Where TF is Crypto Heading?

Where TF Is Crypto Heading?

BTC is down 15% over the past year while the S&P is up 16%, Nasdaq up 22%, gold at all-time highs above $5,200, and silver has nearly tripled since October. M2 money supply is expanding. And crypto is just sitting there doing absolutely nothing, which forces me to ask: what even is this asset class right now?

Source: https://x.com/ceterispar1bus/status/2016894833663599037

10/10 Overhang

Part of the answer starts with October 10th. Trump's tariff threat triggered $19 billion in liquidations, the largest wipeout in crypto history. But what made it more brutal was the growing sense that the cascade wasn't purely organic.

OKX's Star Xu called it "real and lasting damage" and accused certain players of "pursuing short-term gains through Ponzi-like schemes." The Binance accusations keep piling up—timestamp manipulation claims, liquidation wicks during Asian sleeping hours, median performance of 2025-listed futures sitting at -80% within 300 days. Whether coordinated exploit or technical failure, the trust damage is real.

Source: https://x.com/CryptopepperP/status/2015787017322324133

Retail got obliterated. A generation of leveraged traders wiped out, survivors too scared to re-lever. ETF flows went negative $4.57 billion in Nov-Dec alone, the worst two-month stretch on record.

Bits-to-Atoms Rotation?

Where did the capital go? Here's a frame I keep coming back to: Peter Thiel's been arguing for a decade that we're due for a secular rotation from bits to atoms. After fifty years of software eating the world while physical infrastructure stagnated, the pendulum is swinging. AI is the catalyst, finally making atoms investable by optimizing manufacturing, energy, logistics. The irony is that AI will eventually need crypto, but that thesis hasn't priced in yet.

Fundamental Disconnect

What's genuinely weird is that the fundamental picture has never been better while price action has never been more disconnected.

At Davos 2026, crypto was among the most discussed. Brian Armstrong sparred with the Bank of France Governor over stablecoin yields. The GENIUS Act passed, CLARITY is next. SEC dropped the Ripple case. JP Morgan, after years of Dimon calling BTC a "pet rock", now offering crypto trading to institutions and aggressive hiring for crypto roles. Morgan Stanley filing for spot ETFs.

And yet BTC is on track for four consecutive red months. Hasn't happened in seven years. Not even after FTX.

The honest reconciliation is that 10/10 broke something str+uctural and we're still in the compression phase. Attention got hijacked; AI captured growth, gold became the de-dollarization trade, and crypto became the odd asset out. The institutional adoption everyone expected to drive prices hasn't materialized at scale.

What This Means

Like most people here I don't have an answer. The bull case is that we're at the tail end of deleveraging; futures volume at historical lows, every catalyst lined up and waiting. Garret's ETH/Tesla comp is instructive (Tesla ground sideways through 2024 while everyone wrote it off, then broke out once fundamentals finally got priced. ETH might be in that setup now).

The bear case is old playbooks failing simultaneously, and market needs a new catalyst to re-establish what crypto actually is.

Weird times. Fundamentals never stronger, yet price never more disconnected. I guess if you believe the disconnect closes eventually, this is exactly when you want to be accumulating tokens with strong fundamentals.