In the Eastern Eight Time Zone this week, complex signals intertwine between U.S. regulation and the macro market on the same stage. On one side, Patrick Witt, the Executive Director of the U.S. President's Advisory Council on Digital Assets, publicly calls on the industry to seize the current government’s relatively pro-crypto window of opportunity and actively push forward digital asset-related legislation. On the other side, the crypto market sentiment indicator—the Fear and Greed Index—plummets to 24, falling into the "extreme fear" zone. In the face of volatile prices, investors express their unease through rapid deleveraging and risk-averse operations. When the scarce window of regulatory clarity collides with an emotional freezing point, the role of non-sovereign assets like Bitcoin is forced to be re-examined: are they risky assets at the center of the storm, or a backup safety valve when the traditional system fails?

The Shock of the Bond Market and the Fragility of Safe-Haven Assets

The Japanese government bond market was the first to become unbalanced in the recent round of severe volatility, with rapidly rising yields and price pullbacks triggering a chain reaction, causing pressure to spill over into the U.S. bond market, driving the 10-year U.S. Treasury yield to a peak not seen since August 2025. For the global asset pricing system, this point is far from an ordinary technical line; it resembles an emotional watershed: against the backdrop of high interest rates, global funds are forced to recalculate the cost-effectiveness of risk assets versus safe assets. When long-term U.S. Treasuries are no longer stable, the traditional "risk-free rate" anchor begins to loosen, and all valuation systems built on this anchor must face repricing pressure.

As market tension continues to build, U.S. Treasury Secretary Yellen and Japan's Finance Minister make a rare synchronized statement, attempting to cool the turbulent bond market and publicly opposing the narrative of "weaponizing the bond market." On the surface, this is a verbal intervention against market speculation, but the deeper anxiety lies in the fact that when sovereign debt levels are unprecedentedly large, any sharp rise in yields will quickly transmit to national fiscal sustainability, bank balance sheets, and the borrowing costs felt by voters. Policymakers are reluctant to be accused of using the bond market as a tool for geopolitical games, yet they must also admit that under the realities of high leverage and high uncertainty, traditional governance tools are becoming increasingly blunt. This governance dilemma has caused cracks in the safe-haven narrative centered around government bonds and has left room for the subsequent rise of non-sovereign assets: when safe-haven assets themselves become highly volatile, can they still serve as the "last safe haven" in the next crisis?

The Regulatory Window and Rare Statements from Washington

While macro volatility has yet to settle, a highly sensitive signal has emerged from Washington for the crypto industry. As the Executive Director of the U.S. President's Advisory Council on Digital Assets, Patrick Witt recently directly addressed the issue in public, urging all parties in the industry to "seize the current pro-crypto governing window" and push for the swift passage of key legislation. His statement is not a routine remark but rather a reminder of a countdown: the friendly policy environment is not a long-term norm but a scarce resource with a clear time limit. For the U.S. crypto industry, which has been repeatedly tugged between enforcement pressure and regulatory ambiguity over the past few years, this notion of a "window period" is particularly jarring, as it implies a less optimistic reality—if the industry cannot reach a clearer consensus on rules with policymakers during this time, the next political cycle may present missed opportunities once again.

The so-called "regulatory clarity," in Witt's terms, is not an abstract slogan but directly points to the fundamental conditions for the industry's operation. Whether compliance costs can shift from unpredictable fines and settlements to measurable licenses and standards will directly determine whether startup teams and small businesses can continue to experiment and iterate in the U.S. market; whether the entry threshold for institutions can be lowered to a compliance level acceptable to traditional finance also depends on whether the legal classification of asset categories, custody requirements, tax treatment, and information disclosure are clear; and for the innovation landscape, only when the regulatory red lines are clear and the gray areas gradually shrink can companies dare to plan long-term infrastructure investments rather than being forced to maintain short-term exploratory operations under regulatory shadows.

In stark contrast to this vision is the regulatory dilemma that the U.S. has presented for quite some time: rules are driven by case-by-case enforcement, and different agencies compete for the interpretation of crypto assets through litigation and verbal games. Companies often only "realize" that an invisible regulatory red line has been crossed when they receive subpoenas or fines. It is against this backdrop that when individuals from the White House advisory system begin to publicly emphasize the "pro-crypto governing window," the market interprets it as a rare signal of policy friendliness rather than a long-lasting normal environment. In other words, this resembles a temporary ceasefire between the crypto industry and Washington: the opportunity is on the table, but time does not favor either side.

