Author : @ Web3_Mario
Abstract : First of all, I apologize for the delay last week. After briefly studying Clanker and other AI Agents, I found them very interesting and spent some time developing some frame gadgets. After evaluating the development and potential cold start costs, I think it may be the norm for most small and medium-sized entrepreneurs struggling in the Web3 industry to quickly chase market hot spots. I also hope that everyone will understand and continue to support. Getting back to the point, this week I hope to discuss with you a point of view that I have been thinking about recently. Of course, I think this can also explain the recent market fluctuations. That is, after the BTC price breaks through a new high, how to continue to capture incremental value. My point of view is that the focus should be on observing whether BTC can take over AI and become the core of driving economic growth in the new political and economic cycle ushered in by the United States under Trump's administration. The game here has already started with the wealth effect of MicroStrategy, but the whole process is bound to still face many challenges.
As MicroStrategy’s wealth effect unfolds, the market has begun to speculate whether more listed companies will choose to allocate BTC to achieve growth.
We know that the crypto market was volatile last week, with BTC prices fluctuating widely between $94,000 and $101,000. There are two core reasons, which we will briefly sort out here.
First of all, it can be traced back to December 10, when Microsoft formally rejected the Bitcoin Fiscal Proposal proposed by the National Center for Public Policy Research at its annual shareholders' meeting. In the proposal, the think tank suggested that Microsoft invest 1% of its total assets in Bitcoin as a potential means of hedging against inflation. Prior to this, MicroStrategy's founder Saylor also publicly announced through X that he was the FEP representative of NCPPR and gave a 3-minute public online presentation, so the market had some hope for the proposal, although the board of directors had already clearly recommended rejecting the proposal.
Let's talk a little more about the so-called National Center for Public Policy Research in the United States. We know that think tanks are composed of industry experts and are generally funded by governments, political parties or commercial companies. Most think tanks are non-profit organizations, not official institutions. This type of operation is tax-free in countries such as the United States and Canada. Usually, the opinions output by think tanks need to serve the relevant interests of the sponsors behind them. The NCPPR, founded in 1982 and headquartered in Washington, DC, has a certain influence among conservative think tanks, especially in supporting the free market, opposing excessive government intervention, and promoting corporate responsibility, but its overall influence is relatively limited and is smaller than some larger think tanks (such as the Heritage Foundation or the Cato Institute).
The think tank has been criticized for its stance on climate change, corporate social responsibility and other issues, especially its suspected funding sources with interests in the fossil fuel industry, which has limited NCPPR's policy advocacy. Progressives often accuse it of being a "spokesperson for interest groups", which has weakened its influence in the broader political spectrum. In recent years, NCPPR has frequently proposed at shareholders' meetings of various listed companies through the FEP (Free Enterprise Project) project, questioning the policies of large companies on right-wing issues such as racial diversity, gender equality and social justice. For example, for companies such as JPMorgan Chase, they submitted proposals opposing mandatory racial and gender quotas, arguing that these policies will lead to "reverse discrimination" and harm corporate performance. For companies such as Disney and Amazon, they questioned that companies are too catering to progressive issues, and advocated that companies should focus on profits rather than "pleasing minorities." With Trump's inauguration and his support for cryptocurrency policies, the organization immediately promoted Bitcoin adoption to major listed companies through FEP, including giants such as Amazon in addition to Microsoft.
With the formal rejection of the proposal, the price of BTC once fell to $94,000, and then quickly pulled back. From the degree of price fluctuations caused by this incident, it is not difficult to observe that the current market is actually in a state of anxiety, and the point of anxiety is what the new source of growth will be after the market value of BTC breaks through the historical high. And we have seen from some recent signs that some key leaders in the crypto world are choosing to use MicroStrategy's wealth effect to promote the financial strategy of allocating BTC in the balance sheet to more listed companies, in order to achieve the effect of fighting inflation and performance growth, so as to make BTC more adopted. Then let's look forward to whether this strategy can succeed.
As a substitute for gold, BTC still has a long way to go to become a global value storage target in a broad sense, and it is not easy to succeed in the short term.
