The Current State of Bitcoin
Bitcoin has experienced a dramatic decline, falling from a peak of roughly 127,000–128,000 down to below 60,000, putting it at 21-month lows. Over the last six months the asset has sold off by about 50%. This kind of swing is simply part of the lifestyle of owning Bitcoin — a cycle of misery, then joy, then misery again — and we are decisively in a misery phase right now.
That said, a 50% drawdown, while genuinely painful, is actually less severe than Bitcoin's historic drawdowns. For capital markets and public markets, however, this is not the kind of performance most participants are looking for, and most market participants are not religious believers in the asset.
Why the Largest Buyer Has Stepped Aside
A major theme dominating the news has been "strategy" — the financial-engineering approach to accumulating Bitcoin associated with Michael Saylor's company, Strategy. The firm built its position through financial engineering designed to accumulate Bitcoin aggressively, but it is now looking to de-accumulate Bitcoin, doing so publicly and loudly, just as loudly as it once bought it all up.
In reality, the various methods this company used — grabbing momentum traders and tapping into different markets — have failed. The charismatic leadership and the shifting policies behind the strategy have not worked, and the entity now trades like a closed-end fund with good marketing, which is essentially what it is. There is nothing inherently wrong with that, but the problem is how it was sold: it was marketed very aggressively toward retail investors as a safe product, when in truth these were never safe products. That reality is now coming home to roost, illustrated by its "stretch" preferred equity product, which is now trading roughly 20% below par.
The consequence is significant. Strategy is not a real buyer of Bitcoin anytime soon. In fact, it has effectively become a buyer of U.S. dollars — shoring up its own balance sheet just to stay in business for a while. This raises a critical and not-at-all-obvious question: who is buying Bitcoin now that the largest buyer has been sidelined from capital markets? Momentum and trend traders appear far more interested in AI, robotics, and other parts of the market right now. The true believers in Bitcoin are not going anywhere — it is something of a diehard religion, and that conviction has given Bitcoin a great deal of value and a base floor — but the marginal buyer is harder to identify.
It's worth acknowledging the counterpoint: Strategy and its leadership have every right to sell their Bitcoin. Saylor was famously a "never, ever sell" advocate who then sold, but the holders of the asset are entitled to do so.
Three Catalysts for a Recovery
Despite the difficult short-term picture, there are three main catalysts that could drive Bitcoin forward:
1. A rotation back to trend. As soon as an upward trend begins to form, people who left before will return just as quickly, because they understand Bitcoin can be volatile to the upside as well as the downside.
2. Reaffirmation of the four-year cycle. Whether or not it is structurally true, people genuinely believe in Bitcoin's four-year cycle. An upward trend would reaffirm those beliefs and could become a reflexive, self-fulfilling prophecy.
3. Passage of the Clarity Act. This is likely the most important factor. Depending on whom you ask, the act is either never going to pass or may pass as soon as July. If it passes, it would give mainstream financial institutions far greater clarity on how to treat stablecoins. It would split responsibilities between the SEC and the CFTC and should allow more participants to enter the market — ultimately leading to more money flowing into Bitcoin, stablecoins, and many other products across the blockchain ecosystem.
Why the Fundamentals Remain Intact
A natural question arises: given a supportive administration that delivered the Genius Act and the anticipated Clarity Act, an institutional ecosystem, and international participation, shouldn't there be more optimism in the price? The answer is that the core fundamentals of Bitcoin have not changed at all between when it was 128,000 and where it sits now at 60,000:
- It has a finite supply.
- It is highly responsive to liquidity and to the inflationary tactics of fiat currencies.
- It is a sovereign asset.
There may now be different kinds of institutionalized wrappers built around Bitcoin, but the underlying value proposition is unchanged — there are simply broader funneling mechanisms and more capital-markets touchpoints into the product. The catch is that this institutionalization also brings the ability to short the asset and to run various financial games around it. We have seen both sides of that coin: a big run-up, but also a tremendous amount of call selling and futures positioning designed to pull volatility and value out of the asset.
The long-term core belief here is undeterred. In fact, with sentiment in the dumpster and attention rotated elsewhere in the world, history suggests this has often been precisely the right time to get involved with Bitcoin — even though it remains genuinely difficult in the short term.
The Broader Crypto Landscape: Where Traditional and Crypto Finance Meld
The selloff has not been limited to Bitcoin. Ethereum has also sold off, and weakness has appeared across related names such as Coinbase, Circle, and Galaxy, as well as in stablecoins and tokenization more broadly.
Yet the larger structural story is unmistakable. Over the course of roughly twelve years in this industry, the long-discussed "melding" or "blending" of traditional finance and crypto finance has stopped being mere talk — it is genuinely happening:
- Banks are bringing stablecoins into their trading platforms.
- The New York Stock Exchange, ICE, and NASDAQ are all discussing how to tokenize equities.
The driving force is that blockchains are fundamentally better ways to track, trace, and transfer assets of all kinds — undeniably cheaper and more efficient. As a result, large institutions have been forced to respond to innovations emerging from the crypto market. For example, Hyperliquid created 24/7 perpetual futures trading, and now NASDAQ is considering doing the same.
This sets up a central question: will the incumbents capture the value of this better infrastructure, or will new rising companies fill the voids? The likely outcome is some combination of the two.
What These Innovations Enable
- Stablecoins will enable 24/7 trading and global transfers of money and payments at much lower cost than what we see today.
- Tokenized equities will likewise allow 24/7 trading, provide better global access and distribution to assets, and potentially enable better on-chain financing.
- Vaults — a category of on-chain credit or trading strategies — will let people around the world deposit on-chain and, provided they follow AML/KYC procedures properly, gain access to strategies that used to be available only to institutional Wall Street players, now delivered in a global wrapper.
These innovations are genuinely melding into the banking system. Conversations with banks, global custodians, and qualified custodians happen every day, and these institutions are being forced to adopt some of these tools because the world is changing.
Bottom Line
The position remains fully on board. The fundamentals of Bitcoin have not changed in any way, shape, or form; the current weakness is a short-term, sentiment-and-positioning-driven phenomenon rather than a structural one. The conviction is to stay the course as a long-term believer, while waiting for momentum and market rotation to shift back toward crypto — with the Clarity Act, a return to trend, and renewed faith in the four-year cycle standing as the key catalysts to watch.
