BTC erases this year's gains! Fu Peng explains why digital assets have become an important reference signal for forward-looking FICC. [Fu Peng Says 12]

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Why have digital assets become an important reference signal for forward-looking FICC? >>The following only reflects the author’s personal views. Click the video above to watch! This episode was recorded on November 16, 2025. Viewing the world from the trading desk, Fu Peng comments on finance. In this episode, Fu Peng continues to discuss digital assets. Although related content has been shared many times before, it is still worth going deeper. The core question remains: What exactly is Bitcoin (BTC)? Since 2019 and 2020, as traditional finance and regulation gradually intervened, Bitcoin’s characteristics have become increasingly clear. We first need to distinguish its essential features from various concepts previously advocated by the “crypto circle.” Recently, I noticed an interview on CNBC, in which the remarks about Bitcoin were quite insightful. The interview used a case to explain the link between Bitcoin and the artificial intelligence (AI) industry chain—a point I have mentioned before: the mechanism of Bitcoin generation has similarities with the logic of AI industry, from computing power support to TOKEN generation. However, Bitcoin lacks a practical application scenario and leans more towards being a symbol or marker, without a corresponding real-world application carrier. The interview put forward a more precise view: if you regard Bitcoin as an “AI-related stock,” its generation logic aligns with the AI industry, but on the basis of stock attributes, it adds a “continuous buyback” feature—corresponding exactly to Bitcoin’s core property of “limited total supply.” This definition clearly separates Bitcoin from earlier narratives such as “digital gold” or “decentralized currency.” I agree with this view: Bitcoin is closer to an “AI concept stock with a buyback mechanism.” However, it is fundamentally different from true core companies in the AI industry chain, like Nvidia. Although the price movement of Bitcoin and Nvidia shares showed a strong correlation over the past few years, this correlation has clearly weakened recently. If one only uses the correlation between Bitcoin and Nvidia as the basis of judgment, and simply classifies it as an AI concept stock, that misses a key point. We often use the “numerator-denominator” model and related variables to analyze stock value: for real companies, the “numerator” represents real revenue and profit, which is the core support for value. If Bitcoin is defined as an “AI concept stock with a buyback mechanism,” its buyback attribute only corresponds to a variable in the model and completely lacks substantial value support from the numerator end. This is the fundamental difference between Bitcoin and Nvidia—Nvidia has continuously verified numerator value, while Bitcoin only reflects valuation-level fluctuations, without real application scenario support, and is essentially a highly volatile financial asset. This judgment can be validated by recent market trends. Since 2019, Bitcoin’s log price and the CAPE Ratio of US stocks have shown a highly linked characteristic—the CAPE Ratio here can be understood as an AI-led excess return measure, and for the S&P 500 index, it also reflects overall valuation level. From the price chart, Bitcoin started at $4,000, successively broke through $20,000, $80,000, and peaked at nearly $100,000. Its volatility range completely matches that of the CAPE Ratio: the CAPE Ratio rose from below 30x to nearly 40x and now exceeds 40x. This valuation shift is directly mapped in Bitcoin’s price fluctuations. And the “decoupling” between Bitcoin and Nvidia also originates here—Nvidia’s numerator value continues to be verified and has solid value support. This logic also explains the phenomenon that “Bitcoin’s drop is much larger than US stocks in a falling market.” This requires combining comparative data of S&P 500 volatility (VIX), Nvidia volatility, and Bitcoin volatility (the left chart’s core content). Nvidia’s smaller decline is due to its numerator value not fading; from 2022 to 2023, it completed the transformation from “valuation-driven to value-driven.” Its market cap rose from $2 trillion to $4 trillion, with the numerator (revenue, profit) contributing more and more. While valuation still matters (otherwise S&P 500 wouldn’t rise from below 30x to over 40x), the solid numerator support gives it significantly stronger resilience to declines. In contrast, Bitcoin’s price fluctuations are entirely about valuation expansion and contraction—from below $20,000 to around $100,000, essentially mirroring the US stock AI industry chain valuation transmission, with no numerator value support of its own. Thus, when faced with liquidity tightening or valuation adjustment, Bitcoin, lacking a value anchor, will see even larger declines. It’s worth noting that since 2024, the market has shown two key features: first, volatility (VIX) baseline has continually risen; second, Bitcoin price has formed a converging triangle, while US stock AI sector valuations have breached 35x. This reflects the core contradiction of the current US AI stock market: valuations are high, but numerator value has not been fully validated or falsified. The current core debate in the market is the actual utility of AI infrastructure construction—if the infrastructure spawns enough application scenarios, numerator value will keep being released, at which point real companies like Nvidia may continue upward, but Bitcoin might not follow, as it lacks the basis for numerator-value linkage. From the valuation perspective, I believe when Bitcoin price is above $100,000, its investment return space is relatively limited. If you accept the aforementioned positioning of “AI concept stock with a buyback,” then it’s better to trade Bitcoin based on valuation levels: the next valuable “entry point” should appear when valuations naturally fall, or if there’s a systemic “valuation kill” similar to 2022. However, if there’s a “valuation kill” now, it is highly likely to be triggered by weakness in the numerator end—the numerator decays, transmitting to the denominator (valuation), resulting in a “numerator-denominator” spiral adjustment. Overall, under the current high valuation backdrop, Bitcoin’s investment cost-effectiveness has significantly declined. In summary, Bitcoin can be defined as a “high volatility AI-associated financial asset,” whose core feature is “mirroring AI industry valuation, lacking numerator-value support.” Based on this property, its price movements are highly correlated with the US stock AI sector valuation and market volatility, but there is a fundamental difference from real companies like Nvidia. That’s why we’ve closely watched its volatility and price movements lately. That’s my systematic analysis and sharing of logic regarding digital assets. I hope it inspires you. See you next time! 《Fu Peng Says Season Six》fully upgraded! Heavy launch! Risk Warning and Disclaimer The market carries risk, and investments should be made with caution. This article does not constitute personal investment advice and does not take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable to their particular circumstances. Investing based on this article is at your own risk.