Real Vision Founder: Rethinking the Long-Term Value of Cryptocurrency After 13 Years of Bull and Bear Markets

The vault has a ceiling, but the economic system built on top of the vault has no limits.

Written by: Raoul Pal, Founder of Real Vision
Compiled by: Chopper, Foresight News

Now, if you open the information stream, you will find that market sentiment is overwhelmingly pessimistic. The cycle is over, the crypto industry is dead, and the four-year bull-bear pattern has declared its failure; everyone who advised you to buy has been wrong. The price trends have deviated from public expectations, and once the price moves beyond recognition, pessimism spreads. History always repeats itself.

I have witnessed this cycle countless times and know the story's ending. After thirteen years in the crypto industry, I have experienced nearly every mistake one can make. Before I explain my continued bullish logic, let me first discuss the pitfalls I have encountered; true experience always comes from failure.

In 2013, I entered the market when Bitcoin was priced at $200. But the timing of the purchase is not the key point. Before buying my first Bitcoin, I wrote the first macro valuation analysis of Bitcoin in history.

By today’s standards, this valuation model is quite crude. I borrowed the valuation approach from commodities, calculating the total above-ground and underground reserves of gold, and then applied this framework to Bitcoin. The conclusion was: if Bitcoin could become digital gold, under the premise that gold prices maintain current levels, a single Bitcoin could be worth $1 million.

This article quickly spread in Silicon Valley and the financial circles; at that time, no one had built a valuation system for Bitcoin from a macro perspective. I didn’t just express my opinion; I also recommended Bitcoin to all GMI subscribers, including several hedge funds and family offices. In 2013, recommending Bitcoin at $200 to such investors required immense courage.

My core conclusion at the time was: "Bitcoin is currently priced at $200, with a long-term target price potentially reaching $1 million. Considering I might misjudge, I actively discounted it by 10%, giving a ten-year target price of $100,000."

The final result roughly matched my expectations; Bitcoin did indeed reach that price level.

However, seeing the endpoint and understanding the fluctuations along the way are two entirely different matters.

Looking back at this journey, I entered at an excellent price point, the price tripled, then plummeted by 84%. I comforted myself that this was a long-term bet and didn’t require action. Then, the market surged again at the end of 2017; one day, staring at the screen, the price climbed to an unbelievable number, and I chose to sell.

Why? Fear (FUD) was at play. Controversies over forks were rampant, and everywhere was filled with "bubble theories"; I kept telling myself: seize the tenfold increase and cash out, don’t let profits evaporate completely.

I sold everything. But after I sold, Bitcoin continued to rise tenfold.

I tried to act as if I wasn’t regretful, but deep down, I knew I had made a huge mistake. Worse still, during the pandemic, the price of Bitcoin fell again, and I re-entered, thinking I was a savvy bottom-fisher. The reality was different: I sold at $2,000 but bought back at $8,000 to $9,000. Frequent buying and selling, taking profits at highs, repeatedly trading around positions... all these actions hindered the only correct long-term strategy from functioning.

I once roughly calculated that if I had simply held onto my initial capital of $200,000, it would now be worth about $100 million. The power of compound interest lies here, and it also proves that people can easily make foolish decisions. The assets themselves continued to appreciate, while I repeatedly interrupted this process.

The enormous unrealized gains slipped through my fingers, and this expensive lesson taught me one principle: extend the time horizon, discard the noise, and hold long-term. For any brokerage, "dormant accounts" often yield the best returns because holders do not arbitrarily operate their assets.

This is my review. Next, let’s discuss the logic I have come to understand today, which I failed to fully grasp back then.

Bitcoin as a Store of Value Vault

In the past few weeks, I have continuously written about the issue of currency devaluation, and all analyses ultimately point here. Demographic structures create debt, and debt drives continuous currency devaluation; cash loses purchasing power by about 8% each year compared to long-term assets. To fully understand this transmission logic, you can read my previous articles; in summary: holding cash is like holding a block of ice that keeps melting; the rational choice is to hold assets whose total supply cannot be artificially increased.

