2 posts tagged with "Bitcoin"

After a volatile period, the crypto market has arrived at another key juncture. As of this writing, Bitcoin (BTC) is trading around $121,903.0, up a slight 0.02$119,014.0 to $122,026.0. Market sentiment is mixed, caught between a fear of buying at the top and the anxiety of missing out (FOMO).

My thesis is: Crypto assets remain a worthwhile allocation, but strict control over entry timing and position sizing is essential. If you were to choose only one asset, I would unequivocally recommend BTC. For more aggressive investors, supplementing a core BTC position with ETH is a logical next step. For those chasing high-beta returns, a small, speculative position in SOL could be considered.

---

Why It's Still a Good Time to Buy​

The current market environment is supported by four key factors creating a favorable window of opportunity.

1. Macro Tailwinds: Rate Cut Expectations Provide a Boost With recent data showing inflation beginning to cool, market expectations for a Federal Reserve rate cut are on the rise. Historically, looser liquidity conditions tend to boost the prices of risk assets, including stocks and cryptocurrencies. As noted in reports by Barron's, this macroeconomic shift is a key driver of recent asset strength. Against this backdrop, BTC is once again approaching its all-time high set in mid-July, while ETH has shown a strong rebound today.

2. Capital Flows: ETFs Continue to Attract Significant Inflows Capital from traditional finance continues to pour in. According to data from Farside and The Block, U.S.-based spot Bitcoin ETFs have seen consistent net inflows, pushing their assets under management (AUM) to new records. More importantly, the SEC’s approval of in-kind creations and redemptions for crypto ETPs further reduces tracking errors and liquidity friction, making it easier for large-scale capital to move in and out of the market.

3. Structural Catalysts: ETH Leads, Signaling Potential Capital Rotation Market focus is beginning to broaden from BTC to other major digital assets. According to CoinDesk, ETH is now approaching its all-time high, with significant activity in the options market betting on a breakout above $5,000. This strong performance not only captures market attention but also suggests that capital may begin rotating from BTC into ETH and other major altcoins, fostering a healthy, sector-wide rally.

4. Corroborating Evidence of Renewed Risk Appetite Interest from the traditional financial world is also heating up. Leading crypto financial services firm Bullish recently had a successful and warmly received IPO on the New York Stock Exchange (as reported by MarketWatch and Investors). This event clearly signals that despite market volatility, the appetite from traditional capital to allocate to the crypto sector remains strong and is growing.

---

What to Buy & How to Build a Position: An Allocation Guide​

With the "why" established, the next questions are what to buy and how to execute.

• Top Pick (Defensive + Liquid) — BTC (Bitcoin)

  • Rationale: Among all crypto assets, BTC has the clearest regulatory outlook, the most stable ETF-driven inflows, and the highest sensitivity to macro liquidity trends. In a clear uptrend, holding BTC offers the highest probability of success.

• Aggressive Play (Growth) — ETH (Ethereum)

  • Rationale: ETH is on the verge of breaking its all-time high, with tremendous growth potential driven by the anticipation of its own ETFs and a strong ongoing narrative (e.g., Layer-2 scaling, restaking). However, be aware that its price volatility is typically higher than BTC's (NerdWallet, CoinDesk).

• High-Beta (Small Position) — SOL (Solana)

  • Rationale: SOL has demonstrated incredible price elasticity (high beta) thanks to its vibrant on-chain activity and growing ecosystem. However, its network has experienced stability issues in the past (Yahoo Finance), making it suitable only for a small, speculative position aimed at capturing outsized returns.

Entry Strategy and Position Sizing (Examples)​

Investment success depends not just on what you buy, but how you buy and manage risk.

• Entry Method: Phase In, Don't Chase

  • Consider using Dollar-Cost Averaging (DCA) to build a position over 2–4 weeks.
  • Alternatively, place 3–5 limit orders at lower price levels to buy on dips. This helps avoid chasing the market at its peak and reduces the risk of immediate drawdowns.

• Sample Portfolio Allocations:

  • Conservative: 80% BTC / 20% ETH
  • Balanced: 60% BTC / 30% ETH / 10% SOL
  • Aggressive: 40% BTC / 40% ETH / 20% SOL

• Risk Management: Set Stop-Losses, No Leverage

  • You must establish clear rules for reducing or exiting your position. For example, set a drawdown threshold of 25%–35% for a single asset or a 15%–20% drawdown threshold for your total portfolio. If these levels are hit, execute your plan decisively.
  • STRICTLY AVOID LEVERAGE. Using leverage in a high-volatility market is the primary cause of catastrophic losses.

---

Key Risks to Watch​

While optimistic, it's critical to remain aware of the potential risks.

1. Macroeconomic Reversal: If inflation unexpectedly resurges, forcing a delay or reversal of rate cut expectations, or if the U.S. Dollar strengthens significantly, risk appetite could cool rapidly, heavily impacting crypto assets (Barron's).
2. Regulatory and Liquidity Risks: Keep a close eye on ETF fund flows. A sustained shift from net inflows to net outflows would be a major red flag. Additionally, any unexpected regulatory changes could shock the market (Farside, SEC).
3. Technical or Asset-Specific Black Swans: This is especially true for high-beta assets. Major network congestion, unexpected downtime, or other technical failures could trigger a flash crash in an asset's price (Yahoo Finance).

