Today, Bitcoin’s price has once again surpassed the $90,000 mark, igniting market enthusiasm and prompting exclamations of “The bull is back” across social media platforms. However, for investors who hesitated at the $80,000 level and missed the opportunity to enter, this moment feels more like an internal interrogation: Am I late again? Should I decisively buy during a pullback? Will there be another chance in the future?
This brings us to the crux of our discussion: In an asset like Bitcoin, renowned for its extreme volatility, does a “value investing” perspective truly exist? Can a strategy seemingly at odds with its “high-risk, high-volatility” nature capture an “asymmetric” opportunity in this tumultuous game?
In the investment world, asymmetry refers to scenarios where the potential gains far outweigh the potential losses, or vice versa. At first glance, this doesn’t seem characteristic of Bitcoin. After all, most people’s impression of Bitcoin is: either get rich overnight or lose everything.
Yet, behind this polarized perception lies an overlooked possibility: during Bitcoin’s cyclical deep downturns, the methodology of value investing might create a highly attractive risk-reward structure.
Looking back at Bitcoin’s history, it has plummeted over 80%, even 90%, from its peaks multiple times. In such moments, the market is shrouded in panic and despair, with capitulatory selling making prices appear to revert to their origins. But for investors with a deep understanding of Bitcoin’s long-term logic, this represents a classic “asymmetry” — risking a limited loss for a potentially immense return.
Such opportunities are not readily available. They test an investor’s cognitive level, emotional control, and long-term holding conviction. This leads to a more fundamental question: Do we have reasons to believe that Bitcoin truly possesses “intrinsic value”? If it does, how should we quantify and understand it, and accordingly formulate our investment strategy?
In the following content, we will embark on this exploratory journey: revealing the deep logic behind Bitcoin’s price fluctuations, clarifying how asymmetry shines during times of “bloodshed,” and contemplating how the principles of value investing can be revitalized in this decentralized era.
However, one thing you should first understand is that in Bitcoin investment, asymmetric opportunities have never been scarce; in fact, there are many.
1. Why Are There So Many Asymmetric Opportunities in Bitcoin?
If you browse Twitter today, you’ll see an overwhelming celebration of the Bitcoin bull market. Prices have once again surged past the $90,000 mark, with many on social media proclaiming, as if the market always belongs to prophets and the fortunate.
But if you look back, you’ll find that the invitation to this feast was actually sent out during the market’s most desperate moments; it’s just that many lacked the courage to open it.
1.1 Historical Asymmetric Opportunities
Bitcoin has never followed a straight upward trajectory; its growth history is a script interwoven with extreme panic and irrational exuberance. Behind each deep downturn lies a highly attractive “asymmetric opportunity” — the maximum loss you bear is limited, while the gains you achieve could be exponential.
Let’s take a time-traveling journey and let the data speak.
2011: -94%, from $33 to $2
This was the first time Bitcoin was “widely seen,” with prices soaring from a few dollars to $33 within half a year. But soon, a crash ensued. Bitcoin’s price plummeted to $2, a drop of 94%.
Imagine the despair: major geek forums were desolate, developers fled, and even core Bitcoin contributors posted doubts about the project’s prospects.
But if you had “gambled once” back then, investing $1,000, when BTC prices surpassed $10,000 years later, you’d be holding $5 million worth of chips.
2013–2015: -86%, Mt.Gox Collapse
At the end of 2013, Bitcoin’s price broke through $1,000 for the first time, attracting global attention. But the good times didn’t last. In early 2014, the world’s largest Bitcoin exchange, Mt.Gox, declared bankruptcy, with 850,000 Bitcoins disappearing from the blockchain.
Overnight, media outlets had a unified stance: “Bitcoin is over.” CNBC, BBC, and The New York Times all reported the Mt.Gox scandal on their front pages. BTC prices fell from $1,160 to $150, a drop of over 86%.
But what happened later? By the end of 2017, the same Bitcoin was priced at $20,000.
2017–2018: -83%, ICO Bubble Burst
The chart above comes from a New York Times report on the crash. The red box highlights a quote from an investor stating that they had lost 70% of their portfolio’s value.
