Bitcoin Breaks $110,000: Is it Still Time for Value Investors to Get on Board?

The price of Bitcoin has once again reached a new high, breaking through the $110,000 mark, sparking heated discussions in the market. For investors who missed the previous opportunities, is it too late to get on board now? Behind this question lies a deeper consideration: Is there an opportunity for value investing in such a highly volatile asset like Bitcoin?

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

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

However, every time there is a "collapse", Bitcoin is able to rise again and create new highs. The reasons behind this phenomenon are mainly three:

1. Deep cycles and extreme emotions lead to price deviations

Bitcoin is the only global free market open 24/7, without circuit breakers and regulatory interventions. This makes it easier to amplify human emotional fluctuations compared to other assets, leading to prices often deviating from their true value.

2. Extreme price volatility, but the probability of "going to zero" is extremely low.

Although the price of Bitcoin fluctuates wildly, its underlying system has been running stably for over a decade with almost no downtime. Regardless of the crisis encountered, the Bitcoin blockchain consistently generates a new block every 10 minutes. This technological resilience provides it with strong survival capabilities.

3. Intrinsic value exists but is often overlooked, leading to "overselling".

Many people believe that Bitcoin has no intrinsic value, and therefore its price can fall indefinitely. However, in fact, Bitcoin has a quantifiable value system:

• Algorithm scarcity: Total supply limited to 21 million coins.
• A powerful proof of work network protection
• Significant network effect: over 50 million non-zero balance addresses
• Gained recognition from mainstream institutions and some countries.

These features constitute the intrinsic value foundation of Bitcoin, but are often overlooked by the market under panic sentiment.

So, can Bitcoin become an object of value investment? The key lies in how to define "value".

If we go beyond traditional financial metrics and return to the essence of value investing - buying at prices below intrinsic value and holding patiently - then Bitcoin is not only suitable for value investing, but may even embody the concept of "value" more purely than many stocks.

The intrinsic value of Bitcoin mainly comes from two dimensions:

1. Supply Side: Scarcity and Programmatic Deflation

The core value proposition of Bitcoin lies in its verifiable scarcity. Through a fixed total supply and a halving mechanism every four years, Bitcoin achieves programmatic deflation. The stock-to-flow ratio model, based on this characteristic, attempts to predict the long-term price trend of Bitcoin.

2. Demand Side: Network Effects and User Base

According to Metcalfe's Law, the value of a network is proportional to the square of the number of users. The user base of Bitcoin continues to expand, with over 50 million non-zero balance addresses by the end of 2024. This network effect is a key driver of the growth in Bitcoin's value.

By combining both supply and demand sides, we can construct a valuation framework for Bitcoin:

• When the S2F model shows long-term scarcity, and the number of active users/non-zero addresses continues to rise, the mismatch between demand and supply amplifies the asymmetry of value growth.
• Conversely, if user activity declines, even if scarcity is fixed, price and value may fall in tandem.

The essence of value investing is not just "buying cheap", but finding structures with limited risk and significant potential returns in the gap between price and value. It requires investors to remain calm during market panic and to place bets when others are exiting.

From this perspective, the high volatility of Bitcoin is not a barrier, but rather a gift. It creates a rare opportunity for patient value investors to reprice undervalued assets.

True value investors do not shout in a bull market, but quietly layout in the calm beneath the storm. They believe:

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

Although perfectly timing the bottom is nearly impossible, by understanding the fundamental value of Bitcoin, investors can buy misunderstood value at reasonable prices and patiently wait for the market to reprice.

This game ultimately belongs to those who can read the order behind the chaos and the truth behind the crash. Because the world does not reward emotions; the world rewards understanding. And understanding will ultimately be proven right by time.