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 upfront: this is not investment advice, but a framework for thinking. Before any investment, ask yourself one thing: Can you bear the corresponding risk?
First: How to view Bitcoin as an asset
I still believe Bitcoin is a completely new asset class. In the long run, it is a superior "gold" asset.
(1) The total supply is capped at 21 million coins, written in the code, and no one can change it. Gold has new mining output every year; Bitcoin does not.
(2) Extremely high transferability. 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. For gold reserves, you can only trust central bank reports. In fact, the U.S. gold reserves haven't undergone a genuine independent third-party audit for many years.
Some might say, isn't Bitcoin mainly used in the gray market? That view is outdated. More and more countries and financial centers are legislating and establishing compliance frameworks to squeeze out the gray areas. Historically, most disruptive technologies have followed this path—early internet, early electronic payments—they start chaotic and then become regulated. Another key number: the penetration rate of digital currencies globally is about 3%-4% today. You can compare this to the internet at the time of the dot-com bubble burst (around 5% global penetration) or e-commerce in China when Alibaba went public in 2014 (around 3% penetration, reaching 60% a decade later).
I'm not saying Bitcoin will necessarily replicate this curve. But if you believe this is a genuinely existing, long-term valuable asset class, then 3%-4% means it is still very early. Early stage means opportunity, but it also means volatility will be extremely high!
Second: How to understand this round of decline
Let's lay out the facts first. Bitcoin peaked in October 2025 near $126,000. It then fell continuously for four months, with the most severe drop on February 5-6, 2026, falling 15% in a single day, briefly breaking below $61,000. The Fear & Greed Index dropped to single digits, an extreme zone that has only occurred 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% drop in a day would keep you awake at night, then this asset might not be for you. It's not a question of capability, but of nerve.
So why did it fall? My judgment is that this was a cyclical sell-off driven by high consensus. Bitcoin has a very clear four-year cycle because its ignition mechanism is the halving every four years. Historically, each post-halving period sees a cyclical peak within 12-18 months, followed by a correction. The last halving was in April 2024, and the peak in October 2025, roughly 18 months later, almost perfectly fits the historical pattern. This isn't magic; it's consensus. And consensus means experienced players who have lived through multiple cycles will begin systematic selling during this period to lock in profits. Long-term bullishness and periodic selling are not contradictory. Gold fell 45% from $1,900 in 2011 to $1,050 in 2015, and later rose to nearly $5,000 today.
The real difference in this cycle is ETFs and the handover. The U.S. approval of Bitcoin ETFs in 2024 was indeed important because it provided a compliant entry point for a large amount of institutional capital at once. But many overlook this: ETFs brought in new buyers but did not force early holders to sell out. Past Bitcoin holders were mainly two groups: early miners and the first wave of believers (OGs), with extremely low costs, some as low as a few hundred dollars. When Bitcoin saw a wave of institutional buying pushing the price to $120,000, if you were them, would you sell? Most likely, yes. So I believe this round is not fundamentally about Bitcoin failing, but a historic handover Bitcoin must undergo before becoming a mainstream asset. It's a shift from early believers to long-term institutional allocators. ETFs were just the first step, and this handover 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: From $32 to $2, a 93% decline.
2013-2015: From $1,100 to $170, an 85% decline.
2017-2018: From around $20,000 to $3,200, an 84% decline.
2021-2022: From $69,000 to $15,500, a 77% decline.
2025-2026 (so far): Approximately a 50% decline.
The magnitude of decline has been narrowing each cycle. This often indicates 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 outsized returns. If Bitcoin only had 5% volatility, its long-term returns would be similar to treasury bonds.
Third: What about the long-term view?
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 capitalization is approximately $20 trillion. With Bitcoin at $70,000, its total market cap is about $1.4 trillion, only 7% of gold's. Even if this narrative is only half fulfilled, and Bitcoin reaches 30%-50% of gold's market cap, the upside potential from today's perspective remains significant.
But I need to honestly tell you two things: I'm genuinely not advising you to buy now. The handover might not be over; the short-term market remains fragile. 50% might not be the bottom, or it might be. Nobody knows; anyone who knows is a wizard. Again, this is not investment advice. The volatility of digital assets is not suitable for most people.
What is the real risk? Some might ask if Bitcoin could go to zero. Personally, I think the probability of it going to zero is likely lower than the probability of it eventually reaching half of gold's market cap. The real risk often isn't the asset itself, but lies in two things:
(1) Your portfolio structure. If you're all-in, using leverage, or using money you shouldn't, even if Bitcoin rises 10x in the future, you might be forced out mid-way, and in the ugliest manner.
(2) Your depth of understanding of the asset. If you only bought because someone said it would go up, you will definitely not withstand a 50% drop. Only by truly understanding its underlying logic can you remain rational during a crash.
Let me give you a simple math problem: If this cycle is similar to the last one, with a 75% drop from peak to trough, and you bought at a point that's already down 50% from the peak, can you withstand another 50% drop from your purchase price? This isn't a prediction; it's arithmetic.
A final comparison
In 2000, a company we're all familiar with saw its stock price fall from $113 to $5.5, a 95% decline. Back then, everyone said the internet bubble had burst, e-commerce was dead. 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 had to survive to see that day.
It's the same with Bitcoin. The long-term logic hasn't changed, but short-term volatility is enough to kill 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 to ponder: When gold is up 60% and Bitcoin is down 50%, do you think this means the digital gold narrative has failed? Or does it indicate this round of handover is not yet complete? Is Bitcoin evolving from a speculative asset to an allocation asset? Or is it, in essence, just speculation?
How you answer actually reveals your deepest belief about this asset class.