2017 was the “year of nationwide speculation” when Bitcoin entered the public eye. Numerous ICO projects emerged, white papers filled with words like “disruption,” “restructuring,” and “decentralized future,” plunging the entire market into frenzy.
But when the tide receded, Bitcoin fell from its historical high of nearly $20,000 to $3,200, a drop of over 83%. That year, Wall Street analysts sneered, “Blockchain is a joke”; the SEC filed numerous lawsuits; retail investors were liquidated and exited, and forums were silent.
2021–2022: -77%, Industry “Black Swan” Chain Explosions
In 2021, Bitcoin wrote a new myth: the price per coin broke through $69,000, with institutions, funds, countries, and retail investors flocking in.
But just a year later, BTC fell to $15,500. The collapse of Luna, the liquidation of Three Arrows Capital, the explosion of FTX… successive “black swans” toppled the confidence of the entire crypto market like dominoes. The fear and greed index once dropped to 6 (extreme fear zone), and on-chain activity nearly froze.
The chart above is taken from a New York Times article dated May 12, 2022, showing the simultaneous plunge of Bitcoin, Ethereum, and UST.Only now do we realize that behind UST’s collapse was also the “pump-and-dump” maneuver orchestrated by Galaxy Digital with Luna — contributing significantly to the meltdown.
Yet again, by the end of 2023, Bitcoin quietly rose back to $40,000; after ETF approval in 2024, it surged all the way to today’s $90,000.
1.2 Where Do Bitcoin’s Asymmetric Opportunities Come From?
We’ve seen that Bitcoin has repeatedly achieved astonishing rebounds during seemingly catastrophic moments in history. So the question arises — why is this? Why does this high-risk asset, often mocked as a “musical chairs” game, repeatedly rise after collapses? More importantly, why can it provide such strongly asymmetric investment opportunities for patient and knowledgeable investors?
The answer lies in three core mechanisms:
Mechanism One: Deep Cycles + Extreme Emotions Create Pricing Deviations
Bitcoin is the world’s only 24/7 open free market. There’s no circuit breaker mechanism, no market maker protection, and no Federal Reserve backstop. This means it’s more susceptible to amplifying human emotional fluctuations than any other asset.
In bull markets, FOMO (fear of missing out) dominates the market, with retail investors frantically chasing highs, narratives soaring, and valuations severely overdrawing;
In bear markets, FUD (fear, uncertainty, doubt) fills the internet, with cries of “cutting losses” echoing, and prices trampled into the dust.
This cycle of emotional amplification causes Bitcoin to frequently enter states of “prices severely deviating from real values.” And this is precisely the fertile ground where value investors seek asymmetric opportunities.
To sum it up in one sentence: In the short term, the market is a voting machine; in the long term, it is a weighing machine. Bitcoin’s asymmetric opportunities appear in those moments before the weighing machine has been switched on.
Mechanism Two: Extreme Price Volatility, but Extremely Low Probability of Death
If Bitcoin truly were the kind of asset that “could go to zero at any moment,” as often sensationalized in the media, then it would indeed have no investment value. But in reality, it has survived every crisis — and emerged stronger.
- In 2011, after crashing to $2, the Bitcoin network kept operating as usual.
- In 2014, after Mt.Gox collapsed, new exchanges quickly filled the gap, and the number of users kept rising.
- In 2022, after FTX went bankrupt, Bitcoin’s blockchain continued to produce a new block every 10 minutes without interruption.
The underlying infrastructure of Bitcoin has virtually no downtime history. Its system resilience far exceeds what most people understand.
In other words, even if the price halves, and halves again, as long as the technical foundation and network effect of Bitcoin remain, there is no true risk of it going to zero. What we have is a highly attractive structure: limited short-term downside, with open-ended long-term upside.
That is asymmetry.
