Author: Back of the Envelope
Compiled by: Shenchao TechFlow
Shenchao Guide: With AI stocks rising every day, why buy cryptocurrency? This is the question the author hears most often in recent conversations with friends. Even the most steadfast crypto believers are quietly reducing their holdings, waiting for BTC to drop to $50,000. This article unpacks the three most common watch-and-wait mentalities and examines the circumstances under which they might change. For investors and industry practitioners, this serves as a rare, honest snapshot of current market sentiment.
I spend a lot of time talking with friends about what we're investing in. Investing is a way to express one's beliefs about the future, so conversations about investment are, in essence, discussions about where we think the world is headed. What could be more interesting than predicting the future?
One topic that comes up frequently lately is crypto assets. More specifically, whether people are putting money into digital assets and what the future holds for most tokens. The most common views I hear are:
"Only 5-10 tokens are truly worth investing in."
"I hold some BTC and HYPE, but I've sold most of my other major coin positions. I'm in a 'buy-and-forget' mindset with the rest."
"I'm just waiting for BTC to hit $50k before I buy."
A recurring concern people mention is: If you can invest in the entire universe of assets, why choose digital assets over AI-related stocks (whose revenues might be compounding at breakneck speed)? What belief can holding crypto assets help you express that is stronger than 'inference demand will 10x in the future'?
The result is that the personal portfolios of many of my friends—including the most fervent crypto enthusiasts—are moving away from digital assets. People are content with their existing positions, waiting for lower prices, and/or simply feel the opportunity cost of putting money elsewhere is too high.
I think it's worth unpacking the beliefs implied by these views. If these beliefs hold true for individual investors—whose investable universe is unconstrained, and each asset must earn its place in the portfolio on absolute merit—they might also apply to institutions and funds with broad investment mandates. So the question behind this sentiment is: where will the marginal capital flowing into crypto assets come from (and over what timeframe can we expect this to happen)?
Here's how and why these beliefs might change over the next year. (Of course, these three points are interrelated).
Belief 1: Content with Existing Positions
My understanding is that many still believe in a future where digital assets (including digital stores of value) will be more important than they are today, but it's hard to identify a near-term catalyst. Market participants don't want to miss a crypto price surge, so they maintain some positions (even if they aren't confident in a swift price recovery).
In short: The belief in the long-term growth of this category persists, but it's not where they are spending their marginal time or capital. Changing this would require either an observable catalyst reigniting excitement or a rotation from other parts of their portfolio.
Belief 2: Waiting for Lower Prices
One way to look at this is as short-term timing—people think there will be more selling, so they're trying to find a better entry point. But timing is difficult. If you believe BTC will reach $200,000, the difference between entering at $60,000 and $50,000 isn't dramatic. More precisely, I believe the logic of "waiting for lower prices" reflects a belief about the market size and upside potential of crypto assets.
Several factors could change this. First is market timing. Many believe in the 4-year cycle, which would place the BTC bottom somewhere around the end of Q3/early Q4. If we pass that point without a major crash, we might see more people begin reallocating capital to crypto (i.e., out of fear of missing out on any rally). Similarly, if prices crash, there could be a bounce-back as people feel a bottom has been reached. Second, perhaps an event will occur that changes how people estimate the upside. For example, it would be exciting if we saw sovereign nations start allocating funds to digital assets! Maybe a shift in monetary policy could reignite interest in digital assets, etc. Finally, reflexivity could play a significant role. Even a slight price increase might lead people to capitulate (buying back) to avoid the risk of being left on the sidelines.
Belief 3: Opportunity Cost of Allocation
The question isn't just "Will this asset go up?" but rather "Will this go up *more* than the growth I can expect from other assets in my opportunity set?" When everything betting on AI—memory stocks, photonics, new clouds, chips...you name it—seems to be on a "only-up" trajectory, it's harder to justify putting marginal capital into anything that doesn't have the potential to exhibit hyper-fast growth (assuming growth is what you're optimizing for). The challenge is that if the AI productivity train slows down, the chance that the rest of the market sells off isn't zero. But then again, perhaps that marks a bottom (and the start of capital reallocation).
Conclusion
The thoughts above reflect the sentiments I've repeatedly heard in private discussions with highly respected, intelligent people, so this article aims to be a snapshot of current market thinking.
Overall, I suspect we are closer to a market bottom for digital assets than to a market top. But most importantly, I simply enjoy hypothesizing about market participant psychology and thinking about what beliefs might be expressed through asset prices.
Thanks to Jay Drain Jr, Jesse Walden, Hootie Rashidifard, Julian Fernandez, and many others for the conversations and feedback that inspired this article.
All information contained herein is for general informational purposes only. It does not constitute investment advice or a recommendation or offer to buy or sell any investment, nor should it be used to evaluate the merits of any investment decision. It should not be relied upon for accounting, legal, or tax advice or investment recommendations. You should consult your own legal, business, tax, and other relevant advisors regarding any investment. The opinions or positions presented here are not intended to be taken as legal advice or to establish an attorney-client relationship.
