Bitcoin Breaks New High of $110,000: Is It Too Late for Value Investment to Get on Board?

The price of Bitcoin has reached a new high, breaking through the $110,000 barrier, sparking heated discussions in the market. For those investors who were previously hesitant, have they now missed the opportunity to get on board? Behind this question lies a deeper discussion: is there really an opportunity for "value investing" in an asset as volatile as Bitcoin?

Looking back at the history of Bitcoin, we can see that it has experienced multiple deep corrections:

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

However, after each "crash", Bitcoin has achieved an amazing rebound. Behind this extreme price volatility lies a huge asymmetrical investment opportunity.

The sources of asymmetric opportunities in Bitcoin mainly come from three points:

1. Deep cycles and extreme emotions lead to a serious deviation of price from value.
2. Price fluctuations are severe, but the probability of system failure is extremely low.
3. Intrinsic value exists but is often overlooked, leading to an "oversold" state.

So, is Bitcoin really suitable for value investing? Traditional value investing emphasizes margin of safety and discounted cash flows, while Bitcoin has no board of directors, dividends, or earnings. However, if we return to the essence of value investing - buying and holding at a price below intrinsic value - then Bitcoin may embody the concept of "value" more purely than many stocks.

We can explore the intrinsic value of Bitcoin from the two dimensions of supply and demand:

Supply Side: Bitcoin achieves a verifiable deflationary model through hard-coded scarcity and the halving mechanism. The stock-to-flow ratio model (S2F) is based on this logic.

Demand side: The value of Bitcoin largely comes from its network effect. According to Metcalfe's Law, the value of a network is proportional to the square of the number of users. Indicators such as the number of active addresses and the number of non-zero balance addresses can reflect this.

By combining both supply and demand sides, we can construct a robust valuation framework: when S2F indicates long-term scarcity and user activity continues to rise, the mismatch between demand and supply will amplify asymmetry.

The essence of value investing is to find a structure with limited risk but significant potential returns in the gap between price and value. It is not just about "buying cheap", but rather a mindset - to intervene when emotions and fundamentals are severely diverging, assess long-term value, and buy when the price is far below the value.

From this perspective, the high volatility of Bitcoin creates opportunities for value investors. Its panic is not a risk, but a mispricing by the market; its asymmetry is not gambling, but a rare opportunity to reprice undervalued assets.

Overall, Bitcoin provides us with a perspective to rethink value and risk. True security is not about avoiding volatility, but about understanding it and seeing the hidden value foundation when everyone is fleeing. In Bitcoin investment:

• Scarcity is the bottom line
• The network is the ceiling
• Volatility is an opportunity
• Time is leverage

Although you may not be able to perfectly time the market, you can navigate cycles by buying misunderstood value at reasonable prices. This does not require you to be smarter than others, but rather to learn to think in different dimensions and believe in the power of time.

Those who bet in the depths of irrationality are often the most rational. And time is the most loyal executor of asymmetry.