Mechanism Three: Intrinsic Value Exists But Is Overlooked, Leading to “Oversold” Conditions
Many people believe Bitcoin has no intrinsic value, and therefore its price can fall without limit. This view ignores several key facts:
- Bitcoin has algorithmic scarcity (a hard cap of 21 million coins, enforced by the halving mechanism);
- It is secured by the world’s most powerful proof-of-work (PoW) network, with quantifiable production costs;
- It benefits from strong network effects: over 50 million addresses have non-zero balances, and both transaction volume and hashrate repeatedly break records;
- It has gained recognition from mainstream institutions and even sovereign nations as a “reserve asset” (ETFs, legal tender status, corporate balance sheets).
This leads us to the most controversial yet critical question: Does Bitcoin have intrinsic value — and if so, how can we define, model, and measure it?
1.3 Will Bitcoin Go to Zero?
It is possible — but the probability is extremely low. A certain website has documented 430 times that Bitcoin was declared “dead” by media outlets.
Yet directly beneath that declaration count, there is a small note: If you had bought $100 worth of Bitcoin every time someone declared it dead, your holdings today would be worth more than $96.8 million.
You need to understand this: Bitcoin’s underlying system has operated stably for over a decade with virtually no downtime. Whether it was the collapse of Mt.Gox, the failure of Luna, or the FTX scandal, its blockchain has consistently produced one block every 10 minutes. This kind of technical resilience provides a powerful survival baseline.
Now, you should be able to see that Bitcoin is not a “baseless speculation.” On the contrary, its asymmetric potential stands out precisely because its long-term value logic exists — yet is often severely underestimated by the market’s emotions.
This leads us to the next fundamental question: Can Bitcoin, which has no cash flow, no board of directors, no factories, and no dividend payouts, truly qualify as an object of value investing?
2. Can Bitcoin Be Value Invested?
Bitcoin is infamous for its wild price swings. People constantly sway between extreme greed and extreme fear. So how can an asset like this possibly be suitable for “value investing”?
On one side, we have the classic value investing principles of Benjamin Graham and Warren Buffett — “margin of safety” and “discounted cash flow.” On the other side stands Bitcoin — a digital commodity with no board of directors, no dividends, no earnings, and not even a corporate entity. Within the traditional value investing framework, Bitcoin seems to have no place.
But the real issue is this — how do you define value?
If we look beyond traditional financial statements and dividends, and return to the core essence of value investing — To buy at a price below intrinsic value, and hold until value re-emerges — Then Bitcoin may not only qualify for value investing — it may embody the concept of “value” in an even purer form than many stocks.
Benjamin Graham, the father of value investing, once said: “The essence of investment is not what you buy, but whether you buy it for less than it’s worth.” The image above is an AI-generated fictional portrayal of Graham staring perplexedly at a Bitcoin.
In other words, value investing is not limited to stocks, companies, or conventional assets. As long as something has intrinsic value, and its market price is temporarily lower than that value, it can become a valid target for value investment.
But this raises a more critical question: If we cannot use traditional metrics like P/E or P/B to estimate Bitcoin’s value, where exactly does its intrinsic value come from?
Although Bitcoin has no financial reports like companies do, it is far from valueless. It has a fully analyzable, modelable, and quantifiable system of value. While these “value signals” are not compiled into a quarterly report like a stock, they are just as real — and perhaps even more consistent.
We will now explore Bitcoin’s intrinsic value from two key dimensions: supply and demand.
2.1 Supply Side: Scarcity and the Programmed Deflation Model (Stock-to-Flow)
At the heart of Bitcoin’s value proposition lies its verifiable scarcity.
- Fixed total supply: 21 million coins, hard-coded and unchangeable.
- Halving every four years: Each halving reduces the annual issuance rate by 50%. The last Bitcoin is expected to be mined around the year 2140.
- After the 2024 halving, Bitcoin’s annual inflation rate will drop below 1%, making it scarcer than gold.
The Stock-to-Flow model (S2F), proposed by analyst PlanB, has gained widespread attention for its ability to predict Bitcoin’s price trends across halving cycles. The model is based on the ratio between an asset’s existing stockpile and its annual production rate.
- Stock: The total amount of the asset already in existence.
- Flow: The amount newly produced each year.
