Written by: Coach Liu
Waking up from a nap, BTC has slightly risen to 68k. Trump's speech hinted at a possible intention to hastily end the conflict. But how risk assets perform truly shows to what extent the market believes that this troublesome situation can be exited as desired.
The first quarter report card for Bitcoin has come out, showing a drop of more than 20%. This number in itself is not too shocking; after all, in the crypto world, a halving isn't really news. What truly caught Coach Chain's attention is another set of data: since October 2025, Bitcoin has underperformed the U.S. stock market for six consecutive months [1].
This seems to have never happened before.
Mark Connors, founder of Risk Dimensions, used a very simple word to comment on this: unprecedented [1]. Coach Chain scoured historical data and found that Bitcoin's previous corrections were indeed much more severe, but the duration has never been this long. In the past, it would drop hard and recover quickly; this time, however, it has collapsed and hasn't gotten up.
Even more perplexing are the sentiment indicators. Data from Cointelegraph shows that the cryptocurrency Fear and Greed Index has been stuck at 11 for 12 consecutive days, remaining in the extreme fear zone [2]. Since January 28, this index has not moved out of this range.
Traditional traders often respond to such readings by trying to buy at the bottom. After all, the fear and greed index is a contrarian indicator, and extreme fear typically corresponds to buying opportunities. But this time, the market seems skeptical. Some have begun to question whether this signal has become ineffective.
Coach Chain believes that to answer this question, we must first shift our focus away from prices and look at what is happening on the blockchain.
Analysts from CryptoQuant provided an interesting piece of data: the proportion of Bitcoin whale addresses has exceeded 60%, reaching a ten-year high [2]. Meanwhile, the proportion of retail investors has fallen to its lowest level in the same period.
This data is not surprising in itself; it is common for whales to accumulate during bear markets. But the 60% figure deserves particular attention. The analyst noted: generally speaking, when the whale ratio reaches its peak, it often indicates a bottom [2].
Another on-chain signal worth noting comes from another analyst. He found that short-term holders—those holding positions for one week to one month—account for only 3.98% [2]. In previous cycles, this figure falling below 4% often corresponded to the market nearing a bottom.
The logic behind this is simple: speculators have left, while long-term holders remain. A reduction in short-term activity means fewer quick trades, with turnover shifting from dispersed retail investors to concentrated whale accounts.
This sounds like a bottom signal, but things may not be that simple.
Coach Chain has consistently emphasized that market observations should not rely on just one dimension. On-chain data indeed shows signs of accumulation, but macroeconomic conditions and sentiment indicators are not to be ignored.
According to a report from CoinDesk, the conflict between the U.S. and Iran escalated in early March, shaking global markets three times. Oil prices surged, the dollar strengthened, and even safe-haven assets like gold experienced significant fluctuations—the simple reason being margin calls forced institutions and sovereign entities to sell gold to bolster liquidity [1].
Interestingly, Bitcoin demonstrated remarkable resilience during this turmoil, rising about 1% in March, while gold dropped 11% [1]. Connors believes this is due to the previous deleveraging process clearing out excessive leveraged positions. Additionally, Bitcoin's characteristic of cross-border flow also limited the extent of forced selling [1].
However, whether this performance can be sustained depends on a key variable: geopolitics.
Connors' assessment is straightforward: the timing for a reversal could either be in two months or two years [1]. The gap in between depends on the direction of the Iranian conflict. If the conflict escalates, the energy market, liquidity, and global risk appetite would be affected, making it hard for Bitcoin, as a risk asset, to stand alone.
So will these signals become ineffective?
Coach Chain has always reminded readers that historical patterns are for reference, not for blind faith.
This time, several unique circumstances are worth noting. First, Bitcoin has underperformed U.S. stocks for six consecutive months, a historically unprecedented period of imbalance. Prolonged weakness could serve as a catalyst for reversal but might also indicate a fundamental change in market structure—such as Bitcoin returning from being a safe-haven asset to being classified as a risk asset.
Second, the extreme fear signal has persisted for too long. From January 28 to now, the fear and greed index has not moved out of the extreme fear zone. Continuous pessimism may erode investors' patience, with some unable to hold out and deciding to cut losses at the bottom.
Third, while the regulatory environment appears to be improving, there are internal divisions. The U.S. SEC has a new chair, clearing obstacles for more crypto ETFs; the GENIUS bill is also progressing; and an executive order signed by Trump last August has included cryptocurrencies among alternative assets in 401(k) plans. However, the rules proposed by the U.S. Labor Department on Monday highlighted potential divisions among federal agencies [1]. Such uncertainty may inhibit large-scale entry from institutional investors.
So what should be the current plan?
Coach Chain's consistent stance is that investment decisions should be based on one's own cycle judgment, and investment operations should follow one's own plan without chaos.
For long-term holders looking at three to five years, the current market does provide a relatively favorable buying window. Six months of underperformance against U.S. stocks, prolonged extreme fear, and on-chain data suggesting accumulation, these three signals combined point to a market that is nearing a bottom. Dollar-cost averaging or gradual position building is a prudent choice; don't think about making a one-time huge investment, and mentally prepare for a potential months-long volatility.
If one is a short-term trader, the current phase where Bitcoin has a diminished correlation with U.S. stocks indeed provides an opportunity to seek Alpha. But it must be noted that market volatility remains high, and once key support levels are breached—such as 60,000 dollars—it could trigger a new wave of selling. Those lacking strict stop-loss discipline or holding too tightly in a leveraged manner are likely to be shaken out.
As for those who are still observing, they mainly watch three indicators: on-chain data regarding changes in whale address proportions and short-term holding ratios; sentiment indicators on whether the fear and greed index continues to fall or turns upward; and the macro environment concerning the U.S.-Iran conflict and Federal Reserve policies.
In conclusion, Coach Chain feels that the current market indeed resembles a compressed spring; historical experiences point to a bottom, but the longer the compression lasts, the more significant the energy release could be. Whether it's a rebound or a collapse largely depends on the direction in which the geopolitical black swan flies. From the current situation, it may be wise not to be overly optimistic.
Reference Materials
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