Bitcoin is the purest asset of this kind. Its total supply is permanently capped at 21 million coins, with no committee voting to increase it. It is the hardest currency created by humanity, serving the function of value storage, a digital vault.

However, the vault has a growth ceiling, and understanding this is crucial. Bitcoin's target market is global savings looking for a safe haven. Its scale is roughly equivalent to the $35 trillion gold market, plus some other assets used for wealth preservation. My judgment is that Bitcoin will continue to capture a share of this capital allocation. Its only real competitor is Zcash, a privacy-focused cryptocurrency that may capture 10% of the market in the future, while the remaining share will be occupied by Bitcoin.

Thus, the logic of the digital vault holds; Bitcoin is a quality asset. But the vault is only half the story, or even just a small part.

The Economic System Built on the Vault

Bitcoin lacks programmability. By design, it excels at only one thing and does not take on any other functions. Smart contract public chains are an entirely different track. There are many public chains on the market, and I continue to be optimistic about three: Ethereum, Solana, and Sui. The most common mistake people make is to lump them together with Bitcoin as "cryptocurrencies" and discuss which one will ultimately prevail.

People overlook the key fact that their missions are fundamentally different. Bitcoin solves value storage, while smart contract platforms solve multi-party collaboration.

The framework I propose for the era of exponential growth posits that artificial intelligence, robotics, energy, and cryptographic technology are all entering a period of explosive development. The future economy will no longer rely on human labor but will be dominated by machines. Billions of AI agents will continuously engage in transactions, purchasing computing power and settling with each other, with transaction speeds far exceeding those of humans.

An obvious question arises: what do they rely on to complete transactions? The traditional banking system is not applicable. The machine economy cannot tolerate a three-day settlement cycle, reliance on intermediary banks, or clearing institutions that close on weekends. Intelligent agents need a programmable, instant settlement, and 24/7 operational underlying channel—this is precisely the value of smart contract public chains. They will become the settlement foundation of the machine economy in the exponential era.

Therefore, investing in these public chains is not betting on a specific token but on the infrastructure that the next generation of the economy relies on. Tokens themselves are not just currencies; they represent the holders' rights within the network, serving as the foundational layer of collaboration in the digital age.

This also means that one cannot apply Bitcoin's valuation model to public chains, nor can one measure them using traditional corporate valuation methods. Public chains are not a company but an economic entity. To assess the value of an economic entity, one must look at the total economic activity occurring on it.

When we compare the target markets of the two major tracks, the core argument becomes clear. Bitcoin targets global savings, corresponding to a scale of about $35 trillion, equivalent to gold, making it worth investing in. Smart contract platforms are expected to carry the settlement demands of global real estate (about $400 trillion), global debt (about $325 trillion), and global stock markets (about $125 trillion). This is not just a larger scale but an order of magnitude higher.

The conclusion is self-evident: in the long run, the total market value of quality smart contract public chains will be several times that of Bitcoin. This does not mean Bitcoin will fail; it will perfectly fulfill its mission of value storage. The reason is that the economy built on the vault will naturally be larger than the vault itself. The vault stores savings, while the underlying channel carries the circulation of the entire economy.

Counterargument: Are they just functional tokens?

I can foresee the mainstream bearish viewpoints in the market, which deserve serious dissection rather than simple refutation. This line of reasoning is as follows: Bitcoin is fundamentally designed for capital preservation, continuously accumulating value as a currency. Ethereum, Solana, and Sui are merely functional assets and financial infrastructures; infrastructures do not appreciate in value like pure currency assets. No matter how good the technology, it does not qualify as a quality investment target.