- S2F = Stock / Flow
A higher S2F ratio indicates that the asset is relatively scarce, and in theory, the higher the ratio, the greater the value. Gold, for example, has a very high S2F ratio (about 60), which underpins its role as a store of value. Bitcoin’s S2F ratio has steadily increased with each halving:
- 2012 Halving: Price surged from ~$12 to over $1,000 within a year.
- 2016 Halving: Price climbed from ~$600 to nearly $20,000 within 18 months.
- 2020 Halving: Price rose from ~$8,000 to $69,000 over the next 18 months.
You’ll notice the fourth halving, represented by a question mark in the chart — will it follow the same trend? My view is: yes, but the magnitude may taper.
A note about the chart: The left vertical axis uses a logarithmic scale, which helps visualize early-stage trends. A jump from 1 to 10 occupies the same space as a jump from 10 to 100, making exponential growth easier to interpret.
This model draws inspiration from how precious metals like gold and silver are valued. Its logic is:
The higher the S2F ratio, the less inflationary the asset is, and the more value it can theoretically hold.
In May 2020, after the third halving, Bitcoin’s S2F ratio rose to ~56, nearly on par with gold. After the 2024 halving, this ratio has exceeded 100, surpassing gold and making Bitcoin the most scarce monetary asset on Earth — at least by this metric.
The Bitcoin S2F chart is one of the most shared visuals in crypto. On a log-log graph (log of S2F on the x-axis vs. log of price on the y-axis), the data points align surprisingly well along a straight red regression line. This striking fit gave the model near-mythical status in prior cycles.
But of course, no model is perfect. And the S2F model has a key weakness: it only accounts for supply, ignoring the demand side entirely. This may have worked when Bitcoin’s adoption was limited, but since 2020 — when institutional capital, global narratives, and regulatory dynamics entered the scene — demand has become a dominant driver.
So, to form a complete valuation framework, we must now turn to the demand side.
2.2 Demand Side: Network Effects and Metcalfe’s Law
If S2F locks the “supply valve,” then network effects determine how high the “water level” can rise. The most intuitive metric here is on-chain activity and user base expansion.
- As of late 2024, Bitcoin has over 50 million addresses with non-zero balances.
- In February 2025, daily active addresses surged back to ~910,000, hitting a 3-month high.
Using Metcalfe’s Law — which states that the value of a network is roughly proportional to the square of the number of users (V ≈ k × N²) — we understand that:
Doubling the number of active users can quadruple the theoretical network value.
This explains Bitcoin’s tendency to “leapfrog” in value after major adoption events.
(Again, the image of Metcalfe gleefully admiring a Bitcoin is an AI-generated fictional portrayal.)
Three Core Demand Indicators:
- Active addresses: Reflect short-term usage intensity.
- Non-zero addresses: Signal long-term penetration. Despite bear markets, the compound annual growth rate over the past seven years has been about 12%.
- Value-carrying layers: Lightning Network capacity and off-chain payment volume keep climbing, indicating real-world adoption beyond just “HODLing.”
This “N²-driven + sticky user base” model implies two forces:
- Positive feedback loop: More users → deeper transactions → richer ecosystem → more value. This explains why events like ETF launches, cross-border payments, or emerging market integrations often cause nonlinear price spikes.
- Negative feedback risk: If global regulation tightens, new technologies arise (e.g., CBDCs, Layer-2 alternatives), or liquidity dries up, user activity and adoption may shrink — causing value to contract alongside N².
Thus, only by combining S2F (supply) and network effects (demand) can we create a robust valuation framework:
When S2F signals long-term scarcity and active users/non-zero addresses remain in an uptrend, the mismatch between demand and supply amplifies asymmetry.Conversely, if user activity falls — even with fixed scarcity — price and value may fall in tandem.
In other words:Scarcity ensures Bitcoin doesn’t depreciate, but network effect is what allows it to appreciate.
It is especially worth noting that Bitcoin was once dismissed as a “toy for geeks” or a “symbol of speculative bubbles.” But today, its value narrative has quietly undergone a fundamental shift.
Since 2020, MicroStrategy has incorporated Bitcoin into its corporate balance sheet and now holds 538,000 BTC — as shown in the chart above.
I previously discussed this strategic transformation in detail in my article The Bitcoin Dividend.
