Author: Dovey Wan , Founding Partner, Primitive Ventures

Compiled by: Da Yu

In 2025, the cryptocurrency industry achieved almost all of its projected goals. Structurally, it should have been a stellar year.

But why does it feel so lifeless?

The fact that "the price didn't rise" doesn't mean it's all over. Bitcoin hit a new high. But the atmosphere, sentiment, internal confirmation, other cryptocurrencies following suit, and retail investor enthusiasm have all changed. Perhaps most worryingly, this once "leading asset for hot money" has now lost its appeal in terms of wealth effect and volatility.

Related cryptocurrency assets are no longer moving in sync with Bitcoin and Ethereum as they have in previous cycles:

1. Memecoins topped the list from Q4 2024 to Q1 2025, and the launch of Trump tokens further fueled this trend.

2. Cryptocurrency stocks peaked around the time of Circle's IPO and began to decline between May and August 2025.

3. Most altcoins have never formed a sustained trend. During upward movements, there is asymmetry, while during downward movements, it is entirely driven by all participants.

Zooming in, the situation becomes even stranger.

Despite a favorable policy environment, Bitcoin is expected to underperform almost all mainstream traditional financial assets in 2025, including gold, US stocks, Hong Kong stocks, A-shares, and even some bond benchmark indices.

 (Bitcoin performs extremely poorly compared to other assets)

This marks the first time Bitcoin's performance has decoupled from all other asset classes.

This divergence is crucial: prices hit new highs, but this hasn't been internally confirmed, while other markets are performing better. This reveals a simple yet unsettling fact: Bitcoin's liquidity supply chain has undergone a significant shift, with its original four-year settlement cycle altered by larger forces in other markets.

Therefore, we will delve into who bought at the highs, who exited the market, and where the price bottom is.

Huge Gap: Onshore Operations vs. Offshore Operations

We have gone through three distinct phases in this cycle—

Phase A (November 2024 to January 2025): Trump's election victory and a more favorable regulatory environment triggered FOMO (Fear of Missing Out) sentiment among both domestic and international investors. Bitcoin's price broke the $100,000 mark for the first time.
Phase B (April to mid-August 2025): After the deleveraging sell-off, BTC resumed its upward momentum and broke through $120,000.
Phase C (early October 2025): BTC hit its current all-time high in early October, then experienced a flash crash on October 10th, and entered a period of adjustment.

At each stage, we have seen a significant difference between US buying and overseas selling.

Spot: Buy onshore for breakouts, sell offshore for strength at higher prices.

Coinbase Premium remained positive in phases A, B, and C. The high level of buying demand primarily stemmed from domestic spot market funds.
Coinbase BTC balances trended downward throughout the period. Available inventory in the US decreased.
With the price rebound during Phase B and Phase C, Binance balances increased significantly. Offshore spot holders replenished their inventories, potentially increasing selling pressure.

Futures: Offshore leverage increased, onshore positions decreased.

Offshore open interest (Binance and other offshore trading platforms) experienced a surge in phases B and C. Leverage ratios rose. Even after October 10th, leverage ratios quickly fell back and recovered to or exceeded their previous peaks.

Since the beginning of 2025, onshore open interest (CME) has been declining. Institutional investors have not increased their risk exposure despite new highs in contracts.

At the same time, Bitcoin volatility and price movements have diverged.

In August 2025, when the price of Bitcoin first broke through $120,000, DVOL was nearing a local low. The options market did not adequately compensate for the ongoing risk.

Each "top" seems to reflect a divergence between domestic and foreign traders. When domestic spot funds drive prices to break through, foreign spot traders take the opportunity to sell. When foreign leveraged capital chases the rise, domestic futures and options traders reduce their positions and remain on the sidelines.

Where are the marginal buyers? Who else can take over?

Glassnode estimates that the amount of Bitcoin held by enterprises and DAT-type instruments will increase from approximately 197,000 at the beginning of 2023 to approximately 1.08 million by the end of 2025, a net increase of approximately 890,000 over two years. DAT has become one of the largest structured investment vehicles in the Bitcoin system.

Another area that is often misunderstood is ETFs. By the end of 2025, US spot Bitcoin ETFs held approximately 1.36 million Bitcoins, representing a year-on-year increase of about 23%, or about 6.8% of the circulating supply.

Institutional investors (13F filers) hold less than a quarter of the total number of ETFs, and most of them are hedge funds and investment advisors, clearly not the well-known "diamond hand" family members.

The death of retail investors

Since the beginning of 2025, traffic data from Binance, Coinbase, and other top exchanges clearly indicate that retail investor sentiment has remained weak following Trump's dumping of his "meme coins."

Furthermore, since the beginning of 2024, the overall social sentiment among retail investors has actually been bearish.

Since reaching its peak in 2021, the website's overall traffic has been declining.

The record high price of Bitcoin did not cause traffic to fall back to previous levels.

You can read more about this topic in our article from last year : "Who are the marginal buyers?"

