreasonable.

You can’t assume that the price will definitely rise this time just because the price rose after the previous halvings. This is also unscientific. It is also not rational to put your financial future on such an inference.

Looking at the future value trend of Bitcoin, from the perspective of supply and demand, we now know that its supply growth rate is slowing down, but it is still continuously supplied, and then we need to look at its demand side, which is more important. Therefore, we still have to return to the supply and demand of Bitcoin.

The halving of Bitcoin means that the supply growth rate is slowing down. Has the demand for Bitcoin increased? It depends on who is using Bitcoin. Speculation does not generate real demand. If there is a long and a short futures contract, there is no increase and no real demand. So some things may increase liquidity and trading volume, but they cannot change the real supply and demand relationship.

We still need to see who is using Bitcoin? Who needs Bitcoin? We bought so many machines for mining, with real money, and then used real money to buy electricity to maintain the computing power system, so that it can run, so that this accounting system can be used. So, who is using this accounting system? From my observation, there are indeed people who use this accounting system, that is, the group of people left behind by traditional finance: one is the group of people who don’t want to be known by the government, and the other is the normal transactions of those countries kicked out of the US dollar system.

Iranians do use cryptocurrencies to settle cross-border trade in China. They don’t do weird business, they just trade daily necessities. They do use cryptocurrencies to settle. This is their real need. But unfortunately, under the epidemic, all countries are facing the problem of economic recession.

The price of Bitcoin has fallen from five figures to six or seven thousand. One of the reasons is real, that is, the total amount of trade settled with Bitcoin is also declining. This is essentially the Fisher formula. We can work it out backwards, that is, the total amount of money multiplied by the flow rate is equal to the price of the currency settled multiplied by the total amount. When the supply of money has not changed significantly, the number and total value of goods used for settlement are declining, and the flow rate has not changed much, the total market value of our currency will be affected, that is, weakened. Therefore, we can only say that our supply has slowed down, and the supply growth rate has indeed slowed down, but it does not mean that Bitcoin will skyrocket, so everyone must make it clear.

I just mentioned mining. I majored in computer science, and originally 7 nanometers was the limit, because if it goes any smaller, it will be affected by quantum properties. The circuit is already so small that a single electron passes through it, and there will be uncertainty. TSMC said they are working on 5 nanometers, but it is hard to say for sure. Don't be too confident that 7 nanometers is the limit. What if someone develops a smaller nanometer?

There is also a problem that is not just about making the chip smaller. Back then, we all thought that integrated circuits could only be made smaller and smaller. When they were made smaller and smaller, several key technologies came out to improve the computing power of chips, including changing several instruction sets and some CPU-level optimizations. There may be multiple ways to improve efficiency, and we cannot only consider it from this perspective. Of course, the properties of quantum are very rigid, and there is no way to surpass this level.

As for the mining algorithm and reward logic, market-oriented mining will definitely not be without benefits, but the benefits of mining will definitely converge. The halving does not actually change this dynamic, so when Satoshi Nakamoto designed this reward system, he had an understanding of the market.

If mining is not profitable, some miners will gradually quit. When the mining machines quit and the difficulty of mining decreases, the miners will have profits. However, if the mining profits are very high, it will cause an influx of funds. Once the influx of funds occurs, the mining profits will disappear. Whether it is halved or not, or even if it is suddenly reduced to 1/4 next month, the dynamic balance of the mining industry still exists. Therefore, the design of this system was not to make miners rich, nor to make mining useless. The design of this system is to allow mining to maintain the security of Bitcoin. This is the purpose of the design, and it has indeed been achieved.

For all Bitcoin investors, it is to lower expectations and not imagine the halving as a savior or a guaranteed opportunity to make a fortune. For miners, since they have chosen to operate with heavy assets, cash flow management and risk management are of top priority. This is a matter that determines the lives of miners.

It is not about choosing whether to hedge or not, and then immediately studying how to hedge. After so many years, I am actually very surprised that no one in the cryptocurrency circle has done this. At the beginning, I saw that miners were basically in a naked state, buying mining machines, connecting electricity, and then waiting for the price of coins to rise and make a fortune - this is the naked state, and I was very surprised.

There are also people speculating in cryptocurrencies, pushing leverage to this level so crazily. Sometimes in the crypto world, risk-free arbitrage can yield very high returns, which I am quite surprised about. Look at the premium of Bitcoin futures and the current price of Bitcoin. In fact, if I buy Bitcoin spot and then short Bitcoin futures, the risk-free return I can get in USD is much higher than the risk-free interest rate of the US dollar in the market.

This is considered impossible in finance, but it happened. What does this prove? It proves that the enthusiasm and irrationality of investors in the Bitcoin market far exceeds that of any other financial market in the world. Therefore, this is what everyone should pay attention to, that is, Bitcoin is a good thing, and as the demand for clearing outside the US dollar trading system grows, its value continues to grow.

I also want to refute a view that the rise of Bitcoin is entirely a conspiracy or manipulation by the market makers, and it is a scam. No one can be patient enough for the market makers to manipulate this matter for more than ten years. This thing has gone from less than one dollar to a few cents, or even no cent, to six or seven thousand dollars now. No market maker can tolerate you in ten years.

Market makers do exist, but they only make money from irrational people during the trading period. They are not the fundamental reason why Bitcoin can become the best performing asset within ten years.

