Author: Jordi Visser Translator: Shan Ouba, Jinse Finance
The market downturn is a fact.
Frankly, the current sentiment in the cryptocurrency market is extremely poor.
The S&P 500 is nearing its all-time high, the Nasdaq is soaring, gold prices have broken through $4,300, and tech stocks continue their rebound. All traditional indicators point to a market environment of rising risk appetite – funds are flowing into risk assets, and investor confidence is high.
And Bitcoin? It's barely made a move.
Sideways movement, consolidation, fluctuation, dullness—no matter which word you use to describe it, it can't mask the pervasive sense of disappointment in the community. Twitter is full of similar anxious questions: Why are all other assets rising, but Bitcoin is the only one not moving?
This cognitive dissonance is glaring. The Bitcoin ETF has launched successfully and continues to attract monthly inflows; institutional adoption is accelerating; the Genius Act has been passed and the Clarity Act is about to be implemented; there has been no regulatory crackdown, no major hacking incidents, and no collapse of the core narrative. All the factors that should have worked have become reality.
However, the reality is that while other assets are rising, Bitcoin is stagnating.
Over the past few years, my growing connection with the crypto community has given me a unique perspective. I've been observing both the traditional fiat financial system and the crypto ecosystem, and I've gradually discovered a familiar pattern—one that reminds me of the traditional markets I grew up in. The similarities are striking, as are the differences, but sometimes, the similarities manifest in unexpected ways.
What if everyone is mistaken?
What if Bitcoin hadn't run into problems, and instead finally achieved an IPO in the traditional financial sense?
A bridge connecting two worlds
My journey into the crypto space has been incredibly insightful, primarily because I haven't abandoned my understanding of traditional markets, but rather applied that perspective to the crypto industry. I've increasingly realized that despite Bitcoin's revolutionary origins and inherently decentralized nature, the economic principles it follows are as old as capitalism itself.
Early investors take on significant risks, and if their investments are successful, they deserve substantial returns. The key is that they ultimately need to realize these returns—they need liquidity, exit strategies, and diversification.
In traditional markets, this milestone is known as an IPO. It's the moment when early investors cash out, founders achieve financial freedom, and venture capitalists return their investment to limited partners. This isn't failure, but rather a sign of success. The company doesn't die during its IPO; instead, it completes its transformation, matures, and its shareholding becomes more dispersed.
Bitcoin has never undergone a traditional IPO because it has no physical company behind it. But economic laws do not disappear because of different structures; they simply manifest themselves in different forms.
The deviation from revealing the truth
Let's talk about the current market situation.
In the past, Bitcoin's price movements were highly synchronized with tech stocks and closely correlated with liquidity and risk appetite. For years, observing the Nasdaq index could roughly predict Bitcoin's direction. However, since December 2024, this correlation has completely broken down.
This has confused many people—algorithmic traders and momentum investors alike are baffled. When risk assets generally rise while Bitcoin is absent, the market narrative becomes that something is wrong with Bitcoin.
However, based on traditional market experience, this is exactly what happens during the IPO distribution period.
When a company goes public and early investors begin to reduce their holdings, the stock price often enters a consolidation phase even if the overall market rises. Why? Because there's a specific logic behind it: early investors aren't panic selling, but rather reducing their positions in a planned manner. They act cautiously, don't want to drive down the stock price, and are patient—having waited for years, they don't mind spending a few more months ensuring a smooth reduction.
Meanwhile, new investors will enter the market cautiously. They will not chase high prices, but will gradually build positions during pullbacks, waiting for the distribution of shares to be completed before increasing their investment.
The result is: sideways trading that drives everyone crazy. Fundamentals are good, the overall market is rising, but stock prices just won't budge. Just look at Circle or Coreweave—they surged initially after their IPO pricing, then entered a consolidation phase.
Does this sound familiar?
If Bitcoin's slump were due to macroeconomic factors, it should have fallen along with risk assets, not diverged from them. If it were truly a Crypto Winter, the entire industry should have experienced panic, capitulation selling, and a synchronized decline. But in reality, we are seeing a more concrete scenario: some people are systematically and patiently reducing their holdings amidst stable buying pressure.
This sell-off signals that I have achieved my goal and it's time to exit, rather than that I am panicking.
More and more evidence
Then, I received an unexpected but perhaps long-awaited confirmation.
During Galaxy Digital's recent earnings call, Mike Novogratz announced that the company had sold $9 billion worth of Bitcoin for a client. $9 billion—think about that number. This isn't a retail panic sell-off or a shakeout of traders; it's a planned exit of a massive position by an early giant in the space.
But they are simply taking profits and realizing their gains—this is exactly what early investors should do when assets mature and the market has sufficient liquidity to support large-scale exits.
