Author: nikshep
Compiled by: Luffy, Foresight News
AI has taken away Bitcoin's speculative risk attributes, and dollar-backed stablecoins have replaced Bitcoin as the universal circulating currency in the crypto market; the anchor that once silently held together the fragmented crypto world is no longer Bitcoin. This is the most favorable structural change for the crypto industry in years, yet few understand the logic behind it.
This week, Bitcoin fell below $70,000, plummeting about 45% from its peak last October, causing widespread lament in the market. Spot ETFs experienced historic large-scale and sustained outflows, marking the longest redemption cycle since their launch; the price action of Bitcoin, hailed as "digital gold," remains sluggish, while physical gold surges ahead.
But the market's regret is misplaced.
Just as Bitcoin continues its decline, an on-chain exchange largely unheard of by most surpassed Coinbase in trading volume last year; a prediction market platform's valuation soared to $20 billion, with annualized fee revenue reaching $365 million; a privacy coin, once viewed skeptically by the market, rose 70% in a single week, charting an independent course while Bitcoin moved sideways; and a long-underestimated underlying network enables private transfers across all chains, where users don't even need to buy its native token to transfer assets.
The crypto industry has not sunk with Bitcoin. Crypto no longer needs Bitcoin.
This statement may seem bearish at first glance, but the reality is quite the opposite. Crypto is maturing, moving beyond the wild stage where all coins were tied to Bitcoin's price movements and speculation-driven rallies, evolving into a dollar-denominated real economic ecosystem. Projects now succeed or fail based on their own fundamentals. A new underlying infrastructure for interconnectivity is replacing Bitcoin, linking together the entire crypto world.
This year, Bitcoin has lost two of its core functions. Two new types of entities have stepped in as replacements, and the vacant niches in the old ecosystem are nurturing entirely new opportunities.
AI Has Taken Bitcoin's Risk-Speculation Capital
Bitcoin itself generates no cash flow, has no profits, dividends, or interest. Its price fluctuations are almost entirely determined by the volume of speculative capital, making it a typical capital reservoir: prices surge during periods of loose liquidity and plunge when capital tightens. In 2026, the AI sector emerged powerfully, continuously diverting speculative hot money that once flowed into Bitcoin.
Global investment in AI infrastructure this year is projected to be in the range of $700 billion to $830 billion, roughly equivalent to half the size of the US investment-grade bond market, with the potential to reach $7 trillion by 2030; the AI industry contributes about 5% of US GDP, and its contribution to US economic growth now exceeds that of household consumption. Nvidia alone accounts for 8% of the S&P 500 index weight. AI is no longer just another sector; it has formed a super-strong gravitational field for capital, reshaping the pricing logic of capital across the entire market.
AI is continuously draining capital from Bitcoin across three dimensions:
1) AI has captured the core narrative. Bitcoin's past core selling point was "betting on an asymmetric future opportunity," but AI has tangible revenue, continuously exploding market demand, and policy support from governments. Investors can gain exposure through index funds. Institutions now categorize Bitcoin alongside speculative, non-profit-generating meme stocks as part of the same risk asset pool. Within the same risk pool, one side offers profit realization while the other relies purely on expectation. Capital naturally continues to exit Bitcoin, which is the root cause of the consecutive ETF redemptions.
2) AI needs capital. AI expansion heavily relies on debt financing. Cloud giants' bond issuance has already surpassed last year's total, and private credit targeting the AI industry has exceeded $200 billion. Massive debt issuance by high-quality targets absorbs top-tier capital, leaving less and less to trickle down to high-risk assets like Bitcoin.
3) AI forces a high-interest-rate environment. The AI industry drives up production costs for electricity, water, storage chips, etc., with price increases generally in the 5% to double-digit range, anchoring US inflation around 3.8%. The Fed is forced to maintain a high benchmark rate of 3.50%–3.75%, with the market expecting almost no rate cuts this year. AI not only competes with Bitcoin for capital but also locks in a tight liquidity environment from a macroeconomic perspective.