Conclusion​

To put it simply, if you want to buy just one crypto asset and minimize potential regret, even if buying near a peak, BTC is the clear choice.

If you can stomach higher volatility and are seeking greater upside potential in a bull market, then consider supplementing your BTC holding with ETH and adding a small, speculative allocation to SOL.

Remember: strategy, position sizing, and risk management are always more important than trying to predict exact price points.

---

Disclaimer: This article represents personal analysis and opinion and does not constitute investment advice. Crypto assets are high-risk investments subject to extreme price volatility and drawdowns. Please conduct your own research and make investment decisions based on your personal risk tolerance.

Since 2023, the cryptocurrency market has departed from its previously clear bull-bear cycles, entering a "chaotic race" shaped by a combination of macroeconomic liquidity, internal supply-demand imbalances, and rapid narrative rotations. For investors, this presents both a challenge and the ultimate test of their knowledge and strategies. This article will delve into the current fragmented state of the market, analyze its underlying structural causes, and provide actionable observation paths for investors heading into the second half of 2025.

1. A Fragmented Market: Bitcoin Season Coexists with a Deep Altcoin Bear​

The most prominent feature of the current market is the massive performance gap between Bitcoin (BTC) and the vast majority of altcoins.

• Bitcoin's Powerful Rally to New All-Time Highs: Driven by continuous institutional funding, Bitcoin has demonstrated remarkable resilience. According to MarketWatch data, on July 9, 2025, BTC touched an intraday high of $112,000, marking a year-to-date increase of approximately 20%, making it a rare bright spot among major assets.

• Significant "Scramble for Chips" by Institutions: US-based spot Bitcoin ETFs have become the core engine of this market rally. CryptoRank data shows that as of now, these products have seen a cumulative net inflow approaching $50 billion, with $13.5 billion contributed in 2025 alone. This "siphoning effect" means that the limited supply of compliant capital in the market has been almost entirely monopolized by Bitcoin.

• The Long Winter for Altcoins: In stark contrast to Bitcoin's brilliance is the widespread slump among altcoins. According to data from AInvest and BeInCrypto, the Altcoin Season Index has been lingering at a low range of 22-27 in July. An index below 25 is typically considered "Bitcoin Season," clearly indicating that over the past 90 days, the investment returns of most altcoins have underperformed Bitcoin.

This extreme market divergence has created a clear "sandwich" structure:

1. Top Layer: Bitcoin exclusively enjoys institutional liquidity and positive macro-narratives (e.g., inflation hedge, digital gold).
2. Middle Layer: Ethereum (ETH) and a few leading public chains fluctuate with Bitcoin's movements in the absence of independent narratives.
3. Bottom Layer: A massive long tail of altcoins continues to bleed out with high volume in a liquidity-deprived environment, receiving no attention.

2. Why Is Investing "Harder Than Climbing the Heavens"? Three Major Structural Dilemmas​

The collective decline of altcoins is no accident; it stems from a severe imbalance in supply and demand.

1. VC Funding Mismatch and "To-Be-Released" Selling Pressure Looking back to the bull market peak in 2021, crypto startups completed a record-breaking $30 billion in financing (CoinDesk). However, Blockworks statistics show that North American VCs alone raised $12.1 billion in "dry powder" in 2022 but deployed only $3.2 billion. This has created a massive "to-be-released supply"—a large number of projects waiting to unlock and dump tokens onto the market in the coming years.

2. The "High FDV / Low Float" Trap In recent years, new projects have commonly adopted an extreme token issuance model: releasing only 1%-5% of the initial circulating supply while setting the project's Fully Diluted Valuation (FDV) at a sky-high 9 to 12-figure valuation. This model pre-scripts immense selling pressure for the token unlocks scheduled over the next few years. Industry research has classified this as the "low float-high FDV" trap (CoinDesk), which allows early investors to easily pump the price on a thin circulating supply and then dump on retail investors as tokens unlock.

3. Depletion of External Capital Inflows While the supply side is abundant, the demand side is starved.

   • DeFi Contraction: According to data from The Block and CoinGecko, the Total Value Locked (TVL) in DeFi plummeted by 27.5% quarter-over-quarter in Q1 2025, with Ethereum's on-chain TVL dropping from $112.6 billion to $72.7 billion. The double whammy of a rising US Dollar Index and a general decline in altcoins has exacerbated the outflow of on-chain liquidity.
   • NFT Market Cooldown: The NFT art market, once a gateway for mainstream adoption, has entered a deep freeze. DappRadar data shows its transaction volume fell from a peak of $2.9 billion in 2021 to just $0.197 billion for the full year of 2024. In Q1 2025, it recorded a mere $0.024 billion, a cumulative drop of over 93%.

In summary: Against a backdrop of oversupply and scarce demand, the altcoin market as a whole has entered a structural deep bear market.

3. Asset Performance Snapshot (2024-2025)​

The following table visually demonstrates the fragmented state of the market:

Asset	High (July 2024)	Current (July 2025)	Gain/Loss	Notes
BTC	$93,000	$112,000	+20%	Sustained institutional buying, independent rally
ETH	$4,600	$3,200	-30%	ETF expectations not fully met, weak performance
VIRTUAL	$4.72 (Jan 2025)	$1.5	-68%	A typical example of the fading AI Narrative (CoinLore)
Covalent (CQT)	$2.10 (2021)	$0.0023	-99.9%	An extreme case of the High FDV + Low Float trap (CoinMarketCap)