The key point is that this early giant is not an isolated case.
Anyone who understands how to interpret on-chain data can clearly see the trend: those old coins that haven't moved for years (some have been dormant since Bitcoin's price was in the single digits) are suddenly becoming active. It's not a concentrated burst, not a panic sell-off, but a steady, planned movement since the beginning of this year (especially after summer). Addresses that accumulated Bitcoin when it was still a cypherpunk experiment are finally starting to transfer their holdings.
Look at the Fear & Greed Index, and then look at the sentiment on social media—community morale is low, and retail investors are surrendering en masse. This is exactly the typical emotional state that occurs when smart money distributes shares to weak holders.
But most people overlook one point: if you understand the current stage, this sentiment is actually a bullish signal.
Early holders' mindset
Put yourself in someone else's shoes: suppose you were someone who mined Bitcoin in 2010, or an early investor who bought it at $100 or even $1,000.
You've experienced the collapse of the Mt. Gox exchange, multiple bans in China, the 2018 bear market, the COVID-19 pandemic, regulatory uncertainty, and endured mainstream media labeling Bitcoin a scam for over a decade.
When almost no one believed, you chose to believe; you took the risk and ultimately succeeded—Bitcoin's development exceeded almost everyone's expectations.
But what should we do now?
You hold wealth enough to change the lives of generations, and your life has already changed. Perhaps you are about to retire, perhaps your child is about to go to college, perhaps you want to diversify your investments in artificial intelligence, buy a Jeff Bezos-class yacht, start a business, or simply enjoy the fruits of your years of patient waiting.
Now, you can finally exit your position without destroying the market.
This is an unprecedented opportunity.
For years, the market has lacked sufficient liquidity. In 2015, selling $100 million worth of Bitcoin would have inevitably led to a price crash; in 2019, selling $1 billion would have faced the same problem—the market could not absorb such a large-scale selling pressure.
But things are different now: ETFs provide institutional buying, large companies are including Bitcoin on their balance sheets, and sovereign wealth funds are entering the market. The market has finally matured to the point where early holders can exit large positions without causing chaos.
A more crucial insight is that they chose to reduce their holdings in an environment of rising risk appetite precisely because buyers have sufficient funds at that time. When the stock market is rising, confidence is high, and liquidity is ample, it's the best time to distribute shares. Selling during periods of panic depresses Bitcoin prices, while reducing holdings when other assets are strengthening is simply a wise business decision.
This is exactly the moment that early whale have been waiting for – what they want is not a specific price (the price has already been reached), but liquidity, market depth, and the ability to truly exit.
The mission is accomplished, Bitcoin has proven its value, and it's time to reap the rewards.
Why is it not currently a bear market?
I can already hear the criticism: This sounds like you're making excuses for the bear market at the end of a four-year cycle.
This questioning is valid, so let's talk about the fundamental differences in the current situation.
Bear markets are driven by fear, a deteriorating macroeconomic environment, and a loss of confidence in the core narrative. Remember 2018? Exchanges collapsed one after another, ICOs were exposed as scams, and the entire industry reeked of fraud—people sold off because they were afraid Bitcoin would go to zero.
Do you remember March 2020? The global pandemic broke out, and all assets plummeted—people sold off their assets to obtain cash to survive.
But the current situation is completely different.
Today, Bitcoin's fundamentals are arguably the strongest they've ever been: ETF approval, once considered impossible, has become a reality; institutional adoption is accelerating; the halving is happening as scheduled (every four years, as precise as a clock); network security has reached new highs; hash rate has hit an all-time peak; stablecoin adoption is rising; asset tokenization is progressing; and network effects are about to bring about an explosion in trading volume—the vision of the crypto industry is finally becoming a reality.
Nevertheless, everyone must remember that only three years have passed since the darkest period in the crypto industry (price crashes, fraud exposures, and regulatory backlash). Altcoin prices are still 20%-50% lower than their then-peak levels, and for the past two years, it was Bitcoin that has been supporting the entire industry.
Venture capitalists and hedge funds, once major investors in the crypto industry, have been struggling since the bubble burst. They are still recovering from losses in crypto and SaaS investments (impacted by the rise of artificial intelligence).
The current sellers are not selling because they have lost confidence, but because they have won – that is the key difference.
In a bear market, buyers disappear and prices crash because everyone wants to exit, but no one is willing to enter. But look at the reality: Bitcoin is consolidating, not crashing. Each pullback is met with buying support, and the price hasn't made new lows, but rather remained within a range.
Buyers are indeed entering the market, but they are not aggressive or emotional. They are patiently building their positions and waiting for the distribution of shares to be completed.
This is exactly the same pattern as the lock-up period after a large IPO: the stock does not crash, but consolidates; early investors reduce their holdings, and new long-term holders build positions; equity is transferred from visionaries to institutions.
