When the whole world is celebrating, why is only the crypto circle "wintering"?

Article by: EeeVee

“As long as you don’t invest in Crypto, you can make money elsewhere.”

Recently, the crypto world and global markets seem to be experiencing two entirely different realities.

Throughout 2025, gold surged over 60%, silver skyrocketed 210.9%, and the Russell 2000 index of U.S. stocks rose 12.8%. Meanwhile, Bitcoin, after a brief new high, closed the year with a downward trend.

At the start of 2026, divergence continues to intensify. On January 20, gold and silver hit new highs again, the Russell 2000 outperformed the S&P 500 for 11 consecutive days, and the ChiNext 50 Index in A-shares gained over 15% in a single month.

In contrast, Bitcoin experienced six consecutive declines starting January 21, dropping from $98,000 back below $90,000 without hesitation.

Silver’s performance over the past year

Funds seem to have decisively exited the crypto space after November 11. BTC has been oscillating below $100,000 for over three months, entering a period of “lowest volatility in history.”

Disappointment is spreading among crypto investors. When asked about earning profits in other markets after leaving Crypto, some even share the “secret”—“Anything But Crypto”—as long as they avoid investing in Crypto, they can profit elsewhere.

The long-anticipated “Mass Adoption” now appears to be happening. But it’s not the widespread adoption of decentralized applications as expected; instead, it’s a thorough “assetification” led by Wall Street.

This round sees the U.S. establishment and Wall Street embracing Crypto like never before. The SEC approves spot ETFs; BlackRock and JPMorgan allocate assets to Ethereum; Bitcoin is included in the U.S. strategic reserves; several state pension funds invest in Bitcoin; even the NYSE plans to launch a cryptocurrency trading platform.

So, the question is: why, after Bitcoin receives so much political and capital endorsement, does its price perform so disappointingly when precious metals and stocks are reaching new highs?

While crypto investors have become accustomed to analyzing pre-market U.S. stock prices to gauge crypto trends, why isn’t Bitcoin rallying along with them?

Why is Bitcoin so weak?

Leading Indicator

Bitcoin is considered a “leading indicator” of global risk assets. Raoul Pal, founder of Real Vision, has repeatedly mentioned this in many articles because Bitcoin’s price is purely driven by global liquidity, unaffected directly by corporate earnings or interest rates of any country. Its volatility often leads that of mainstream risk assets like the Nasdaq.

According to MacroMicro data, Bitcoin’s turning points in recent years have often preceded the S&P 500’s movements. Therefore, when Bitcoin’s upward momentum stalls and fails to reach new highs, it sends a strong warning signal that the upward energy of other assets may also be nearing exhaustion.

Liquidity Tightening

Secondly, Bitcoin’s price remains highly correlated with the net liquidity of the global dollar. Although the Federal Reserve cut interest rates in 2024 and 2025, the quantitative tightening (QT) initiated in 2022 continues to drain liquidity from the market.

Bitcoin’s new highs in 2025 were largely driven by ETF inflows, but this did not fundamentally change the tight macro liquidity environment. Bitcoin’s sideways movement is a direct response to this macro reality. In a liquidity-scarce environment, a super bull market is difficult to ignite.

The second-largest liquidity source globally—the Japanese yen—also began tightening. In December 2025, the Bank of Japan raised short-term policy rates to 0.75%, the highest in nearly 30 years. This directly impacted a key funding source for global risk assets: yen carry trades.

Historical data shows that since 2024, three rate hikes by the Bank of Japan have been accompanied by Bitcoin falling over 20%. The synchronized tightening by the Fed and BOJ worsens the global liquidity environment.

Bitcoin’s dips during rate hikes in Japan

Geopolitical Conflicts

Finally, potential “black swan” geopolitical events keep markets on edge, and a series of internal and external actions by Trump in early 2026 push this uncertainty to new heights.

Internationally, Trump’s actions are unpredictable—from military interventions in Venezuela and the unprecedented arrest of its president, to the imminent threat of war with Iran; from attempting to buy Greenland to issuing new tariffs against the EU. These aggressive unilateral moves are escalating tensions among major powers.

Domestically, his measures deepen fears of a constitutional crisis. He has proposed renaming the Department of Defense to the “Department of War” and ordered active-duty troops to prepare for potential domestic deployment.

These actions, combined with hints that he regrets not using military force to intervene and fears losing midterm elections, heighten public concern: will he refuse to accept defeat in midterms and use force to stay in power? Such speculation and high pressure are intensifying internal conflicts in the U.S., with protests showing signs of expansion.

Last week, Trump invoked the Insurrection Act and deployed troops to Minnesota to quell protests. The Pentagon has also ordered about 1,500 active-duty soldiers in Alaska to standby.

