The recent market indeed makes it hard to get excited. Bitcoin is no longer the 'crazy kid' that used to jump around; instead, it resembles a middle-aged office worker stuck in a midlife crisis—wanting to break through but weighed down by burdens, and desiring to give up yet feeling unwilling. Some say this is a transition between bull and bear markets, but I see it more like the entire crypto space undergoing an 'identity crisis.'
1. Once liquidity is withdrawn, the vulnerabilities are exposed
The recent decline of Bitcoin is superficially attributed to the tightening of macro liquidity (the fluctuating expectations of Federal Reserve interest rate cuts and the strengthening of the dollar), but the deeper issue is that the market structure has changed.
Following the decline but not the rise: when Nasdaq rebounds, Bitcoin plays dead; when the U.S. stock market falls sharply, it drops even harder. This 'asymmetric correlation' indicates that Bitcoin now resembles a 'high beta tail' of risk assets, rather than an independent track.
Liquidity is drying up: ETFs have turned from 'blood transfusion bags' into 'money pumps', with net outflows for five consecutive weeks; exchanges are deeply collapsing, and large sell orders can easily break through order books. Previously, institutions would absorb OG selling pressure, but now they have become timid themselves.
What’s more painful is that money is running to places with consensus: gold has a thousand-year consensus, tech stocks have cash flow expectations, while Bitcoin's 'digital gold' narrative is being smacked by reality— the world isn’t chaotic enough to need it as a safe haven; rather, it is unable to withstand the strong dollar.
2. The narrative is out of touch: a facade of anti-establishment, yet wanting to enter the mainstream.
The most awkward thing about Bitcoin is that it is becoming more compliant yet increasingly mediocre.
Early players loved its 'anti-censorship' feature, but now Wall Street only cares about 'whether it can be included in asset allocation'. The result is that the rebellious spirit has faded, but mainstream market trust has not been fully secured.
New stories like on-chain inscriptions and Layer 2 payments may excite insiders, but they hold no appeal for external funds. Ordinals seem like a cultural movement but fail to address the question of 'why ordinary people should buy Bitcoin'.
Some even joke that Bitcoin is now like the 'gold ETF of the blockchain world', but gold has a much longer history and less volatility; why would institutions seek distant alternatives?
3. The players have changed, and the game rules have gone bad.
In today's crypto world, all that remains are savvy individuals: arbitrage funds, high-frequency trading, and opportunists... retail investors are either too scared to lose or have been drawn away by the stock market.
The profit-making effect has disappeared: in the past, hoarding coins could lead to wealth, but now altcoins have collapsed and cannot bounce back to their previous highs; playing MEME coins requires PVP speed, and ordinary people going in are just giving away their heads.
Institutions are shrewd like monkeys: MicroStrategy is still bottom fishing but is using a leveraged game of 'issuing stocks to buy coins'; their real allocation is far less grand than advertised.
Ironically, both the crypto world and the U.S. stock market are diverging, but the U.S. market is seeing a divergence into tech giants, while the crypto space is diverging into more competitive meme projects.
4. Where is the way out? Perhaps we must first acknowledge 'mediocrity'.
In the short term, Bitcoin is likely to continue fluctuating around the bottom (between 85,000 and 95,000); unless a new round of global monetary easing occurs or regulation suddenly shifts, both seem unlikely right now.
In the long term, Bitcoin needs to answer one question: if it is neither the 'holy grail against fiat' nor a 'tool for quick riches', then what is it?
The possible answer might be 'a supplementary asset against inflation', like a younger version of gold, but it needs lower volatility and clearer institutional endorsement.
Or rely on technology to break the deadlock, such as the real popularization of the Lightning Network, making Bitcoin the 'infrastructure for cross-border payments', rather than just a symbol for speculation.
Written at last: a cold market is not the end, but only those who stay clear-headed can survive.
To be honest, I don’t think the crypto world is over, but the logic of the past needs to be turned over. If one still hopes for a 'four-year halving cycle' or 'mysterious whales to pump the market', it's highly likely they will lose faith in life.
When the market is cold, it's actually an opportunity to focus on learning new rules. For example, the current correlation between U.S. AI stocks and Bitcoin, along with the rise of RWA (real-world assets), might hide the seeds of the next trend.
What Bitcoin fears most is not a drop, but the lack of discussion on why it is worth buying. Now, it needs to find a reason again.
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