Lessons learned from traditional markets
To understand Bitcoin's current stage, one might look at the post-IPO performance of those great tech companies.
Amazon went public in 1997 at $18 per share, rising to $100 within three years, and then trading sideways for the next two years—even as the internet industry continued to grow. Why? Because early investors and employees finally gained liquidity and began to sell. Many who believed in Amazon at $1 cashed out at $100. Their choice was correct, as they reaped a 100-fold return. But the stock needed to absorb this selling pressure before it could continue to rise.
After Google's IPO in 2004, its stock price remained in a consolidation phase for nearly two years; Facebook (now Meta) experienced a similar situation in 2012-2013 – the expiration of the lock-up period triggered significant volatility and sideways trading.
This is normal, healthy, and a sign of success.
The company will not decline at this stage, nor will its assets perish. What truly happens is a transfer of power—early believers pass the baton to a new generation of holders, who buy in at higher prices and with different investment horizons.
From cypherpunks to institutions, from libertarian idealists to corporate finance departments, from staunch believers to trustees managing billions of dollars.
It's not about good or bad, it's just evolution—that's the natural life cycle of successful assets.
The transfer of power
This transformation is of profound significance and deserves our attention.
Bitcoin was born from an ideology created by cypherpunks who believed in decentralization, sought freedom from government control, and trusted mathematical certainty over institutional trust. Early adopters were rebels, non-mainstream groups, and visionaries who saw potential that others could not.
Today, these individuals have received their due rewards and are passing the baton. The entities that take the baton are less concerned with ideology and more focused on returns. BlackRock doesn't care about becoming its own bank; it only cares about portfolio diversification and risk-adjusted returns.
Is this a loss? In some ways, yes. Bitcoin may never again have the same aggressive dynamism as it did in its early days; the days of 100x returns in a year may be over, and the volatility that once created enormous wealth will diminish as the holder structure becomes more dispersed.
But this is also a victory – Bitcoin has survived long enough to become boring; its success has been so thorough that early believers have been able to cash out and leave; its value has been proven so that even the world's most conservative financial institutions have started buying it.
More importantly, from a market structure perspective, this distribution of shares is highly bullish in the long run.
Why is diversified holding better than concentrated holding?
Observing traditional markets taught me a principle that applies to Bitcoin: concentrated holdings are fragile, while diversified holdings are antifragile.
When Bitcoin was primarily held by thousands of early adopters, the market was inherently volatile—a few wallets could significantly influence the price, and a single person's sell decision could trigger a cascading effect across the market. Price fluctuations were extreme simply because of this unstable holder structure.
However, as holdings become more diversified—with millions of investors holding small positions rather than thousands holding huge positions—the market structure will become more stable.
Think about it in practice: if 100 people hold 50% of the supply, and one of them decides to sell, 0.5% of the total supply will flood the market, inevitably affecting the price; but if 1 million people hold 50% of the supply, even if 10,000 people decide to sell, the total selling pressure is still 0.5%, but it will be spread across thousands of transactions at different times, prices, and platforms, thus diluting the impact.
This is exactly what happens after an IPO: the initial shareholder group is small (founders, early employees, venture capitalists), and after the IPO and the lock-up period expires, shareholding becomes diversified—the number of holders increases from hundreds to millions, including index funds, retail investors, and institutions.
The decrease in stock volatility is not due to a decline in the company's attractiveness, but rather to a more robust shareholder structure.
Bitcoin is currently undergoing this shift. Early whale, who once single-handedly influenced the market, are now reducing their holdings to thousands of institutional investors through ETFs, millions of retail investors through exchanges, corporate finance departments, and pension funds.
Every Bitcoin that is transferred from a centralized account to a decentralized account makes the network more resilient, the price more stable, and the asset more mature.
Admittedly, this means that the days of 10-fold increases may be over, but it also means that the risk of a catastrophic crash triggered by concentrated selling has decreased.
A decentralized ownership structure is key to distinguishing speculative assets from durable stores of value, and it is also essential for Bitcoin to evolve from a magical internet currency into a global monetary asset.
Future Timeline
If this view is correct (and I believe the evidence strongly supports this judgment), what should investors expect?
First, patience is key. IPO distribution typically lasts 6-18 months, and the current process may have been underway for several months but is far from over. Furthermore, Bitcoin's cycle is faster than fiat assets; in Bitcoin's timeframe, we may have already exceeded 6 months. Currently, sideways movement is expected to continue, and Bitcoin will likely continue to disappoint by not rising alongside risk assets. Market sentiment may remain subdued for some time—without clear signals, and an upward move could suddenly begin even with existing positive factors.