Discrepancy Between Emotion and Price in Extreme Fear

The marginal improvement on the regulatory front has not immediately translated into price stability. According to BlockBeats data, the market's Fear and Greed Index has dropped to 24, entering the "extreme fear" zone. Behind this number is a defensive posture in the spot market, where participants actively reduce positions and increase cash ratios, as well as a systemic caution reflected in large-scale deleveraging and rising volatility in the derivatives market. Some investors choose to lock in profits and guard against deeper pullbacks, while others reduce leverage and close long positions to mitigate tail risks, causing the entire market to shift from chasing gains to prioritizing survival in a short time.

If we extend the outline of this market cycle, we can see a clear contradictory structure: on one hand, expectations for regulatory benefits are accumulating; the institutional advancement following the ETF, the friendly statements from White House advisors, and the increased discussion density on digital asset issues in Congress all point to a future that is "clearer than before." On the other hand, the tightening of short-term financial conditions, rising bond market rates, and an overall decline in risk appetite are ruthlessly compressing the valuation space for high-volatility assets. When discount rates rise and liquidity is "sucked out," even the most compelling long-term narratives struggle to offset the downward pressure on asset prices in valuation models.

In this context, the mismatch of "marginally improving policy and marginally deteriorating sentiment" has become one of the most prominent features of the current market. Historically, such mismatches often occur around cyclical transitions or institutional turning points: regulatory rules begin to become predictable, but the shadows of the previous round of macro tightening and risk events have yet to dissipate, leading investors to habitually price future risks with a more pessimistic perspective. This does not mean that short-term volatility has ended; on the contrary, there may be a long time lag between emotional recovery and the realization of institutional dividends. However, for funds with a medium to long-term perspective, it is precisely during this period of conservative pricing and divided expectations that opportunities suppressed by emotion are more likely to emerge— the question is, who dares to bet on an incomplete institutional future when the index shows "extreme fear"?

The Non-Sovereign Asset Narrative and the Repricing of Bitcoin

The severe turbulence in the sovereign bond market is not merely a technical discussion about the yield curve; it is also quietly reshaping the worldview of global asset allocators. As BlockBeats emphasizes, when traditional "high-credit" assets like Japanese and U.S. government bonds experience severe fluctuations in a short period, the question of "whether assets are deeply tied to a single government's credit" is brought back to the forefront for repeated examination. For institutions that allocate capital across multiple jurisdictions, seeking both liquidity and hedging against political and policy risks, shifting some positions from assets heavily reliant on sovereign credit to targets not directly tied to any single government's balance sheet is becoming an increasingly relevant topic.

In this context, Bitcoin's role is beginning to change subtly. On one hand, it remains a high-risk asset with extremely high volatility, deeply influenced by market sentiment and macro liquidity; on the other hand, its characteristics of fixed supply rules, global circulation, and lack of direct ties to any single sovereign create a certain complementarity with traditional safe-haven assets. The CEO of Bridgewater Capital recently publicly stated that Bitcoin's price is expected to return to the range of $125,000 to $150,000 in the long term (according to a single source). This target range is not a short-term prediction but rather an expression of the long-term potential of digital assets as viewed by some institutional funds he represents. This statement cannot endorse any specific price point, and the details of its valuation model have not been disclosed, but it at least conveys a signal: in the eyes of some traditional finance practitioners, Bitcoin is no longer just a "speculative toy" but an asset class that can be included in long-term allocation discussions.

Compared to traditional safe-haven tools like gold and government bonds, Bitcoin's advantages and disadvantages are equally pronounced. In terms of liquidity, the global 7×24 hour trading and the coexistence of multiple exchanges make it more flexible than assets dominated by a single market in certain extreme situations; in terms of political risk, Bitcoin does not depend on the fiscal health or geopolitical strategies of any one country, but it is inevitably influenced by regulatory policies from various countries. This characteristic of "diversified dependence" and "imperfect sovereign neutrality" is a new variable that investors must weigh; in terms of supply constraints, the total cap and periodic halving mechanism provide it with a radically different inflation path from fiat currencies, leading some funds to begin viewing it as a "digital safe-haven position" to hedge against long-term currency depreciation and institutional uncertainty. This narrative will not end in a single market cycle, but each severe shock in the sovereign bond market will invisibly add a layer of reality to this narrative.