Additionally, the computing power side is also being disrupted. Bitcoin mining and AI computing power are essentially about converting electricity into computing power, competing for the same power resources. However, Nvidia servers offer far higher economic efficiency per unit of electricity than mining rigs. Last quarter, the comprehensive cost for top publicly traded mining firms to mine one Bitcoin was about $80,000, but the market price was only $70,000, resulting in a loss of $19,000 per coin. Numerous mining firms are transitioning to AI computing: the industry has signed over $70 billion in AI supercomputing cooperation orders, with top miners expecting AI business revenue to account for up to 70% by year-end. Core Scientific spent $10.2 billion to convert a 300-megawatt Bitcoin mining facility into an AI data center; Riot sold its own Bitcoin and leased land to AMD. These entities, once guardians of Bitcoin's network security, are collectively exiting.
Compared to the quantum computing risk many fear, AI brings permanent structural change. Even if future quantum computers could crack Bitcoin's encryption algorithms, the industry could patch the protocol through post-quantum cryptographic standards and soft forks. However, AI's capture of narrative, capital, and power resources is irreversible; no protocol upgrade can reverse it. Bitcoin's first core value is now completely obsolete.
Dollar Stablecoins Replace Bitcoin as the Base Money of the Crypto Market
This is the most easily overlooked critical change. Throughout crypto's development history, Bitcoin long served as the industry's reserve asset and on/off-ramp intermediary: fiat was first converted to Bitcoin, then exchanged for various altcoins. All coins were priced in BTC, and incoming off-chain capital had to buy Bitcoin first. This was the root cause of the synchronized price movements across the entire market in the past.
Stablecoins have severed this link. USDC trading volume surpassed USDT for the first time since 2019, and global stablecoin annual transaction volume has exceeded $30 trillion. The current user on-ramp path is now: fiat → USDC → various assets. Bitcoin has been completely removed from the circulation chain. Polymarket relaunched this year with its own native dollar stablecoin (pegged 1:1 to USDC reserves), and Hyperliquid settles entirely in US dollars across its platform. As summarized within the industry: stablecoins have become the underlying universal reserve currency for applications, with various platforms merely placing their own label on top.
Therefore, when market risk aversion increases, dominance charts show Bitcoin's share declining while stablecoins' share rises. Capital is not leaving the crypto market; it is merely switching within the industry to dollar-denominated assets. Investors looking to gain exposure to the crypto sector no longer need to hold Bitcoin; dollar stablecoins have taken over this function. On-chain transactions all operate in dollars, and on-chain capital flows can no longer bring buying pressure to Bitcoin. Bitcoin's second core function has officially concluded.
After Breaking Free from Bitcoin, the Crypto Economy Thrives
Setting Bitcoin aside, today's realized products are no longer speculative chips tied to coin prices but commercially viable projects with genuine cash flow.
The existence of Hyperliquid alone debunks the notion that "cryptocurrency is dying." This on-chain spot and perpetuals exchange matches the order book depth and transaction speed of top-tier CEXs, with users self-custodying their assets; its total trading volume last year was $2.6 trillion, higher than Coinbase's $1.4 trillion, with annualized revenue of $8–13 billion. The platform uses 97% of its fees for secondary market buybacks and burns of its native HYPE token. The annual buyback volume is approximately $13 billion, accounting for 7% of the token's total market cap, with a burn rate 4–5 times that of Ethereum's and 14 times that of Solana's. The project received no venture capital funding, achieving a value flywheel through community airdrops and fee buybacks. Trading volume fluctuations depend entirely on trader demand and have no correlation with Bitcoin's price action. The platform's scale grew against the trend during Bitcoin's bear market.
Another key player is the prediction market leader Polymarket, valued at $20 billion, with annual trading volume of $250–300 billion, annualized fees of $365 million, and daily active users increasing 2.5 times in five months; it issued its own platform dollar stablecoin, and its token is soon to be listed. Polymarket's product revolves around betting on elections, sports events, and global happenings, with demand independent of Bitcoin price movements.
Projects like these now adopt traditional corporate valuation logic: revenue, user base, valuation multiples—a clear sign of the industry's maturation.
The New Sector Bonus: Privacy Becomes a Scarce Resource
If Bitcoin's transparent and monitored ledger was the default option of the past, then privacy is the new upgrade option. This is a sovereign, untraceable currency that can only be obtained on-chain. But the way to acquire this currency is entirely different, and this distinction is key.
