Author: @wuk_Bitcoin
This article doesn't discuss predictions or macro-level narratives; from Jason's perspective, it only covers three things:
- How should we view Bitcoin as an asset?
- How to understand this round of decline;
- What are your thoughts on the medium- to long-term development of Bitcoin?
It must be made clear that this is not investment advice, but rather a framework for thinking. Before making any investment, ask yourself one thing: can you bear the corresponding risks?
First: How should we view Bitcoin as an asset?
I still believe that Bitcoin is a completely new asset class, and in the long run, it is a superior "gold" asset.
(1) The total supply is limited to 21 million coins, which is written in the code and cannot be changed by anyone. Gold has an additional amount of new mining every year, but Bitcoin does not.
(2) Extremely high transferability. Moving $100 million worth of gold from one country to another requires armed escort; $100 million worth of Bitcoin only requires a key. In an era of increasing geopolitical and global uncertainty, the transferability of assets itself carries a premium.
(3) Auditable. Every Bitcoin transaction is on-chain and can be verified by anyone. As for gold reserves, you can only trust the central bank's reports. In fact, the US gold reserves have not undergone a truly independent third-party audit for many years.
Some might argue that Bitcoin is primarily used in gray areas. This view is outdated. More and more countries and financial centers are now enacting legislation and enforcing regulations to squeeze out these gray areas. Historically, most disruptive technologies have followed this path; the early internet and early electronic payments were initially chaotic before becoming standardized. Another crucial statistic is that the global penetration rate of digital currencies is currently only around 3-4%. You can compare this to the internet's penetration rate during the dot-com bubble burst in 2000, when it was around 5% globally; and e-commerce penetration in China was around 3% when Alibaba went public in 2014, but reached 60% ten years later.
I'm not saying Bitcoin will definitely replicate this curve. Rather, if you believe this is a real, long-term value asset class, then 3%-4% means it's still very early. Early stage means opportunity, but it also means extremely high volatility!
Second: How to understand this round of decline
Let's start with the facts: Bitcoin peaked in October 2025, near $126,000. It then experienced a four-month decline, peaking on February 5-6, 2026, with a single-day drop of 15%, briefly falling below $61,000. The Fear & Greed Index plummeted to single digits, an extreme range that has only occurred a few times in history. Then, the very next day, it rebounded 11%, climbing back above 70,000.
This is Bitcoin; its volatility is several times that of traditional assets. If you can't sleep if it drops 15% in a day, then this asset might really not be right for you. This isn't a matter of ability, but rather a matter of mental fortitude.
So why the drop? My assessment is that this is a cyclical sell-off driven by a high degree of consensus. Bitcoin has a very clear four-year cycle because its mechanism involves a halving every four years. Historically, a cyclical high has appeared 12-18 months after each halving, followed by a correction. The last halving occurred in April 2024, peaking in October 2025, roughly 18 months later, almost perfectly matching history. This isn't just a sign, it's a consensus. And consensus means that experienced players who have weathered multiple cycles will begin systematically selling during this period to lock in profits. Long-term optimism and phased selling are never contradictory. Gold fell from $1900 in 2011 to $1050 in 2015, a 45% drop, before rising again to nearly $5000 today.
The real difference in this round lies in ETFs and the turnover. The approval of Bitcoin ETFs in the US in 2024 was indeed significant, as it provided a compliant entry point for a large amount of institutional funds. However, many overlooked this point: while ETFs brought in new buyers, they didn't force existing buyers to exit prematurely. Past Bitcoin holders were primarily of two types: early miners and the earliest believers (OGs), whose costs were extremely low, some even a few hundred dollars. When a large influx of institutional buying drove Bitcoin up to $120,000, would you sell if you were them? Most likely you would. Therefore, I believe this round isn't essentially about Bitcoin failing, but rather a historic turnover that Bitcoin must undergo before becoming a mainstream asset. It's a shift from early believers to long-term institutional investors. ETFs are just the first step, and the turnover may not be over yet.
An often overlooked pattern: if you look at all the major pullbacks in Bitcoin's history together, you'll find a very interesting phenomenon.
In 2011, it fell from $32 to $2, a drop of 93%.
Between 2013 and 2015, the price fell from $1,100 to $170, a drop of 85%.
Between 2017 and 2018, the price fell from around $20,000 to $3,200, a drop of 84%.
The price fell from $69,000 to $15,500 in 2021-2022, a drop of 77%.
Up to 2025-2026, the decline is approximately 50%.
Each round of declines is narrowing. This usually means one thing: the asset is maturing, volatility is decreasing, because the holder structure is changing. Of course, a 50% drawdown is still significant, but it's not a bug, it's a feature. High volatility is the price you pay for excess returns; if Bitcoin only had 5% volatility, its long-term returns would be similar to government bonds.
Third: How do we view this in the long term?
I have a simple framework: if you believe Bitcoin is digital gold, then its long-term value should be comparable to physical gold. Today, gold's market capitalization is approximately $20 trillion, while Bitcoin's total market capitalization at $70,000 was about $1.4 trillion, only about 7% of gold's. Even if this narrative only materializes halfway, reaching 30%-50% of gold's market capitalization, there's still significant upside potential from today's perspective.
But I want to be honest with you about two things: I really don't recommend that you buy now. The turnover may not be over yet, the market is still very fragile in the short term, and 50% may not be the bottom, or it may not be. Nobody knows. Only a god knows. There is still no investment advice here. The volatility of digital assets is not suitable for most people.
What is the real risk? Some might ask if Bitcoin will go to zero. Personally, I think the probability of it going to zero is probably lower than the probability of it reaching half the market capitalization of gold in the long run. The real risk often lies not in the asset itself, but in two things:
(1) Your position structure. If you go all in, use leverage, or use money you shouldn't, even if Bitcoin rises 10 times in the future, you may still be forced out halfway through, and in the ugliest way.
(2) Your depth of understanding of the asset. If you only listen to others saying it will rise, you will definitely not be able to withstand a 50% drop. Only by truly understanding its underlying logic can you remain rational during a crash.
Let me do a very simple math problem for you. If this cycle is the same as the last one, with a 75% drop from the high to the low, and you bought in when it had already dropped 50%, could you withstand another 50% drop? This isn't prediction; it's arithmetic.
The last comparison
In 2000, there was a company we're all familiar with whose stock price plummeted from $113 to $5.50, a 95% drop. Back then, everyone said the dot-com bubble had burst and e-commerce was doomed. Today, that company's stock price is around $240, roughly a 42-fold increase; it's called Amazon. In hindsight, it seems easy, but the prerequisite is: you have to survive until that day.
The same applies to Bitcoin. The long-term logic remains unchanged, but short-term volatility is enough to wipe out anyone who doesn't know how to manage their positions. So what really matters is not whether it will rise, but whether you can survive until it does.
Finally, I'd like to ask a question: When gold rose by 60% while Bitcoin fell by 50%, do you think this means the narrative of digital gold has failed, or does it indicate that this round of consolidation is not yet over? Is Bitcoin evolving from a speculative asset to a portfolio asset? Or is it essentially a speculative investment?
How you answer actually reveals your most fundamental belief in this asset class.
