Author: @wuk_Bitcoin
This article is not about predictions or macro narratives. From Jason's perspective, it focuses on three things:
- How to view Bitcoin as an asset;
- How to understand this round of decline;
- How to view Bitcoin's medium to long-term development going forward.
It must be clarified that this is not investment advice, but a framework for thinking. Before any investment, ask yourself one thing: Can you bear the corresponding risks?
First: How to View Bitcoin as an Asset
I still believe Bitcoin is an entirely new asset class and, in the long run, a superior 'gold' asset.
(1) It has a finite supply of 21 million coins, written in code, and no one can change it. Gold has annual new production; Bitcoin does not.
(2) Extremely transferable. Moving $100 million worth of gold from one country to another requires armed transport; moving $100 million worth of Bitcoin requires only a private key. In an era of increasing geopolitical and global uncertainty, the transferability of an asset itself carries a premium.
(3) Auditable. Every Bitcoin transaction is on the blockchain, verifiable by anyone. With gold reserves, you must trust central bank reports. In fact, the U.S. gold reserves haven't undergone a true third-party independent audit for many years.
Some might say, isn't Bitcoin mainly used in the grey market? That view is outdated. More and more countries and financial centers are legislating and regulating, squeezing out the grey areas. Historically, most disruptive technologies have followed this path—early internet, early electronic payments—first chaotic, then regulated. Another key number: global digital currency penetration today is roughly 3%-4%. You can compare this to the internet's penetration of about 5% during the 2000 bubble burst, or e-commerce penetration in China at about 3% when Alibaba went public in 2014, reaching 60% a decade later.
I'm not saying Bitcoin will necessarily replicate this curve. But if you believe this is a real, long-term valuable asset class, then 3%-4% means it's still very early. Early means opportunity, but also means volatility will be enormous!
Second: How to Understand This Round of Decline
First, the facts: Bitcoin peaked in October 2025 near $126,000. It declined steadily over the next four months, most sharply on February 5-6, 2026, with a single-day drop of 15%, briefly falling below $61,000. The Fear & Greed Index dropped to single digits, an extreme zone that has only appeared a few times in history. The next day, it rebounded 11%, reclaiming $70,000.
This is Bitcoin. Its volatility is several times that of traditional assets. If a 15% daily drop keeps you awake at night, this asset may truly not be for you. It's not a question of capability, but of nerve.
So why the drop? My judgment is that this is a cyclical sell-off under high consensus. Bitcoin has a very clear four-year cycle due to its halving mechanism every four years. Historically, a cyclical high occurs 12-18 months after each halving, followed by a correction. The last halving was in April 2024, peaking in October 2025—about 18 months, almost perfectly matching history. This isn't superstition; it's consensus. And consensus means experienced players who have been through multiple cycles will systematically begin selling during this period to lock in profits. Long-term bullishness and periodic selling are never contradictory. Gold fell 45% from $1,900 in 2011 to $1,050 in 2015, only to later rise to nearly $5,000 today.
The truly different aspect this round is ETFs and turnover. The U.S. approval of Bitcoin ETFs in 2024 is indeed important, as it provided a compliant entry point for a large amount of institutional capital. But many overlook this: ETFs brought in new buyers but didn't force old buyers to sell out beforehand. Past Bitcoin holders were mainly two groups: early miners and the first believers (OGs), with extremely low costs—some even a few hundred dollars. When Bitcoin saw a wave of institutional buying, surging to $120,000, would you, if you were them, sell? Very likely. So I believe this round is not about Bitcoin failing, but about the historic turnover Bitcoin must undergo before becoming a mainstream asset: from early believers to long-term, allocation-focused institutions. ETFs are just the first step, and the turnover may not be over.
A frequently overlooked pattern: if you look at Bitcoin's major historical drawdowns together, you'll find an interesting phenomenon.
2011: $32 to $2, a 93% drop
2013-2015: $1,100 to $170, an 85% drop
2017-2018: ~$20,000 to $3,200, an 84% drop
2021-2022: $69,000 to $15,500, a 77% drop
2025-2026 (so far): ~50% drop
The magnitude of each cycle's drop 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 huge, but this isn't a bug; it's a feature. High volatility is the price you pay for potentially superior returns. If Bitcoin only had 5% volatility, its long-term returns would likely be similar to government bonds.
Third: How to View the Long Term?
I have a simple framework: if you believe Bitcoin is digital gold, its long-term value should be benchmarked against physical gold. Today, gold's market cap is roughly $20 trillion. Bitcoin at $70,000 has a total market cap of about $1.4 trillion, equivalent to only 7% of gold's. Even if this narrative is only half realized, and Bitcoin reaches 30%-50% of gold's market cap, the upside from today remains significant.
But I need to tell you two things honestly: I am not advising you to buy now. The turnover may not be over; the short-term market remains fragile. 50% might not be the bottom; it might be. No one knows; those who claim to know are wizards. This is still not investment advice. Digital assets' volatility isn't suitable for most people.
What is the real risk? Some ask if Bitcoin could go to zero. Personally, I think the probability of it going to zero is lower than the probability of it eventually reaching half of gold's market cap. The real risk often isn't the asset itself, but two things:
(1) Your position sizing. If you go all-in, use leverage, or use money you shouldn't, even if Bitcoin rises 10x in the future, you might be forced out along the way, and in the ugliest manner.
(2) Your depth of understanding of the asset. If you're just buying because someone said it will go up, you definitely won't hold through a 50% drop. Only by truly understanding its underlying logic can you remain rational during a crash.
Let's do simple math: if this cycle mirrors the last one with a 75% drop from peak to trough, and you bought after a 50% drop, could you withstand another 50% drop from your entry? This isn't prediction; it's arithmetic.
A Final Comparison
In 2000, a company we all know well saw its stock price drop from $113 to $5.5, a 95% decline. At that time, everyone said the internet bubble had burst, e-commerce was over. Today, that company's stock is around $240, roughly a 42x increase from that low. It's called Amazon. In hindsight, it's easy, but the premise is: you have to survive until that day.
The same goes for Bitcoin. The long-term logic hasn't changed, but the short-term volatility is enough to wipe out anyone who doesn't manage their position. So what truly matters is never whether it will rise, but whether you can survive long enough for it to rise.
Finally, a question: When gold is up 60% and Bitcoin is down 50%, do you think this means the digital gold narrative has failed, or does it show this round of turnover isn't over yet? Is Bitcoin evolving from a speculative asset to an allocation asset? Or is it essentially just speculation?
How you answer reveals your most fundamental belief about this asset class.