Following that, global asset management giants like BlackRock and Fidelity launched spot Bitcoin ETFs, introducing billions of dollars in incremental capital. Morgan Stanley and Goldman Sachs began offering Bitcoin investment services to high-net-worth clients. And even countries like El Salvador adopted Bitcoin as legal tender. These changes are not just about capital inflows — they represent an endorsement of legitimacy and institutional consensus.
2.3 Summary
In Bitcoin’s valuation framework, supply and demand are never isolated variables — they intertwine to form the double helix of asymmetric opportunity.
- On one hand, the Stock-to-Flow model, grounded in algorithmic deflation, mathematically outlines how scarcity lifts long-term value.
- On the other, network effects, measured by on-chain data and user growth, reveal Bitcoin’s real-world demand foundation as a digital network.
In this structure, the disconnect between price and value becomes ever more visible — and that is precisely where value investors find their golden window. When the market is gripped by fear, and price falls below the levels implied by comprehensive valuation models, asymmetry quietly opens its door.
3. Is the Essence of Value Investing Simply the Search for Asymmetry?
At its core, value investing is not merely about “buying cheap.” It rests on a more fundamental logic: in the gap between price and value, find a structure where risk is limited but potential reward is significant.
This is where value investing diverges sharply from trend-following, momentum trading, or speculative gambling.
- Trend investing relies on market inertia;
- Momentum trading bets on short-term volatility;
- Value investing requires patience and rationality, stepping in when sentiment diverges drastically from fundamentals, evaluating long-term value, and buying when the price is far below it — then waiting for reality to catch up.
What makes this effective is that it builds a naturally asymmetric structure:The worst outcome is a controlled loss, while the best-case scenario can exceed expectations by multiples.
If we examine value investing more deeply, we’ll find that it is not a set of techniques, but a way of thinking — a structural logic built on probabilities and imbalances.
- Investors analyze “margin of safety” to assess the downside risk.
- They study “intrinsic value” to determine the likelihood and extent of mean reversion.
- They choose to “hold patiently” because asymmetric returns often require time to materialize.
None of this is about making perfect predictions. It’s about constructing a bet where, when you’re right, you win far more than you lose when you’re wrong. That is the very definition of asymmetric investing.
Many people misunderstand value investing as conservative, slow-moving, and low-volatility. In truth, the real essence of value investing is not about earning less and risking less — it’s about using controllable risk to pursue disproportionately large returns.
Whether it’s the early shareholders of Amazon, or the Bitcoin maximalists quietly accumulating during crypto winters, at their core, they are doing the same thing:
When most people underestimate the future of an asset, and its price has been driven into the dirt by emotion, regulation, or misinformation — they move in.
From this perspective:
Value investing is not some outdated strategy of “buy low, collect dividends.” It is the common language of all investors seeking asymmetric return structures.
It emphasizes not just cognitive skill, but also emotional discipline, risk awareness, and above all — faith in time.
It does not require you to be the smartest person in the room. It only requires you to stay calm when others panic, and to place your chips when others walk away.
And so, once you truly grasp the deep connection between value investing and asymmetry, you’ll understand why Bitcoin — despite its unfamiliar form — can be embraced by serious value investors.
Its volatility is not your enemy — it is your gift.Its panic is not your risk — it is market mispricing.Its asymmetry is not a gamble — it is a rare chance to re-price an underappreciated asset.
The real value investor is not shouting in the bull market.They are quietly laying groundwork in the calm beneath the storm.
4. How to Use Asymmetry to Invest in Bitcoin
Once you understand where Bitcoin’s intrinsic value comes from — and recognize that market volatility often creates windows where price falls below value — the next question is: As an ordinary investor, how can you practice value investing with Bitcoin?
Let us first clarify a critical point: Value investing is not about trying to catch the absolute bottom.That’s extremely difficult — if not impossible — to do consistently.The essence of value investing lies in this: Once the price enters a clearly undervalued zone according to your assessment, begin buying in stages, with discipline, and hold patiently until value is realized.
Given Bitcoin’s high volatility, here are a few simple yet effective strategies for value-based participation:
4.1 Dollar-Cost Averaging (DCA)
This is the most basic, and for most people, the most suitable strategy.
