What Bitcoin became while you were HODLing

In 2009, a friend introduced me to Bitcoin. He wasn’t encouraging me to buy Bitcoin, but rather simply sharing an interesting project that many were discussing online, just like he had shared Wolfram Alpha a week earlier. 

With the limited technical knowledge I had, I made sense of the main concept and believed it was a coherent idea that could plausibly work, given the global scepticism of finance in the wake of the 2008 global financial crisis. 

Then, some years passed, and I started hearing about the all-time highs of Bitcoin, which didn’t make sense; the anti-finance news sounded a lot like finance news to me. The divide between the technology enthusiasts and ‘investors’ started to fade, with an unchallenged victory of the latter. 

Bitcoin stands as an asset worth around $2 trillion, having secured legitimacy by embracing and being embraced by institutions. For early believers, this ascent marks a U-turn: Bitcoin is no longer an alternative to the system, but just a high-beta extension of it.

Mission-killing growth

Bitcoin is experiencing a paradox of success. By proving itself as a superior store of value, it triggered a deflationary trap that has rendered it largely impractical as a medium of exchange. In a world where Bitcoin is perceived as "digital gold," nobody wants to be the person who spent 0.005 BTC on a laptop that could have bought a car a decade later.

The volatility that traders love remains a nightmare for the merchant. For a currency to function, it needs price stability — a quality Bitcoin has traded for speculative upside. The introduction of spot Bitcoin ETFs in 2024 was the final nail in the coffin. By wrapping Bitcoin in a traditional financial product, the market has cemented its status as a hold-to-earn asset rather than a spend-to-live tool.

Bitcoin is now a line item on institutional balance sheets, generally moving in lockstep with global equities, losing the very non-correlation that early advocates promised would protect Bitcoin holders from systemic collapse. US Tech 100 and Bitcoin investors now tend to respond to the same interest rate signals, often with near-identical sentiment. 

The most stinging defeat for the cypherpunk ethos is the total erosion of anonymity and financial inclusivity. Bitcoin was intended to be the “money of the unbanked,” a means for those outside the traditional financial system to achieve financial autonomy. 

Instead, the current landscape is one of wide surveillance. The original vision of anonymous, permissionless transactions has given way to a reality of full monitoring. While access was once granted simply by having an internet connection, it now requires several conditions to be met in a fully regulated manner, mostly including — ironically — a bank account. Through the "domestication" of the network via centralised on-ramps, Bitcoin has simply replicated the barriers of the traditional banking system. 

Furthermore, while smart-contract platforms like Ethereum or Solana have evolved to handle complex financial logic and decentralised infrastructure that goes beyond financial transactions, Bitcoin has remained functionally stagnant. It is the "feature phone" of the “smartphone” blockchain world: secure but unable to host the programmable financial services required to actually replace a bank. This is apparent even without comparing it to sophisticated interoperability projects like Polkadot and Cosmos. 

Losing the “moon” mentality

Bitcoin’s evolution into a regulated, institutionally traded asset necessitates a fundamental shift in how participants perceive it. The narratives that once sustained the ecosystem — rebellion, inevitability, and outsized asymmetry — no longer describe the market that exists today.

For long-term holders, this means accepting that holding Bitcoin is no longer an act of opting out of the financial system; it is a concentrated macro bet within it. 

Bitcoin now derives much of its price behaviour from the same forces that move equities and risk assets: global liquidity, interest rates, and institutional risk appetite. Treating it as a moral position or an unorthodox prophecy, rather than a portfolio allocation, exposes holders to unnecessary risk. 

Position sizing, rebalancing, and drawdown tolerance now matter more than ideological conviction. If Bitcoin represents your sole hedge against systemic risk, it has ceased to function as a hedge at all.

Traders face an equally significant adjustment. The “moon” mentality — the expectation of exponential gains driven by retail enthusiasm — belonged to an era of low liquidity and fragmented markets, back when r/wallstreetbets wouldn’t even allow posts about crypto. 

That environment has been replaced by ETF flows, professional market makers, and high-frequency trading. Volatility still exists, but appears to be increasingly structured, mean-reverting, and tied to macro catalysts rather than social media narratives. Profitable trading now depends less on catching the next viral move and more on understanding correlations, liquidity cycles, and risk regimes. Smaller edges, tighter risk management, and patience have replaced bravado and leverage.

This shift forces a broader realisation for all participants: Bitcoin is no longer a market unto itself. It moves with the system it was designed to bypass. Federal Reserve policy, dollar strength, and global liquidity conditions now exert more influence over price than ideology or community belief. Ignoring this reality is no longer principled — it is costly.

A (big) win, but not “the win”

None of this diminishes Bitcoin’s strengths. It remains secure, scarce, and highly liquid, with unmatched brand recognition in the digital asset space. But clarity is now essential. Bitcoin is now used for what it is, not for what it was originally meant to be. Expecting it to deliver financial liberation by default is more of a 'did-you-know' tip rather than actionable information.

Bitcoin did not fail to grow; it failed to complete its original mission, which is now carried out by other crypto projects prioritising functional development over price discovery. The market ultimately chose institutional legitimacy over monetary rebellion. The 2008 white paper now reads less like a living blueprint and more like a founding myth — historically significant, but no longer operative. Bitcoin did not break the banks; it was absorbed by them.

As we enter a period of continued uncertainty, the challenge for traders, holders, and builders alike is to move beyond nostalgia and engage with reality. Bitcoin remains a powerful financial instrument, but freedom no longer comes from blindly believing in it. It comes from understanding exactly what Bitcoin has become — and positioning accordingly.