The exchange's strategy has also been adjusted accordingly. Faced with high customer acquisition costs and low activity among existing users, the exchange has shifted from "striving for growth" to "retaining existing capital through yield-generating products and multi-asset trading (actively listing US stocks, gold, and foreign exchange)".

Everywhere else, there's a bull market.

The real "wealth effect" in 2025 wasn't reflected in the cryptocurrency sector: the S&P 500 (+18%), Nasdaq (+22%), Nikkei (+27%), Hang Seng Index (+30%), KOSPI (+75%), and even the A-shares market rose by 19%, all achieving strong growth. Gold (+70%) and silver (+144%) also saw significant increases, making "digital gold" seem somewhat ridiculous in comparison.

Artificial intelligence stocks, 0DTE (zero-day trading), and commodities such as gold and silver have further diminished its appeal.

Speculators' money did not rotate into alternative investments. Many people withdrew completely and returned to the stock volatility market, while new speculators happily made profits in the US stock market or their home country's stock market.

Even South Korean retail investors were selling off Upbit and instead betting on the KOSPI index and US stocks: Upbit's average daily trading volume in 2025 decreased by approximately 80% compared to 2024. During the same period, the KOSPI index rose by over 75%. South Korean retail investors net bought approximately $31 billion worth of US stocks.

Who is the biggest dumper?

Every cycle has its top sellers who sell at local highs, but interestingly, the timing of this cycle's selling coincides with the time of RS divergence.

Bitcoin had previously been closely correlated with the performance of US tech stocks until around August 2025, when it began to lag significantly behind ARKK and Nvidia, followed by a crash on October 10th, and has yet to make up for the previous gap.

Just before this divergence occurred, in late July, Galaxy disclosed in its financial reports and media briefings that it had executed a sell order for over 80,000 bitcoins on behalf of a long-time holder. This transaction brought the phenomenon of "Satoshi-era whales taking profits" into the public eye.

Mining company sells assets to fund artificial intelligence capital expenditures

From the Bitcoin halving in 2024 to the end of 2025, miner reserves experienced their most sustained decline since 2021. By the end of the year, reserves stood at approximately 1.806 million Bitcoins. Hashrate decreased by about 15% year-over-year.

Under the "AI Outflow Plan," miners transferred approximately $5.6 billion worth of Bitcoin to exchanges to fund the construction of AI data centers.
Companies like Bitfarms, Hut 8, Cipher, and Iren are transforming sites into AI and high-performance computing parks, signing 10- to 15-year computing contracts, and viewing electricity and land as "gold in the age of AI."
Riot is the representative of HODL, and the company announced in April 2025 that it would begin selling all the coins mined each month.

It is estimated that by the end of 2027, approximately 20% of mining power capacity could be redeployed to AI workloads.

China has taken even stricter measures. In December 2025, Xinjiang once again became a target of the People's Bank of China and various ministries. Approximately 400,000 ASIC miners were forced offline, causing global hashrate to drop by 8% to 10% within a few days.

Gray Whale: Bitcoin Black Hangover

Similar to the significant impact of the PlusToken scam in the 2021 cycle, several large-scale fraud and gambling cases in 2025, including Qian Zhimin's Ponzi scheme/cult network and the case of the Cambodian Prince Group/Chen Zhi, are likely to be the main driving forces behind the surge in Bitcoin prices.

Both cases involved the seizure of tens of thousands of Bitcoins, with the total amount reaching or exceeding 100,000 black coins.

This may also increase potential selling pressure from governments, while also significantly suppressing large gray markets that hold Bitcoin long-term. This could create selling pressure in the short to medium term, but is generally positive in the long run.

2026 Outlook

Under this new structure, the original "four-year halving cycle" is no longer a viable self-fulfilling path.

The next phase of the regime will be driven primarily by two axes.

Vertical sectors: macro liquidity and credit conditions, interest rates, fiscal stance, and the AI investment cycle.
Horizontal Analysis: Valuation and Premium Levels of DAT, ETFs, and Other Bitcoin Alternatives

Early Bitcoin winners, including veteran players, miners, and Asian gray whales, are distributing tokens to passive ETF holders, DAT structures, and long-term national capital.

Bitcoin's trajectory appears to resemble that of FAANG between 2013 and 2020: the market is slowly shifting from high-beta investment strategies dominated by early retail and growth funds to passive allocation strategies dominated by index funds, pension funds, and sovereign wealth funds.

Bitcoin is now an easily accessible crypto asset without any physical contact with cryptocurrency. You can buy it through a brokerage account, manage it like an ETF, with clear accounting and the ability to explain it to the trader's investment committee in five sentences.

The valuations of most other crypto assets are not based on their actual utility or legitimacy in physical markets and on Wall Street.

We always look forward to a new bull market, but it would be great if this bull market were not just about price increases, but also about utility increases, which could transform the legitimacy of the ETF era into on-chain demand, passive holding into active use, and bring real returns, rather than just a constantly changing narrative.

If this happens, today's "locked-in players" will not look like the biggest losers of one cycle, but rather like the first investors of a new cycle.

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