Source: Daoshuo Blockchain

In the comments to our articles, readers often ask whether Bitcoin’s four-year bull-bear cycle will be broken?

In this regard, I think there are two references:

One is the price fluctuation pattern of gold, and the other is the original four-year cycle of Bitcoin itself.

Why use gold as a reference?

Because the "digital gold" characteristics of Bitcoin are now becoming more and more obvious.

But if you refer to gold, there is a big difference between the two. ------------- Bitcoin's output is halved every four years, which gold does not have. , so I feel that the price trend of Bitcoin is not likely to be like gold.

The remaining reference is its own halving cycle. In this regard, past experience seems to have been repeating this pattern. But I always feel that this rule seems to have no theoretical basis, so I gradually think that this rule may be broken in the future.

That said, I'm not sure about it either.

In fact, not only for Bitcoin, but also for various assets (such as stocks), I have been wondering whether they have a quantifiable bull-bear cycle?

In the process of reading the books of Buffett and Munger this year, one of their views has been deeply engraved in my mind:

They will buy stocks whose prices are seriously affected. Undervalued, but valuable asset. Because they believe that the market will one day bring the severely undervalued price back to a position that matches the value.

I often share this point of view in articles.

But every time I read two old gentlemen expounding this point of view, I always have a question:

How long will this "someday" last?

In the book of another senior master, Mr. Fisher, his view is not to guess how long this "one day" will be, but as long as he thinks the price is undervalued or the stock is still It has a lot of potential and he will always have it in his hands.

His holding of several stocks for decades reflects his thinking.

However, this still does not answer the questions in my mind. I still hope to find a quantitative answer.

Fortunately, I recently read the answer given by my senior Duan Yongping to this question.

He said the following, to the effect:

As for how long it takes for prices to return to value, someone told him (Duan Yongping) that Buffett once said that it takes four years. He (Buffett) hasn't seen it for more than 4 years. His (Duan Yongping) experience does not exceed 3 years. He (Duan Yongping) believes that a valuable stock will reflect its actual value in less than 3 years, while companies with major problems will return to their actual value in 3-4 years.

This passage gives a very clear answer.

According to my understanding of this passage:

Duan Yongping believes that when the price of a good stock is seriously undervalued, it should not exceed 3-4 years, the stock price will rise to close to value; when the price of a bad stock is seriously overvalued, no more than 3-4 years, its price will be brought back to its original shape.

As an experienced senior investor, this answer is worthy of our great attention and reference.

"A stone from another mountain can be used to attack jade"------When I saw this passage, I immediately thought about crypto assets. Is this law worth observing, referencing and learning from?

I thought about it carefully. If we divide crypto assets into two categories: one is a pure value storage asset like Bitcoin, and the other is an asset with use value and services like Ethereum. In terms of valuable assets, this rule is worth noting for the second category.

Why?

Because I believe that future encryption projects will definitely develop in the direction of providing real value and services, so project tokens will definitely be increasingly empowered by the value and services provided by the project (although today This is still very lacking).

This indicates that project tokens will become equitized.

So it is worth observing whether the stock rules summarized by senior Duan Yongping are applicable to the second type of crypto assets.

So does this rule also apply to the first type of assets such as Bitcoin?

I think it is also of great reference value, because in the future it is very likely that the rise and fall of Bitcoin prices will be increasingly driven by the entire encryption ecosystem.

For the entire encryption ecosystem, more and more assets will be in the first category in the future.

In other words, whenever a Bitcoin halving occurs, if the overall price of crypto assets is seriously overvalued, we can observe whether their prices will fall back in no more than 3-4 years. ; And when their falling prices become seriously undervalued, we can observe whether their prices will rise in no more than 3-4 years (that is, during the next halving cycle).

Therefore, in the next market situation (until next year), if the price of Bitcoin becomes seriously overvalued, then I estimate that the four-year cycle will continue at least once more.