Self-custodied privacy. Zcash (ZEC) surged 70% in a single week, with its total market cap approaching $10 billion, up over 45x from its 2024 low, charting an independent course while Bitcoin moved sideways. Its fundamental support is solid: the proportion of private transaction volume increased from 11% last year to 30%, and most private assets are not transferred back to public chains, leading to a continuously shrinking circulating supply coupled with rising demand. Regulatory pressures that once suppressed privacy compliance have ironically boosted the realization of privacy coin value: Robinhood listed ZEC spot trading, and Grayscale filed for the industry's first privacy coin spot ETF. Privacy has evolved from a single-use case into a long-term investment thesis. However, using ZEC requires purchasing the token separately and switching to its public chain.
Omnichain universal privacy. NEAR eliminates the need to buy a specific privacy token or migrate assets across chains. Leveraging on-chain signature technology, a single NEAR account can directly control native assets on Bitcoin, Ethereum, and Solana, without wrapped tokens or cross-chain bridge risks, relying on a decentralized multi-party secure computation network for key custody. Combined with a confidential intent protocol, users can privately transfer assets on any public chain, with transaction counterparties and routing information hidden throughout the process, executed via private sharding. User assets remain on their original chains, turning privacy into a universally applicable underlying service.
Compared to a single privacy coin, this model is more disruptive. Users don't need to hold ZEC or leave the native ecosystems of Ethereum or Bitcoin. Privacy transforms from an exclusive asset attribute into a default feature for all transactions.
The Underlying Coordination Layer for the Multi-Chain Era, Replacing Bitcoin's Hub Role
Looking at the broader crypto landscape: the industry is no longer converging but rather operating with multiple chains in parallel, with ecosystems continuously expanding. Dollar stablecoins have become the underlying universal currency, and AI agents autonomously holding credentials, calling interfaces, and transferring funds have become new participants.
The vast multi-chain + agent ecosystem urgently needs interconnected infrastructure, a role Bitcoin played over the past decade. That vacancy is now being filled by a new coordination and privacy layer: cross-chain signing, dollar settlement, private transactions, and agent automation.
NEAR is targeting this sector. It supports AI agents settling privately in USDC, leverages hardware security zones for confidential computation, and aims to build its signature network into the key management hub for the agent economy, providing chain-agnostic cross-chain and privacy services for users and bots.
Another product in this space is Venice. It focuses on AI applications with private interactions, attracting a large number of native Web2 users; staking its platform token VVV allows users to share AI inference revenue. The project has bought back and burned over 40% of its token circulating supply, with demand driven by AI usage volume, decoupling its token's performance from Bitcoin.
The new focal point of the industry has already taken shape: it is no longer a single cryptocurrency but the underlying infrastructure, with various substantive projects creating real value by building upon it.
Summary
Putting it all together: The US dollar is the circulating cash for the entire industry. Project tokens like HYPE, POLY, ZEC, NEAR, VVV correspond to corporate equity. The privacy-cross-chain layer is the infrastructure linking the entire industry. Bitcoin is just one segment within this ecosystem. With AI capturing the macro speculative pool, physical gold absorbing safe-haven demand, and stablecoins monopolizing the reserve currency function, Bitcoin's former glory has faded under this triple pressure.
The era of the entire industry obsessively watching Bitcoin's price action, with all altcoins following its lead, is over. Now, evaluating projects aligns with traditional corporate standards: Does it have real revenue? Active users? Can the token capture the project's growth?
Stop using Bitcoin's price fluctuations to gauge the health of the crypto industry. Focus instead on project revenue, user growth, and the underlying infrastructure that connects all chains: the omnichain infrastructure enabling private transfers, dollar settlement, and cross-chain interoperability for both humans and machines.
AI has taken the macro speculative capital. The US dollar has taken the reserve currency status. A new underlying protocol has taken on the responsibility of interconnecting the entire industry. Bitcoin falling below $70,000 is not the end of crypto; it is the historic inflection point where crypto finally breaks free from Bitcoin's constraints.
