Author: @wuk_Bitcoin

This article does not talk about predictions or macro narratives, but discusses three things from Jason's perspective:

• How to view Bitcoin as an asset;
• How to understand this round of decline;
• How to view Bitcoin's medium to long-term development ahead.

It must be made clear that this is not investment advice, but a framework for thinking. Before any investment, first ask one question: Can you bear the corresponding risks?

First: How to view Bitcoin as an asset

I still believe that Bitcoin is a brand new asset class, and in the long run, it is a superior "gold" asset.

(1) Limited supply, 21 million coins, written in code, no one can change it. Gold still has new mining every year, Bitcoin does not.

(2) Very strong transferability. One hundred million dollars' worth of gold requires armed transport from one country to another; one hundred million dollars' worth of Bitcoin only requires a string of keys. In an era of increasing geopolitical tensions and global uncertainties, the transferability of an asset itself has a premium.

(3) Auditable. Every transaction of Bitcoin is on the chain, and anyone can verify it. For gold reserves, you can only trust the central bank's reports; in fact, the US gold reserves have not been independently audited by a genuine third party for many years.

Some may say that Bitcoin is mainly used in gray areas, but this view is outdated. More and more countries are legislating and regulating financial centers to squeeze out the gray parts. Historically, most disruptive technologies have gone through this process; early internet and early electronic payments were first chaotic and then standardized. There is also a key number: the global penetration rate of digital currencies is currently about 3%-4%. You can compare this to the internet's penetration rate of about 5% when the bubble burst in 2000; e-commerce's penetration rate was about 3% when Alibaba went public in 2014, and ten years later it reached 60%.

I'm not saying Bitcoin will definitely replicate this curve. Rather, if you believe this is a genuinely existing and long-term valuable asset class, then 3%-4% means it is still in its very early stages. Early means opportunity, but it also means that volatility will be very high!

Second: How to understand this round of decline

First, let's lay out the facts: Bitcoin peaked in October 2025, approaching $126,000. It then fell continuously over the next four months, with the sharpest decline happening on February 5-6, 2026, where it dropped by 15% in a single day, at one point falling below $61,000. The fear and greed index dropped to single digits, a rare extreme range in history. Then the next day, it bounced back by 11%, regaining $70,000.

This is Bitcoin; its volatility is several times that of traditional assets. If a 15% drop keeps you up at night, then this asset may not be suitable for you. This is not a matter of capability, but of nerve endurance.

So why did it fall? My judgment is that this is a highly consensual periodic sell-off. Bitcoin has a very clear four-year cycle, as its mechanism is to halve every four years. Historically, 12-18 months after each halving, there is a cyclical peak followed by a correction. The last halving was in April 2024, peaking in October 2025, almost perfectly aligning with history. This is not a matter of meaning; it is a consensus. And consensus means that veteran players who have experienced multiple cycles will begin systematic selling during this period to lock in profits. Being optimistic in the long term and selling periodically have never been contradictory. Gold fell from $1900 in 2011 to $1050 in 2015, a 45% drop, only to rise again to nearly $5000 today.

This round is fundamentally different in terms of ETF and turnover. In 2024, the US approved Bitcoin ETFs, which is genuinely important because it provides a compliant entry point for a large amount of institutional capital. However, many overlook this point: ETFs have allowed new buyers to enter the market, but they did not cause old buyers to cash out early. Past Bitcoin holders were mainly of two types: early miners and the earliest believers (OG), with very low costs, some even just a few hundred dollars. When Bitcoin surged to $120,000 with a wave of institutional buying, would you sell if you were them? Most likely not. So I believe this round is not about Bitcoin failing, but rather a historic turnover that Bitcoin must undergo before becoming a mainstream asset. It is a shift from early believers to long-term investors. The ETF is just the first step, and the turnover may not yet be finished.

One frequently overlooked rule: if you look at all major declines in Bitcoin's history together, you'll find an interesting phenomenon.

In 2011, it fell from $32 to $2, a 93% drop.

From 2013-2015, it dropped from $1,100 to $170, an 85% drop.

From 2017-2018, it fell from around $20,000 to $3,200, an 84% drop.

From 2021-2022, it went from $69,000 to $15,500, a 77% drop.

From 2025-2026 to now, it has dropped about 50%.

Each round of decline has been narrowing. This usually indicates one thing: the asset is maturing, and volatility is decreasing because the holder's structure is changing. Of course, a 50% drawdown is still significant, but this is not a bug; it is a feature. High volatility is the price you pay for excessive returns; if Bitcoin only fluctuated by 5%, its long-term returns would be similar to that of government bonds.

Third: So how to view the long-term?

I have a simple framework: if you believe Bitcoin is digital gold, then its long-term value should be benchmarked against physical gold. Today, gold's market cap is approximately $20 trillion, and when Bitcoin was at $70,000, its total market cap was roughly $1.4 trillion, only equivalent to 7% of gold. Even if this narrative only comes true halfway, with Bitcoin reaching 30%-50% of gold's market cap, it still has a large upside potential from today's perspective.

But I must honestly tell you two things: I really do not advise you to buy right now, as the turnover might not yet be finished; the short-term market remains fragile, and a 50% drop may not be the bottom; it might be, and no one knows. The ones who know might be divine; no investment advice is given here, as the volatility of digital assets is not suitable for most people.

What is the real risk? Some may ask if Bitcoin will drop to zero. Personally, I think its probability of going to zero might be lower than its long-term path toward achieving half of gold's market cap. The real risk often lies not in the asset itself, but in two areas:

(1) Your position structure. If you are all-in, using leverage, or using money that should not be used, even if Bitcoin rises tenfold in the future, you might be forced to exit midway, and in the most unfavorable way.

(2) The depth of your understanding of the asset. If you only hear others say it will go up, then you will definitely struggle when it drops 50%. Only by truly understanding its underlying logic can you remain rational during plummeting.

Allow me to pose a very simple math problem for you: if this cycle is like the last one, with a drop of 75% from the peak to the low, and you bought in when it had already fallen by 50%, can you still endure a further 50% drop? This is not a prediction; it is arithmetic.

Final Comparison

In 2000, there was a company we are all familiar with that saw its stock price drop from $113 to $5.5, a 95% drop. At that time, everyone said the internet bubble had burst and e-commerce was failing. Today, that company's stock price is around $240, increasing approximately 42 times; it is called Amazon. In hindsight, it is certainly easy, but the premise is: you must survive to see that day.

Bitcoin is the same; the long-term logic has not changed, but short-term volatility can kill anyone who does not manage their positions effectively. Thus, what truly matters is not whether it will rise, but whether you can survive until it rises to that day.

Lastly, I want to ask a question: When gold rises by 60% and Bitcoin drops by 50%, do you think this signifies a failure of the narrative of digital gold, or does it indicate that this round of turnover is not yet finished? Is Bitcoin evolving from a speculative asset to a configured asset? Or is it inherently just a speculation?

Your answer reveals your most fundamental belief in this asset class.

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