DCA means investing a fixed amount of money at regular intervals (e.g., weekly or monthly) to buy Bitcoin — regardless of price fluctuations.
Advantages:
- Smooths out cost basis: You buy fewer BTC when prices are high and more when prices are low. Over time, your average cost per BTC tends to be lower than the market average during an uptrend.
- Emotionally neutral: DCA is a rule-based approach. It protects you from emotionally-driven actions like panic selling or euphoric buying.
- Simple and practical: No complex analysis required. Ideal for investors who don’t have time to monitor the market daily.
I have written a detailed explanation on DCA in the past — if you’re still unsure, I recommend reading that closely.
4.2 Dynamically Adjust Based on Market Sentiment: The Fear & Greed Index
If you want to enhance DCA’s efficiency slightly, you can incorporate market sentiment indicators as a secondary filter.
The Crypto Fear & Greed Index is a widely used metric. It aggregates factors like volatility, trading volume, social media sentiment, Bitcoin dominance, and Google Trends to produce a score between 0 and 100:
- 0–25: Extreme Fear
- 25–45: Fear
- 45–55: Neutral
- 55–75: Greed
- 75–100: Extreme Greed
Value investing emphasizes contrarian thinking — as Warren Buffett famously said:
“Be fearful when others are greedy, and greedy when others are fearful.”
You can combine this with your DCA strategy:
- Base DCA: Stick to your regular weekly/monthly investment schedule.
- Add More When There’s Fear: If the index falls below 20 or 15 (extreme fear), it often signals severe undervaluation. You can add an extra lump sum in such periods.
- Be Cautious When There’s Greed (optional): When the index rises above 80 or 85, the market may be overheated. You may choose to pause new purchases — or even trim profits, if appropriate.
4.3 Important Reminder
Never invest more than you can afford to lose.Bitcoin is still a high-risk asset. Its price could, in theory, go to zero — even if the probability is shrinking over time. You must allocate capital according to your personal risk tolerance.
That said, Bitcoin is also the lowest-risk crypto asset in terms of fundamentals, so it should occupy the dominant position in any crypto portfolio. My own allocation looks like this:Bitcoin : Ethereum : Others = 5 : 3 : 2
Whether you adopt a simple DCA approach or a DCA enhanced with sentiment filters, the core principle remains the same:
Acknowledge that you cannot predict the market. Use market irrationality to your advantage. Accumulate a fundamentally sound asset in a disciplined way when its price appears undervalued.
Always remember: Investing is not supposed to consume your entire life.It should not cost you your sleep or peace of mind.
Conclusion
Bitcoin is not a gambling table for escaping reality — it is a footnote that helps you re-understand reality.
In this world of uncertainty, we often mistake safety for stability, for risk aversion, for avoiding volatility. But real safety has never been about hiding from risk — it is about understanding it, mastering it, and — seeing the buried foundation of value when everyone else is fleeing.
That is the true essence of value investing:To find the asymmetric structures built on insight and mispricing;To quietly accumulate the chips the market has forgotten, when it is buried at the bottom of the cycle.
And Bitcoin — an asset born of code-enforced scarcity, evolving value through networks, and repeatedly reborn through fear — is perhaps the purest expression of asymmetry in our time.
Its price may never be tranquil.But its logic remains unwavering:
- Scarcity is the floor
- Network is the ceiling
- Volatility is opportunity
- Time is leverage
You may never perfectly time the bottom. But you can ride through cycles — again and again — buying misunderstood value at reasonable prices.
Not because you are smarter than others — But because you have learned to think in a different dimension: You believe that the best bets are placed not on price charts — But on the side of time.
So remember this:
The ones who place their chips deep within irrationality Are often the most rational of all. And time — is the most loyal enforcer of asymmetry.
This game will always belong to those who can read the order behind the chaos, and the truth behind the collapse. Because the world does not reward emotion — The world rewards understanding.And understanding, in the end — Is always proven right by time.
Asymmetry: The Underlying Hue of Bitcoin from a Value Investing Perspective was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.