First, let's analyze the first attraction of this strategy, whether the effect of allocating BTC to fight inflation is valid in the short term. In fact, when it comes to fighting inflation, the first thing that comes to mind is gold, and Powell also mentioned the view that Bitcoin is a competitor to gold when answering reporters' questions at the beginning of the month. So can Bitcoin become a substitute for gold and a global value storage target in a broad sense?
In fact, this question has always been the focus of discussion on the value of Bitcoin. Many people have made many arguments based on the similarity of the original attributes of assets, which I will not elaborate on here. What I want to point out is how long it will take to realize this vision, or whether this vision supports the current valuation of BTC. My answer is that it will not be easy to achieve in the foreseeable four years, or in the short and medium term, so it is not very attractive to use this as a promotion strategy in the short term.
Let’s look at how gold has developed to its current status as a store of value. As a precious metal, gold has always been regarded as a valuable item by all civilizations and is universal. The core reasons are as follows:
- Its obvious luster and excellent ductility make it valuable as an important decorative item.
- The lower output value makes gold scarce, thus giving it financial attributes, making it easy to be chosen as a class symbol in a society after class division.
- The wide distribution of gold around the world and its low mining difficulty have freed civilizations from being restricted by factors such as culture and productivity development. Therefore, the dissemination of value culture is from the bottom up and has a wider range.
With these three attributes, gold has universal value and plays the role of currency in human civilization, and the entire development process makes the intrinsic value of gold stable. Therefore, we can see that even if sovereign currencies abandon the gold standard and modern financial instruments give it more financial attributes, the price of gold basically follows the law of long-term growth and can better reflect the real purchasing power of currency.
However, it is unrealistic for Bitcoin to replace gold in the short term. The core reason is that its value proposition, as a cultural viewpoint, will inevitably shrink rather than expand in the short and medium term for two reasons:
- The value proposition of Bitcoin is top-down: as a virtual electronic commodity, the mining of Bitcoin needs to rely on computing power competition. There are two determining factors here, electricity and computing efficiency. First of all, the cost of electricity actually reflects the degree of industrialization of a country, and the cleanliness of the energy behind the so-called electricity determines the future development potential. And computing efficiency needs to rely on chip technology. To put it bluntly, it is no longer possible to obtain BTC simply by relying on a personal PC. With the development of technology, its distribution is bound to be concentrated in a few regions, and undeveloped countries with a large population distribution in the world that do not have competitive advantages will not be easy to obtain. This has an adverse impact on the efficiency of the dissemination of this value proposition, because when you cannot control a certain resource, you can only become the object of its exploitation. This is why stablecoins will compete with the sovereign currencies of some countries with unstable exchange rates. From the perspective of national interests, this naturally cannot be recognized, so it is difficult to see undeveloped countries encouraging this value proposition.
- The decline of globalization and the challenge of the dollar hegemony: We know that with the return of Trump, the isolationism he promotes will deal a relatively large blow to globalization. The most direct impact will be the influence of the dollar as the global trade settlement target. This has caused the dollar's hegemony to receive certain challenges. This trend is the so-called "de-dollarization". The whole process will hit the demand for the dollar worldwide in the short term. As a currency mainly denominated in US dollars, Bitcoin will inevitably increase its acquisition cost in the whole process, which will increase the difficulty of promoting value propositions.
Of course, the above two points only discuss the development challenges of this trend in the short and medium term from a macro perspective, and do not affect the narrative of Bitcoin as a substitute for gold in the long term. The most direct impact of these two points in the short and medium term is reflected in the high volatility of its price, because the rapid increase in its value in the short term is mainly based on the improvement of speculative value rather than the increase in the influence of its value proposition. Therefore, its price fluctuations are bound to be more in line with speculative products and have high volatility properties. Of course, due to its scarcity, if the over-issuance of the US dollar continues to be serious, as the purchasing power of the US dollar decreases, all US dollar-denominated commodities can be said to have a certain degree of inflation resistance, just like the luxury goods market in previous years. However, this inflation resistance is not enough to make Bitcoin more competitive than the value storage effect brought by gold.