This normalization of conflict is dragging the world into a “gray zone” between localized wars and a new Cold War. Traditional full-scale warfare still has clear pathways and market expectations, sometimes even accompanied by monetary easing to “rescue the market.”

But these localized conflicts are highly uncertain, full of “unknown unknowns.” For risk capital markets that rely heavily on stable expectations, this uncertainty is deadly. When large capital cannot predict future directions, the most rational choice is to hold cash and wait, rather than allocate funds into high-risk, highly volatile assets.

Why don’t other assets fall?

In stark contrast to the silence in crypto, since 2025, markets like precious metals, U.S. stocks, and A-shares have risen in turn. But these gains are not due to improved macroeconomic or liquidity fundamentals; rather, they are driven by structural trends under the influence of sovereign will and industrial policies amid great power rivalries.

Gold’s rise reflects responses by sovereign nations to the existing international order, rooted in cracks in the dollar system’s credibility. The 2008 global financial crisis and the 2022 freezing of Russian foreign exchange reserves shattered the myth of the dollar and U.S. Treasuries as “risk-free” global reserves. In this context, central banks worldwide have become “price-insensitive buyers.” They buy gold not for short-term profits but as an ultimate store of value independent of any sovereign credit.

Data from the World Gold Council shows that in 2022 and 2023, global central banks bought over 1,000 tons of gold for two consecutive years, setting records. This gold rally is mainly driven by official sector demand, not market speculation.

Comparison of gold and U.S. Treasuries in central bank reserves shows that by 2025, total gold reserves surpassed U.S. Treasuries.

Stock market gains are also a reflection of national industrial policies. Whether it’s the U.S. “AI Nationalization” strategy or China’s “industrial independence” policy, these are driven by state power actively shaping capital flows.

In the U.S., the “Chips and Science Act” has elevated AI to a strategic national security level. Funds are flowing out of large tech stocks and into more growth-oriented, policy-aligned small- and mid-cap stocks.

In China’s A-share market, funds are similarly concentrated in “Xinchuang” (core technology innovation) and “defense and military” sectors closely related to national security and industrial upgrading. This government-led trend has a valuation logic fundamentally different from Bitcoin, which relies purely on market liquidity.

Will history repeat?

Historically, Bitcoin has not been the first asset to diverge from others. Every time, it has ended with a strong rebound.

There have been four instances where Bitcoin’s RSI (Relative Strength Index) against gold fell below 30, indicating extreme oversold conditions: in 2015, 2018, 2022, and 2025.

Each time Bitcoin was extremely undervalued relative to gold, it foreshadowed a rebound in the exchange rate or Bitcoin’s price.

Historical trend of Bitcoin / Gold, with RSI indicator below

In 2015, at the end of a bear market, Bitcoin’s RSI against gold dropped below 30, leading to a super bull run in 2016-2017.

In 2018, during a bear market, Bitcoin fell over 40%, while gold rose nearly 6%. After RSI dropped below 30, Bitcoin rebounded from its 2020 lows, gaining over 770%.

In 2022, during a bear market, Bitcoin declined nearly 60%. After RSI fell below 30, Bitcoin rebounded again, outperforming gold.

Since late 2025, we are witnessing this historic oversold signal for the fourth time. Gold surged 64% in 2025, while Bitcoin’s RSI against gold again entered oversold territory.

Can you still chase other assets now?

Amid the “ABC” hype, selling off crypto assets easily to chase seemingly more prosperous markets could be a dangerous decision.

When small-cap U.S. stocks start leading the rally, it’s often the last exuberance before liquidity dries up at the end of a bull market. The Russell 2000 has gained over 45% since its 2025 lows, but most of its constituent stocks have poor profitability and are highly sensitive to interest rate changes. If the Fed’s monetary policy falls short of expectations, these vulnerabilities will quickly surface.

Second, the frenzy in AI stocks shows typical bubble characteristics. Whether it’s Deutsche Bank’s survey or Ray Dalio’s warnings, AI bubble risks are listed as the biggest market threat in 2026.

Nvidia, Palantir, and other star companies have valuations at historic highs. Whether their earnings growth can support such valuations is increasingly questioned. Deeper risks include AI’s massive energy consumption potentially triggering new inflation pressures, forcing central banks to tighten monetary policy and bursting asset bubbles.

According to a January survey by Bank of America fund managers, global investor optimism has hit a new high since July 2021, with growth expectations soaring. Cash holdings have fallen to a record low of 3.2%, and hedges against market corrections are at their lowest since January 2018.

On one side, soaring sovereign assets and widespread investor optimism; on the other, escalating geopolitical conflicts.

In this context, Bitcoin’s “stagnation” is not simply “beating the market.” It’s a clear signal—a warning of larger risks ahead, and a buildup for a broader narrative shift.

For true long-term believers, this is precisely the moment to test their conviction, resist temptation, and prepare for the crises and opportunities that lie ahead.