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I think we've hit rock bottom. We went from 60,000, just below that, to about 80,000. We still believe that Bitcoin is three revolutions in one. The first major event Wood points to is the sudden collapse that occurred in October. According to her explanation, a software glitch on Binance triggered what is known as automatic deleveraging lending.
The problem became particularly acute for market participants who tried to hedge positions on different exchanges. A hedge fund or decentralized finance company could hold a long position on one exchange and a short position on another, effectively trying to neutralize its impact on price fluctuations.
Still bullish sentiment. So, for almost the last year, we have experienced another cryptowinter. But we fell, at least when it comes to Bitcoin, by 50%. During previous crypto winters, Bitcoin fell by 75%. Is this some progress? Yes, yes, yes. But the reason we had this winter was initially the so-called sudden collapse in October, October 10th of last year, when Binance had a software failure and automatic deleveraging occurred, where if a hedge fund or DeFi company was operating on two exchanges, one of which had a long position and the other had a short position, in order to be perfectly hedged.
What happened during automatic deleveraging lending on Binance was a software glitch that caused it to trigger automatically. So they ended up at a complete disadvantage. And I think it cost, depending on the estimates, between $15 billion and $30 billion in damages. Many people simply went bankrupt.
So, that was the first. The second was quantum computing. Quantum computing—many believe that Bitcoin is the most attractive target. And the reason is that it is cryptographic, and Satoshi coins are there. We don't know if Satoshi is a group or an individual, but that group or individual hasn't moved these coins since they were created.
So they are, in essence, easy prey. They did not move their wallets to more quantum-resistant ones. And, of course, there are many lost Bitcoins. So, this is a big attractive target. The more we work on quantum technologies, the longer it will take —years and years and years. Currently, AI research is accelerating progress, but not by that much.
To give you an idea, they're currently working with 100 qubits at a time. This is the maximum. We need hundreds of thousands of qubits to crack the code, so to speak. This will not happen soon . And the third thing that happened was AI. The AI was taking up all the oxygen in the room. And the Bitcoin miners were ahead.
They went from mining Bitcoin to servicing data centers with their energy, right? So, these three things happened in the last year. I think we're hitting rock bottom. We went from 60,000, just below that level, to around 80,000. We still believe that Bitcoin is three revolutions in one. The first is that he introduced the technology inherent in the internet and the currency inherent in the internet, which we did n't have.
And why did n't we have this before? We didn't have that because in the early 90s , when internet developers were writing code, no one knew that financial services and commerce would happen on the internet. So there was no built-in level for that. And now he is. So this technological revolution is a global monetary system that is, first, digital, private, government-free , rules-based, and, crucially, mathematically capped at 21 million units, guaranteeing long-term purchasing power and wealth creation in a way that fiat currencies do not.
And the third is that it is a new asset class. This is really the first representative of a new asset class, and we think it will be the largest because these are three very big ideas, very big ideas. And we publicly state a baseline scenario of over 700,000, an optimistic one of 1.5 million, but when?
Till what time? Well, we were talking about 2030. This could well happen, especially if institutions start entering the market en masse. And tokenization as a concept is attracting more and more institutions to decentralized finance. The only thing that has slightly overshadowed Bitcoin in terms of fundamental indicators is stablecoins.
One development that Wood believes has complicated the narrative around Bitcoin is the rapid rise of stablecoins. Stablecoins offer many of the benefits of digital money while remaining pegged to traditional fiat currencies, primarily the US dollar. For people living in emerging markets, where local currencies can quickly lose purchasing power, stablecoins can provide a more accessible form of access to the dollar without the need for direct access to the traditional American banking system.
Okay, we understand stablecoins because in emerging markets , people live day to day. They are so worried that their currencies are destroying their purchasing power and their wealth. They can't afford the volatility of Bitcoin. So this is an intermediate stage. But they say that over time, these people will recognize that Bitcoin is better than the dollar, which is mostly backed by stablecoins.
So, they will build their wealth with the help of Bitcoin. So that's interesting. You and I have talked a lot about Bitcoin and stablecoins. What about the rest of the crypto ecosystem? Do you have an opinion on Ethereum and other coins? Yes, we have. We believe that the "big four" are Bitcoin , Ethereum, Solana, and Hyperliquid.
During a bear market, developers really work. We watch what they create, how ecosystems adapt to each other and become more specialized. So, Hyperliquid is all about perpetual futures. Solana also enables high-throughput financial transactions . Ethereum is all about smart contracts. I think this will be very important for agency commerce.
But as we know from companies like Cloudflare, they say, "To enable agent commerce and agent payments, we need an ecosystem, a blockchain, that allows 20 to 100 million transactions per second." That is, these are microtransactions, when agents communicate with each other and conclude agreements in micro-denominations.
Well, you know, one thousandth or one millionth of a dollar, that's what it is. So Cloudflare CEO Matthew Prince says, "We need 20 to 100 million." Well, we see that Visa, the traditional payment ecosystem, is doing 20,000 payments per second. Think about it. He says 20-100 million. Ethereum and Solana have very low throughput.
I'm an advisor at a blockchain called Layer Zero, and they're aiming to reach 2 million and then increase that number. So, we're watching the payments space, agent payments, and agent commerce to understand how quickly it will evolve and scale. And I think that's going to be very important, well, especially for Ethereum.
Let's see if he can handle that volume. He can't now . That's when founders get very inventive. Yes, this is a very unusual period. Never seen anything like it. By the way, this is worse than the collapse of the technology and telecommunications sectors, which made no sense because the technology was not ready 26 years ago.
The seeds were sown for everything that is happening now, but the technology wasn't ready and was too expensive. Fast forward —all that has changed, and we are now in the era of technological revolution. So it was very strange to see such a big drop, but here's what I realized. Usually, when we enter a bear market, we start to focus on the assets we believe in the most.
We have an evaluation system to identify such assets. And what do we do during a bull market? As in 2020, we are diversifying more because we know that a bear market may come. A correction can happen at any moment. And we work in a very unstable sector. And volatility is not a measure of risk, which is very important for your audience to understand.
This is a function of uncertainty. Our research allows us to achieve a higher level of confidence than, I would say, most investors. However, during that bear market, this strategy usually worked very well. During that market, we should have continued to move into Mag 6 and other companies with large cash reserves—they now have less cash due to investments, but are still cash fortresses.
But we didn't expect supply chain problems to last 3 years, and what's bothering us the most is the slowdown in sales growth. Electric cars, for example, have been hit pretty hard, haven't they? Supply chain problems have slowed them down significantly. A 22- or 24-fold increase in rates—this had never happened before, and it only worsened the supply situation.
So we can usually withstand rate increases. But with rates skyrocketing, it's much more difficult. I mean, "MAG 6" did pretty well. But it was difficult to get through it. I don't think we'll see anything like this again . First, we hope that COVID will not happen again. But even if that happened, the reason rates had to be raised so much was because governments around the world simultaneously threw in all their might—both fiscal and monetary—and that created a lot of problems.
They probably won't do it again. Mhm. Katie Wood's argument ultimately boils down to a long-term technological thesis. Bitcoin has endured another crypto winter, facing competition from stablecoins, technological concerns about quantum computing, and a huge shift in investor focus to artificial intelligence.
However, Wood believes that these events do not refute the Bitcoin thesis. On the contrary, they show how rapidly the digital economy is developing. receive more Bitcoin analytics and crypto updates. See you in the next video.
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