Therefore, I believe that using inflation prevention as the focus of short-term marketing is not enough to attract "professional" customers to choose Bitcoin instead of gold, because their balance sheets will face extremely high volatility, which cannot be changed in the short term. Therefore, it is highly likely that in the next period of time, large listed companies with stable business development will not aggressively choose to allocate Bitcoin to cope with inflation.
BTC takes over from AI and becomes the core driver of economic growth in the new political and economic cycle in the United States under Trump's administration
Next, let’s discuss the second point, which is whether some listed companies with weak growth can achieve overall revenue growth by allocating BTC, thereby driving up their market value. I think this financial strategy can be more widely recognized. This is the core of judging whether BTC can gain new value growth in the short and medium term in the future. And I think this is easy to achieve in the short term. In this process, BTC will take over from AI and become the core driving economic growth in the new political and economic cycle in the United States under Trump’s administration.
In the previous analysis, we have clearly analyzed the successful strategy of MicroStrategy, which is to convert the appreciation of BTC into the growth of company performance revenue, thereby boosting the company's market value. This is indeed very attractive to some companies with weak growth. After all, it is more comfortable to lie down and embrace a trend than to burn yourself to fight for a career. You can see that many companies are dying, and their main business revenue is declining rapidly. In the end, they choose to use this strategy to allocate the remaining output value to reserve some opportunities for themselves.
With the return of Trump, his internal government cuts will have a significant impact on the US economic structure. Let's look at a piece of data, the Buffett indicator of US stocks. The so-called Buffett indicator, the stock god Buffett mentioned in a special article in Forbes magazine in December 2001: the ratio of the total market value of the stock market to GDP can be used to judge whether the overall stock market is too high or too low, so it is generally called the Buffett indicator. This indicator can measure whether the current financial market reasonably reflects the fundamentals. Buffett's theoretical index indicates that 75% to 90% is a reasonable range, and more than 120% indicates that the stock market is overvalued.
We can see that the current Buffett index of the US stock market has exceeded 200%, which shows that the US stock market is extremely overvalued. In the past two years, the core driving force that has pushed the US stock market to avoid a correction due to monetary policy tightening is the AI sector represented by Nvidia. However, with the slowdown in revenue growth in Nvidia's third-quarter financial report, and according to its performance guidance, revenue in the next fiscal quarter will slow further. The slowdown in growth is obviously not enough to support such a high price-to-earnings ratio, so there is no doubt that the US stock market will be under pressure for some time to come.
As for Trump, the specific impact of his economic policies is undoubtedly full of uncertainty in the current environment. For example, whether the tariff war will trigger internal inflation, whether the reduction of government spending will affect the profits of domestic enterprises and cause the unemployment rate to rise, and whether the reduction of corporate income tax will further increase the already serious fiscal deficit problem. In addition, Trump seems to be more determined to rebuild the ethics and morality in the United States. The promotion of some culturally sensitive issues, such as strikes, demonstrations, and labor shortages caused by the reduction of illegal immigrants, will cast a shadow on economic development.
If economic problems are triggered, especially a stock market crash in the current highly financialized United States, it will have a serious impact on its support rate, and thus affect the effectiveness of its internal reforms. Therefore, it is very cost-effective to implant a core that has been mastered and drives economic growth into the US stock market, and I think Bitcoin is very suitable for this core.
We know that the recent "Trump deal" in the crypto world has fully demonstrated its influence on the industry, and most of the companies supported by Trump are local traditional industrial companies, not technology companies, so their businesses did not directly benefit from the entire AI wave in the last cycle. If things develop as we described, the situation will be different. Imagine if local small and medium-sized enterprises in the United States choose to allocate a certain amount of Bitcoin reserves in their balance sheets, even if their main business is affected by some external factors, Trump can achieve the effect of stabilizing the stock market to a certain extent by advocating some crypto-friendly policies to drive prices. Moreover, this targeted stimulus is extremely efficient and can even bypass the Federal Reserve's monetary policy. It is not easily constrained by the establishment. Therefore, in the next new US political and economic cycle, this strategy is a good choice for the Trump team and many small and medium-sized enterprises in the United States, and its development process is worth paying attention to.