Legislative Games and the Industry's Self-Rescue in the Window Period

To make the above allocation logic truly stand firm, the crypto industry cannot bypass a critical threshold: the legislative and regulatory framework. However, at the current stage, there is a lack of publicly verifiable details regarding the names of specific bills, pathways for advancement, and even formal timelines for implementation. Any imagination with time nodes carries the risk of misleading. In this uncertain environment, the industry can only attempt to secure clearer boundaries through more traditional political and market tools: lobbying becomes a necessary option, industry alliances attempt to form a unified dialogue window at the regulatory level, and self-regulatory standards act as temporary "soft rules" in areas lacking hard regulation, using transparency and risk control practices to gain the trust and patience of regulators.

Meanwhile, the long-standing dispute between the U.S. SEC and CFTC over the regulatory responsibilities for crypto assets continues to add noise and uncertainty to the market. Which tokens should be considered securities, which are closer to commodity attributes, and whether a unified framework will emerge to coordinate the division of labor between the two agencies are all currently unresolved. In briefings, these future plans and timelines are clearly marked as blanks that cannot be fabricated, meaning market participants must remain sufficiently vigilant against overly optimistic interpretations of "unified regulation is about to land." Until actual legal texts appear, any premature bets on a specific regulatory outcome are irresponsible exposures to risk.

During the regulatory window and game phase, there is also a clear strategic differentiation within the industry. Some companies choose to wait and slow down new investments in the U.S., redirecting resources to jurisdictions with more stable rules and clearer policy stances; some teams and projects simply "go overseas," relocating their registration, core teams, or main businesses to regions with relatively friendly regulations to gain certainty and survival space; and there are also a group of more patient and capital-strong participants who choose to continue betting on long-term dividends in the U.S. They believe that once the regulatory framework is established, the vast capital market, technological ecosystem, and institutional infrastructure in the U.S. will provide compliant participants with returns far exceeding those in other countries. Miners, trading platforms, and institutional funds weigh these three paths repeatedly, reflecting differing judgments about the long-term institutional advantages of the U.S. versus short-term regulatory costs.

Choosing Between Panic and the Window Period

Looking at the current landscape, the severe volatility in the sovereign bond market has exposed the fragile side of traditional safe-haven assets, with gold and government bonds no longer being unconditionally regarded as "absolute safe" havens; Washington has rarely released relatively friendly regulatory signals for the crypto industry, while failing to provide any clear legislative timeline; the crypto market itself is under dual pressure from emotional freezing points and price pressures, with the Fear and Greed Index dropping to 24. The potential emergence of institutional dividends and the extreme conservatism of market sentiment coexist in the same time frame.

For investors, what truly needs to be constructed is not a specific bullish or bearish judgment at a certain price level, but a framework for thinking that balances expectations of regulatory clarity with short-term volatility risks. How to distinguish between cyclical noise and long-term institutional changes that may alter asset attributes, how to assess risk-reward ratios when liquidity tightens and policy marginal improvements occur simultaneously, and how to identify which assets' prices have fully or even excessively reflected pessimistic expectations, while others have yet to incorporate institutional benefits into valuations—these questions are more worthy of time and thought than "Is this the bottom?" For some funds, the answer may be to maintain a defensive posture, waiting for clearer signals from both macro and regulatory fronts before entering; for others who lean towards forward-looking allocations, it may involve selectively embracing non-sovereign assets that are less tied to single sovereign credit and are expected to survive under future compliance frameworks, all while strictly controlling positions and risks.

Looking ahead, there are several key observation points worth continuous tracking. First, the marginal changes in official regulatory statements: the tone, frequency, and specific wording from Washington on digital asset topics often foreshadow subtle adjustments in institutional direction. Second, the allocation rhythm of institutional funds towards non-sovereign assets like Bitcoin, especially changes in medium to long-term positions from traditional financial background institutions like Bridgewater Capital, can reflect the mainstream capital's acceptance of the "digital safe-haven position" narrative to some extent. Third, whether the current high-level panic sentiment will gradually dull over time; if, in the absence of significant negative news, the market's reaction intensity to macro volatility and regulatory winds begins to weaken, it may indicate that the selling pressure on the emotional level has passed its sharpest phase, and what will truly determine the direction of the next trend will be the slower and deeper main lines of institutional and macro factors.

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