Therefore, everyone should be more rational. As a non-asset-heavy, ordinary Bitcoin investor, you should focus on its long-term value and study the clearing of all non-US dollar banking systems in the world. How to evaluate the total demand? Is the market in an irrational frenzy?

For miners, they have chosen the heavy asset approach to obtain a certain profit margin. You must know that you are different from ordinary investors. Your liquidity risk management is a fatal thing for you. You are not able to attack or defend, and it is difficult for you to leave the market. You must stay in it. Your mining machine has become a fixed asset investment.

Also, don’t think that mining is something that will definitely make you rich, because the mining system itself is designed to be used in a dynamic balance of the market - mining is definitely profitable, but it does not mean that you will have profits at any time. At the same time, mining will not allow your profits to grow indefinitely, it will adjust dynamically.

Don't be pessimistic about the halving, as if mining will cease after the halving. This is not the case. Because the design of this mechanism is a dynamic balance, even if the halving continues, this industry will often still have profit margins, and there will not be much profit margins, because its entry threshold is not high. If you buy a mining machine and host it in a mining farm, and then join a mining pool, you can participate in it, so it is a very market-oriented thing. It is not like the Federal Reserve, which only provides direct liquidity injection and currency creation to primary dealers and their member banks and shareholder banks. Ordinary people like us cannot participate in the process of minting US dollars, but Bitcoin is an open system that everyone can participate in, which means that it will definitely reach the market cost.

Miners should not be too enthusiastic or too pessimistic and should do a good job of risk management.

Friends who invest in Bitcoin, including long-term investors, should not be too optimistic or too pessimistic. Don’t think that the halving is the savior when Bitcoin rises, and don’t think that it’s over if it falls to 3,800 and your faith is shattered. If you keep wandering between ecstasy and shattered faith, your wealth will be robbed back and forth.

We should look at the halving calmly and objectively. Without the halving, the total upper limit of Bitcoin cannot be controlled. It relies on continuous halving to converge the upper limit to the limit of the sum of a geometric series.

Therefore, halving is a very common and normal thing, and its significance should not be exaggerated. This is my view on halving.

Question: Regarding the halving, do you have any judgment on the market situation after the halving?

Xu Zhe: There are many factors that affect the future price of Bitcoin. In the long run, it depends on the total amount of settlement in the non-US dollar currency system. I am optimistic, because judging from the recent situation, the reverse globalization has inevitably begun. Once the US-led globalization goes in the opposite direction, the demand for global settlement in the non-US dollar system will surge in the future. However, because the epidemic has also greatly changed the direction of human history, the probability of the human economy heading for a great depression in the future is also very high. The two offset each other, and it is difficult to judge which one is stronger now.

In general, first of all, the US dollar system is now facing a big challenge. The Federal Reserve's balance sheet has suddenly increased from 4 trillion US dollars to 6 trillion US dollars. It is similar to the original supply of 21 million Bitcoins, but suddenly it is said that 30 million Bitcoins will be available. This is a big problem.

Another thing is that the total amount of US debt has skyrocketed. After the end of the Bretton Woods system, the current US dollar monetary system has only been in place for 50 years. 50 years is actually quite short. Many people criticize Bitcoin, saying that it is not like legal tender in this way or that way, so it is not a currency. This is absurd. Because the current monetary system has actually only been running for 50 years, and it has not been running very well, so the system is now facing a big challenge.

Then even if there is no problem with this system, non-dollar forces are also growing, which means that the anti-globalization that Trump has led has inevitably begun, and this epidemic has actually accelerated it.

If you are paying attention to international current affairs, Trump has clearly stated that during this epidemic, medicines, ventilators, masks and other medical supplies, including raw materials for medicines, all rely on made in China. This just proves how wrong it was to allow China to join the WTO global supply chain in the past. Therefore, the world needs to de-sinicize and de-globalize. This is a very obvious trend. Moreover, the United States and other countries have already started to do so.

From both perspectives, the clearing system under the dollar-dominated system is not cracked, but has collapsed by half, so this may be an opportunity for Bitcoin. However, Bitcoin is only one of the options for global non-dollar currency clearing. Among so many options in the future, it is difficult to determine that Bitcoin will definitely win. Personally, I am betting on the long side.

Bitcoin has a bright future in asset allocation, and I think there is nothing wrong with it. But if you ask me to guarantee that "Bitcoin will definitely replace the current currency trading system", I don't have such a strong belief. This is the truth. Therefore, the future price of Bitcoin depends on multiple factors.

From the perspective of the general trend, now may be an era where the blue sky has died and the yellow sky should be established. However, will the last laugh be the Yellow Turban Army or Sima Yi? Don't be too confident. Everyone should be cautious in asset allocation. Bitcoin is a very promising candidate, but you say it will definitely be the king in the future, not necessarily!

In fact, when Bitcoin came out, it was groundbreaking. No one had ever thought of using this method to settle currencies. There is no guarantee that in the next few years, another genius will come up with a better method than Bitcoin. This is unpredictable. Because human development is getting faster and faster, it is very likely that a better settlement system than Bitcoin that does not rely on a central counterparty system will suddenly appear in the future.

We can’t rule out the possibility, and this is how I see the future price of Bitcoin.

Risk warning: The content of this article is only the personal opinion of the guest, does not represent the views or position of Zhikuang University, and does not constitute any investment opinion or suggestion.