After Bitcoin's crash, we finally don't have to pretend anymore

Author: Yuan Shan Dong Jian

Why do I answer people around me like this?

Someone asked me: Bitcoin dropped from 120,000 to 70,000, what do you think?

I said: Finally, I don’t have to pretend anymore. This is the most honest moment for Bitcoin.

When they print money, people say it’s to hedge inflation.

When ETFs get approved, people say it’s institutional recognition.

During a crash, people say it’s a risk asset.

Has the narrative collapsed? Good collapse.

I often see friends arguing: Is Bitcoin a safe-haven asset or a risk asset?

Some cite data: Look, when the US stock market drops, BTC also falls—definitely a risk asset, just like Nasdaq.

Others counter with history: During the pandemic in 2020 and the Russia-Ukraine war, BTC rose, clearly a safe haven.

And some institutions try to smooth things over: BTC is an “alternative asset,” it diversifies risk in a portfolio, blablabla.

But what if I tell you that this debate itself is a false proposition?

Because Bitcoin’s biggest problem now isn’t “what it is,” but that the market doesn’t know what story to use to price it.

More precisely: The narratives that once inflated BTC have all collapsed one after another. But maybe that’s actually the healthiest sign of this round of decline.

Let’s start from January 29,

That day, US stocks plummeted, safe-haven sentiment rose. Logically, if BTC is “digital gold,” it should at least hold steady.

On the same day, the Fed turned hawkish, with Powell’s successor Kevin Warsh known for being hawkish. Risk assets should have fallen.

But what happened?

BTC chose to drop about 7% under these two completely opposite macro conditions, from $96,000 straight down to around $80,000.

Yes, the market simply doesn’t know what logic to use to price BTC.

When stocks fall, BTC falls too—like a risk asset.

When the Fed is hawkish, BTC also drops—still like a risk asset.

But when gold rises, BTC doesn’t rise, and it’s not like a safe haven.

Here’s an interesting data point: The correlation between BTC and the S&P 500 was fluctuating before ETF approval in January 2024. But after approval? The correlation shot up, moving basically in sync.

BTC and the VIX index have a slight negative correlation of 0.16, but studies show: BTC’s dips often lead VIX’s rises.

It can be understood as: BTC is both a “risk asset that falls with stocks” and a “risk asset that falls earlier than stocks.”

Isn’t that a form of mental schizophrenia?

From $126,273 in October to now $70,370, a decline of about 44%. Market cap from a peak of $2.5 trillion down to about $1.4 trillion. This week, about $200 million in leveraged positions were liquidated, and ETF net outflows since the start of the year probably also total around $200 million.

Some say this is the start of a “death spiral.” Michael Burry (yes, the one from “The Big Short”) even issued a note saying this might be a “self-reinforcing collapse” of BTC—price drops, companies report poor earnings, forced selling, price keeps falling.

It looks pretty grim. But I want to say: This is actually Bitcoin’s most authentic moment.

In those years, BTC was packaged with three identities:

From 2017 to 2024, BTC experienced three “identity reshuffles”:

First: 2017–2020, Cyberpunk’s anti-government currency

The narrative then was “decentralized utopia,” “fighting central bank money printing,” “code is law.”

On Twitter, a bunch of people kept shouting “Not your keys, not your coins,” mocking fiat as a “government scam.”

But there’s a problem with this narrative: it’s too niche.

The number of people who understand the cyberpunk spirit is probably only a few hundred thousand worldwide. This narrative can’t support a trillion-dollar market cap.

Second: 2020–2023, Wall Street’s “digital gold”

In 2020, during the pandemic, the Fed printed money endlessly, and institutions started entering.

Michael Saylor from MicroStrategy led the buy-in, Grayscale created trusts, Tesla put BTC on its balance sheet.

The narrative then became: “BTC has limited supply, capped at 21 million, naturally anti-inflation, digital gold for the era.”

Sounds great, right?

But in 2022, US inflation hit 9% (a 40-year high), and BTC dropped 60%, while gold barely moved or even slightly rose.

This narrative collapsed.

Third: 2024–2025, Nasdaq’s tech growth stocks

In January 2024, the US approved a spot BTC ETF, with giants like BlackRock and Fidelity entering.

The narrative shifted again: “BTC is a new tech asset, like AI and blockchain, representing the future.”

But here’s the problem: if it’s a tech stock, it should follow Nasdaq.

As a result, in 2026, when tech stocks corrected, BTC fell even more sharply than anyone.

And this narrative also collapsed.

So what happens when the narratives collapse?

Now, BTC is in an awkward state: no narrative.

On Twitter, people argue back and forth, just trying to find a “legitimate reason” for BTC.

But have you ever thought that maybe BTC doesn’t need a fixed identity at all?

It’s just a mirror, reflecting the market’s most greedy or most fearful emotions at the moment.

In 2017, it reflected the frenzy of “decentralized utopia.”

In 2021, it reflected the greed of “printing money.”

In 2026, it reflects the confusion of “I don’t know what to believe.”

That answer sounds a bit vague.

But I want to say: the collapse of narratives might actually be a good thing.

Why is the collapse of narratives a good thing?

First, those who were misled by “false narratives” can finally exit.

Institutions that rushed in during 2021, shouting “fight inflation,” now see ETF outflows and can leave. Retail investors who bought BTC as tech stocks, with leverage, got margin calls and also left.

Who’s left?

Those who simply don’t care what BTC “is,” only that “I believe in this thing.” You might call them fools, but at least they’re honest.

Second, a BTC without a narrative is closer to its essence.

BTC has no cash flow, no dividends, no rent income. Its value depends 100% on “how much the next buyer is willing to pay.” It’s purely a consensus game.

When narratives were still there, everyone could pretend “I’m a rational investor.”

But when narratives collapse, you have to admit: it’s gambling.

What are you gambling on? That someone still believes.

Third, this isn’t the first, and certainly not the last time.

In 2018, BTC dropped from $20,000 to $3,000—a decline of 85%. Back then, some said “the narrative collapsed,” “the ICO bubble burst.”

In 2022, BTC fell from $69,000 to $16,000—a 77% drop. Some said “the institutional narrative is dead.”

But look, it bounced back. Not because it found a “perfect narrative,” but because some people just thought: whatever it is, I find this thing interesting.

Returning to the original question: what exactly is BTC?

Those Twitter debates about “safe haven or risk” might have forgotten one thing:

The market isn’t an exam room, and assets don’t need a standard answer.

Does BTC not know what it is?

That’s because the market itself doesn’t know what it wants.

In 2021, when they printed money, people said it was “hedging inflation.”

In 2024, when ETFs got approved, people said it was “institutional recognition.”

In 2026, during the crash, people said it’s “a risk asset.”

But have you ever thought that maybe none of these are BTC’s problem? Maybe we’re just too eager to label it?

BTC is just BTC.

It rises, you’re happy; it falls, you’re upset—that’s enough.

Those who spend all day studying “what it is” might really be asking:

“Can I find a reason to believe it will go up again?”

But if you need a reason to believe, then you don’t really believe.

In closing

Those who rely on stories like “digital gold,” “hedging inflation,” or “institutional entry” to fool people, can shut up now. The ones who truly stay are not because they’re smart, but because they don’t need narratives at all.

Some might say: Aren’t you just “recharging faith”?

Maybe.

But I prefer to believe: in a market full of uncertainty, admitting “I don’t know what it is” is more honest than pretending “I know.”

Screw narratives.

Make money when it rises, hold on when it falls, or just run away.

That’s the most authentic state of the crypto market.

Though this answer might be a bit vague, haha.

But at least it’s more honest than those pretending to have a standard answer.