The crisis of faith

Bitcoin on 5^th February slumped below $72,000, hitting levels not seen in 15 months (Oct ’24). This has triggered a "crisis of faith" among retail investors, with over $460 billion in total crypto market value wiped out in just a week.

The "Mutation" of the 4-year cycle:

Institutional analysts argue that Bitcoin has matured into a macro asset. It is no longer driven solely by supply shocks from halving, but by global liquidity and Federal Reserve policy. Historically, 2025 should have been a peak year, but the decline has many wondering if institutional ETFs have "tamed" Bitcoin’s volatility or simply broken its old patterns.

In the Bitcoin's correlation with the Nasdaq has hit record highs, around 0.75, leading to the popular nickname: "Leveraged QQQ in a hardware wallet."

The "Warsh" effect:

The nomination of Kevin Warsh as the next Federal Reserve Chair in late January has sent shockwaves through the market.

• Warsh has been advocating a smaller Fed balance sheet which led to a liquidity squeeze for the market pricing & triggered a massive sell-off that wiped out over $430 billion in crypto value in just four days ($460 billion in a week).
• Bitcoin on 5^th February was fighting to hold the $70,000–$72,000 level. It broke those levels on the same day after which the traders might become cautious of a supply gap that could see prices drift toward the $58,000 mark (the 200-week moving average).

• The daily timeframe chart shows that Bitcoin has been in a strong downward trend, moving from a high of $126,300 in October last year to the current $64,941. It recently crashed below the key support level at 80,537, its lowest level in November last year.

The 4-year cycle isn't dead; it has simply been swallowed by the much larger Global Liquidity Cycle.

Bitcoin at $65,000 is not just a price point; it is a message. It tells us that digital assets have graduated to the big leagues of macro-finance, but the "tuition" for that graduation is the loss of its status as an outsider.

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