However, reverse deduction reveals the flaws. The growth ceiling of pure value storage assets is determined by the total scale of savings seeking preservation. The scale is massive but has a clear ceiling. The ceiling for infrastructure assets, on the other hand, depends on all the applications that can be built on top of them; every time a new project is born, the ceiling is further raised. Low transaction fees do not equate to low value. The underlying network can scale and proliferate precisely because of low costs, and the network's value continues to rise accordingly.

There is a clear dividing line here: lending protocols and exchanges built on Ethereum are commercial projects with revenue and competitive barriers that can be valued based on cash flow. Ethereum itself is not a commercial project. The value of Ethereum comes from the totality of all ecosystems built on it. If Ethereum were to stall, it would not just be one company disappearing; all layer-two networks, most of the stablecoin market, and the entire decentralized finance ecosystem would collapse instantly. This is its core value; it is the foundational base upon which all projects rely for survival, not just one among many.

Similarly, this explains why layer-two networks struggle to replicate the value of layer-one public chains. Layer-two networks borrow security from the underlying main chain, and a large portion of the profits ultimately flows back to the base layer. Even if a prosperous layer-two network emerges on Ethereum, it essentially continues to boost Ethereum's value. Ultimately, all value settles in the underlying layer-one public chain.

Why is the market generally pessimistic at present?

Returning to the market sentiment mentioned at the beginning of the article. If the long-term logic is so solid, why is the current market so painful? The macro environment of continuous liquidity easing and a trend towards a more relaxed financial environment has already taken shape. The disruption to the market rhythm comes from the unexpected fact that the market has not risen as anticipated. The market crash in October 2025 and the government shutdown triggered a series of disturbances, disrupting the original market rhythm and delaying the timing of the market's launch. Many investors directly interpret the "delay" as "the logic has completely failed."

The underlying logic has never collapsed. The duration of the gap between crypto asset prices and liquidity expectations has exceeded my expectations, but the gap will only be repaired, not permanently closed.

Previously, the U.S. manufacturing PMI index remained below the boom-bust line for a long time, and the business cycle fell into a slump. The crypto industry is highly dependent on market activity and investment willingness, naturally requiring a macro cycle to warm up. For a long time, the macro environment has been under pressure. In addition, Bitcoin has periodically shown liquidity discount trends, decoupling from overall liquidity trends; this phenomenon occurs cyclically. The volatility of crypto assets is higher than liquidity indicators; when the market overheats, the gains exceed expectations, and when the market cools, the declines also exceed expectations. Extending the time dimension, the correlation coefficient between the two remains around 87%.

We are currently in a phase of market coolness, so many people judge that the long-term logic has failed, but this is not the case. The business cycle has already bottomed out and is recovering. The manufacturing PMI index has been in the expansion range for six consecutive months, with the latest data for July recorded at 53.3. Historical patterns indicate that in such macro environments, the crypto market often welcomes a warming trend. During the upward phase of the cycle, investors' risk appetite increases, and internal differentiation will also occur in the crypto market: junk bonds outperform government bonds, small-cap stocks outperform large-cap stocks; Ethereum and other smart contract public chains outperform Bitcoin. The reason is that economic activity boosts demand for block space, while savings demand drives Bitcoin's market.

How to Operate

I will not provide a fixed investment portfolio, nor will I predict the bottom. Thirteen years of experience in the industry have taught me that no one can time the market precisely; forcing predictions may ultimately replay the tragedy of selling Bitcoin at $2,000.

The review at the beginning of the article is the most important insight. The crypto track is a long-term game, and it severely tests one's mindset; many people's income and wealth are deeply tied to the industry. The ultimate winners are not those with the strongest short-term trading abilities but those who can clearly understand the essence of the assets they hold, believe in the trend of continuous network adoption, and can endure a 50% deep drawdown every few years.

Broaden your perspective, strip away market noise. At the same time, allocate to the digital vault (Bitcoin) and the economic underlying channels (quality smart contract public chains), aligning with the industry's growth curve without expending energy trying to outsmart the cycle.