A prolonged sideways trend is the main threat to Bitcoin, not a market crash.
Many believe that the worst thing for Bitcoin is a sharp price drop. However, as my years of analyzing market cycles show, the real danger lies in a long and tedious stagnation. It is a prolonged sideways trend, not a correction, that can undermine investor confidence and destroy the fundamental narratives on which demand rests.
The market handles a sharp drop relatively easily if faith in the next upward surge remains. Investors are willing to hold assets, expecting a rebound. But when the price stagnates for years, buying interest begins to inexorably fade. This is a slow but sure process of "killing" the story that attracted capital.
Particularly vulnerable in such a situation is the structure built by the largest public Bitcoin holder — the company Strategy (formerly MicroStrategy). Its founder, Michael Saylor, uses perpetual preferred shares (STRC) to finance purchases. The problem is not that the price falls. The problem is that with multi-year movement in a narrow range, the premium on these shares shrinks. Saylor's capital-raising machine becomes less efficient. He needs not just another tranche to buy coins, but a fundamentally new reason for faith in the asset.
Narratives Lose Their Power
After ten years in the industry, I have concluded that the essence of Bitcoin hardly changes. What changes is the story around it. These stories explain why the price should rise. But today, most of the old narratives appear completely exhausted.
- Bitcoin was called digital gold, but in crises it trades like a tech stock.
- It was considered freedom money, but many crypto veterans are now choosing other coins.
- The development of artificial intelligence constantly heightens fears about quantum computing.
At the same time, I continue to believe in long-term growth. The influx of institutional capital is inevitable. My previous forecasts have fully materialized: in 2018, I anticipated the launch of spot ETFs, and later, the emergence of a US president supporting cryptocurrency. Both scenarios have successfully come to pass. But the feeling of an inevitable powerful catalyst is noticeably weaker today.
In Search of New Meaning
As an analyst, it saddens me to observe the erosion of the original ideas. The concepts of "freedom money" and "energy value" are gradually disappearing. Saylor promotes ideas of Bitcoin banking and digital lending, but these concepts are too complex for the average retail investor. I genuinely miss the times when the main Bitcoin message was freedom.
My professional opinion: The market desperately needs a new, simple, and understandable narrative that can replace "digital gold" and "freedom money." Until that happens, a prolonged sideways trend will remain the most serious threat to Bitcoin, capable of burning out the patience of even the most steadfast "hodlers."