Secondly, volatility will decrease. With diversified holdings, the dramatic rises and falls of previous cycles will moderate—the once common 80% drop may become 50%, and a 50% drop may become 30%; a tenfold increase may become a threefold increase. This will disappoint speculators seeking high risk, but it will reassure risk managers.
Third, its correlation with traditional risky assets may recover after the distribution period ends. Once early whale have completed their reductions and holdings are sufficiently diversified, Bitcoin may resume following market sentiment fluctuations, albeit with lower volatility and greater stability.
Fourth (a crucial point): Market sentiment will only improve after the distribution of tokens is largely complete. The current frustration stems from a lack of understanding of the current phase – they are waiting for Bitcoin to catch up with the stock market's gains and fear the end of the four-year cycle. Be patient; once the heavy selling pressure dissipates and institutions patiently accumulate early supply, the path forward will become clear.
The exact timeline cannot be predicted, but once you have seen similar patterns in traditional markets, you can identify the current trend.
Maturation of asset classes
Every revolutionary technology goes through this kind of evolution.
In the early days of the internet, companies founded by believers, though lacking business models, firmly believed that connectivity would change the world. They were right; many became extremely wealthy. Then came the bursting of the dot-com bubble and industry consolidation, a shift in ownership, and dreamers giving way to doers. The internet didn't die; instead, it truly realized its vision—just over a longer period than the early hype.
Personal computers, mobile phones, cloud computing, artificial intelligence—all transformative technologies follow a similar trajectory: early believers take huge risks, reap rich rewards after the technology succeeds, and ultimately realize their gains; then they enter a transitional period, which may seem like a failure, but is actually a step towards maturity.
Bitcoin is evolving along the exact same path.
Early holders took risks when Bitcoin was at risk of going to zero, endured ridicule, regulatory uncertainty and technical difficulties, built infrastructure, survived the Mt. Gox collapse crisis, persevered in the scaling debate, and actively promoted the technology when no one was listening.
They succeeded – Bitcoin is now an asset with a market value of over $1 trillion and has been recognized by the world's largest financial institutions.
Now, they are reaping the profits they deserve.
This is not the end of Bitcoin, nor even the beginning of its end, but rather the end of its beginning.
From speculation to institutional holding, from cypherpunk experiments to global assets, from concentrated holding to diversified holding, from violent fluctuations to stability, from revolutionary to fundamental.
Opportunities during the distribution period
What gives me confidence is that I've met him twice.
I understand how traditional finance works, and I'm familiar with IPOs, lock-up period expiration, and institutional portfolio construction models; I also understand the crypto community—the hopes, disappointments, and the different beliefs this time.
Sometimes it is different, and sometimes it is not.
The current situation with Bitcoin is not different; rather, it is a manifestation of the economic laws that have dominated the market for hundreds of years in a new context.
The low spirits felt by everyone are not a sign of failure, but rather a marker of the most difficult stage of the journey—early believers cashing out, and later believers feeling they've missed an opportunity. This stage is uncomfortable and frustrating, but essential.
The key insight that gives long-term investors confidence is that once the distribution of tokens is complete, Bitcoin's structure will be stronger than ever before.
When holdings are dispersed from thousands of early whale to millions of investors, assets become more resilient, less susceptible to manipulation by a single entity, more stable, more mature, and better able to absorb large amounts of capital without triggering violent fluctuations.
With the IPO nearing its end, early whale are reaping the rewards. The final form of Bitcoin will prepare it for the next phase—no longer a speculative tool for pursuing huge returns, but a fundamental monetary asset with a decentralized and stable holder structure.
This might sound boring to someone who buys in at $100 and dreams of it growing to $10 million. But for institutions managing trillions of dollars, companies seeking balance sheet diversification, and nations exploring reserve assets, boredom is exactly what they want.
The incentive of concentrated holding is being replaced by the enduring appeal of diversified holding, with early believers passing the baton to long-term holders with different motivations who buy at higher prices.
This is what success looks like; this is Bitcoin's IPO.
Once this process is complete, the distribution of shares ends, and holdings are sufficiently dispersed, true institutional adoption can officially begin—because the market can finally absorb large amounts of capital without worrying about the pressure of huge concentrated holdings waiting to exit.
The current consolidation is frustrating, sentiment is poor, and the divergence from risk assets is perplexing.
But Bitcoin's fundamentals have never been stronger, and the structural shift from concentrated to decentralized holdings is the necessary path for it to evolve from a revolutionary experiment into a lasting monetary asset.
The early whale are experiencing their own liquidity crisis, so let them be—they deserve it. And the Bitcoin they leave behind is stronger, more decentralized, and more resilient than when they first held it.
This is not a reason for despair, but rather an opportunity to build a position. Bitcoin's volatility is the price it pays in its infancy; its stability will be proof of its maturity.
