In the context of significant price corrections in Bitcoin and a gloomy market sentiment, how do institutional investors view this flagship crypto asset? Matthew Sigel, the portfolio manager of VanEck's on-chain economy ETF ($NODE), recently shared his insights. The current market signals are complex and intertwined; while institutions maintain a high level of research and attention, they appear more cautious when it comes to deploying capital. This caution stems from a multidimensional assessment of the macro environment, market internal structure, and on-chain fundamentals.
1. Three-Dimensional Perspective on Evaluating the Bitcoin Market
Institutions typically analyze the current state and prospects of Bitcoin from three key dimensions, which together form the picture of the current mixed signals in the market.
- Macro Liquidity: Pressure and Opportunity Coexist
● Bitcoin shows a persistent negative correlation with the US Dollar Index (DXY), making it highly influenced by the global liquidity cycle. Currently, the tightening credit conditions in the macro environment pose significant pressure. Crucially, Bitcoin miners are at the core of this pressure.
● To transition into AI computing businesses, miners need to make large capital expenditures, which is particularly challenging in a tightening liquidity environment, leading them to continuously sell Bitcoin to raise funds, creating a certain selling pressure.
● Therefore, from a global liquidity perspective, while there are long-term opportunities, short-term headwinds are present.
- Market Leverage Levels: Positive Signals of De-risking
● In contrast to the macro pressures, the leverage situation within the crypto market is releasing positive signals.
● After a massive liquidation in mid-October, the leverage levels across the entire ecosystem have significantly decreased, and the funding rates in the perpetual contract market have returned to low or even negative values.
● This spontaneous "de-leveraging" process in the market reduces the risk of extreme declines caused by cascading liquidations, providing conditions for a healthy market bottom, and is seen as a bullish micro-structural indicator.
- On-Chain Fundamentals: Highlighting Weak Demand
● On-chain data serves as a window to observe the native demand for the Bitcoin network. Currently, both network transaction fees, the number of active addresses, and overall transaction frequency indicate a weak state.
● This suggests that the actual usage demand and speculative activity in the current market are both low, lacking the intrinsic momentum to drive prices higher. This dimension raises a "red flag," indicating that the market has yet to regain vitality.
2. Institutional Operating Strategies: Key Price Levels and Gradual Deployment
In the face of the aforementioned mixed signals, institutions are not passively waiting but have formed a strategy based on key price levels and disciplined operations.
- Anchoring Core Price Support Levels
Based on the assumption of declining historical volatility, Matthew Sigel proposed several technical levels worth noting.
● First, the area around $78,000 (approximately a 40% drop from the historical high) is seen as an important risk-reward balance point.
● Second, the $70,000 region has undergone multiple tests, forming strong psychological and technical dual support.
● In more extreme cases, $55,000 (200-week moving average) and $27,000 (level before the last cycle started) can serve as long-term bottom references, although the probability of the latter occurring is considered low. Institutions generally view the $78,000 to $70,000 range as a potential deployment opportunity area.
- Discipline in Execution: Gradual Investment Over One-Time Bets
● Unlike individual investors who often pursue "precise bottom fishing," institutions emphasize discipline and risk management in their operations.
● Even when they favor a certain price range, they tend to adopt a strategy of gradual buying (dollar-cost averaging) or setting a series of limit orders.
● This approach avoids the concentrated risk that may arise from trying to "catch a falling knife," allowing for a rational gradual establishment of positions amid market fluctuations. The execution advantages of institutions also enable them to better grasp market liquidity and practice this strategy.
3. Crypto Stocks: Institutional Indirect Exposure and Stock Selection Logic
For many traditional institutions, gaining exposure to crypto assets through publicly listed companies with clear regulations and financial transparency is a more convenient route. VanEck's $NODE ETF is a product of this logic, and its performance has also outperformed Bitcoin prices during the same period.
- Broad Definition and High Diversification
● The investment scope of $NODE is not limited to purely "crypto companies" (like Coinbase and mining firms) but also includes all companies that achieve "revenue growth" or "cost reduction" through the adoption of Bitcoin or blockchain technology.
● For example, a South Korean semiconductor company supplying storage chips to mining machine manufacturers may also be considered due to its partial business being related to the crypto cycle. This broad definition brings about high industry diversification.
- Controlling Risks and Utilizing Volatility
● In terms of specific holdings, institutional strategies tend to strictly control the size of individual positions (usually kept within 1%-4% of the portfolio) to avoid heavy bets on highly leveraged or small startup companies. By constructing a portfolio that includes dozens of related companies, they can effectively smooth out the volatility caused by operational risks of individual companies.
● At the same time, utilizing market sentiment fluctuations for "buy low, sell high" rebalancing operations is one of the sources of their excess returns.
4. Industry Focus: The Transformation and Challenges of Bitcoin Miners
Miners are a key link connecting the Bitcoin network and traditional capital markets, and their current dynamics profoundly impact the market.
- Difficult Transition to AI Infrastructure
Bitcoin miners are undergoing a large-scale transformation into AI computing service providers. This transition is capital-intensive and requires substantial investment. In the context of tightening macro credit, the financing capabilities of miners have diverged: leading companies may secure debt financing, while others must rely on more expensive convertible bonds or equity financing, or even continue to sell coins. This divergence may accelerate industry consolidation, creating a "winner-takes-all" scenario.
- Two Potential Catalysts to Turn the Situation Around
The recovery of the mining sector may depend on two external factors: first, whether the AI business can generate tangible, scalable revenue, proving the sustainability of its business model; second, whether the Federal Reserve's monetary policy shifts to easing, improving global market liquidity, thereby reducing miners' capital costs and financing difficulties.
5. Altcoin Ecosystem: Cautious Institutional Attitude
Compared to Bitcoin, institutions generally hold a more cautious or even negative attitude towards altcoins (crypto assets other than Bitcoin).
- Lack of Product-Market Fit
● The core reason is that most altcoins, aside from their speculative attributes, have yet to find large-scale, sustainable practical application scenarios (product-market fit). Their inflation models and the oversaturation of numerous projects have also diluted long-term value.
- Regulatory Environment Changes Weaken Advantages
● The potential "de-regulation" policies of the Trump administration, in Matthew Sigel's view, may inadvertently weaken the competitive advantages of public chains like Ethereum. In a strongly regulated era, decentralization serves as a compliance moat;
● However, under a relaxed regulatory environment, centralized or semi-centralized "company chains" may leverage their strong business development and sales capabilities to capture the market more quickly, making the competitive environment for purely decentralized protocols even more challenging. This also partly explains why Bitcoin's dominance has been so strong in this cycle.
Finding Rational Paths Amid Complex Signals
● From the institutional perspective, investing in Bitcoin is far from a simple binary decision of "buy" or "sell." It is a comprehensive analysis process based on macro liquidity, market microstructure, on-chain data, key technical levels, and structural changes in the industry. The current market presents a typical environment of mixed signals: the clearing of leverage brings opportunities, but macro pressures and on-chain weakness pose challenges.
● For investors, the insights from institutional strategies are:
First, establish a multidimensional analytical framework to avoid relying on a single indicator;
Second, focus on key price areas rather than precise points, adopting a disciplined approach to gradual deployment to manage risks;
Finally, understand the structural changes within the crypto ecosystem (such as miner transformations and regulatory impacts), as these changes may have more far-reaching effects than short-term price fluctuations. In the noise of the market, this rational, step-by-step framework may be more important than predicting short-term trends.
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