Can't beat the stock market, can't outperform precious metals, has Crypto truly become an outsider in the bull market?

Author: Nancy, PANews

Last night (December 29), Bitcoin once again broke out of the “market manipulation” pattern. Faced with this tug-of-war and stagnant trend, the market’s nerves seem to have long been numb.

Since Bitcoin’s peak and subsequent decline, it has been less than three months in total, but investors seem to have been in deep winter for a long time. This psychological breakdown is not solely due to the decline in paper assets but also stems from shaken confidence—stocks soaring, indices reaching new highs, gold and silver surging…

Traditional assets are celebrating wildly, while crypto assets unexpectedly fall behind. Under this huge gap, players are starting to vote with their feet—bearish sentiment, cutting losses, liquidating positions—cryptocurrency markets are falling into unprecedented survival anxiety.

Entering Purgatory Mode, Trading Activity Drops to Freezing Point

Waiting and defending are becoming the main themes in the crypto market at year-end.

In fact, the market cap of stablecoins has quietly risen to an astonishing $300 billion. Based on historical experience, such a massive off-market liquidity pool should be the fuel for a bull market, indicating that a large-scale bubble is about to ignite. However, the reality is that the crypto market has not only failed to celebrate collectively but has instead entered purgatory mode.

Looking back at the year’s crypto market trends, investor confidence has been deeply shaken. Although Bitcoin and Ethereum hit all-time highs this year, they failed to sustain their momentum and both turned downward. The altcoin market is even more brutal; even new coins launched are not immune to spiral declines, and liquidity exhaustion has become the norm.

In this meat grinder market, whether old hands or newcomers, no one is immune. Even Bitcoin holders are having a tough time—over 30% of Bitcoin is currently at a loss. The last time such a level of supply loss occurred was in October 2023, when BTC was around $26,000.

Along with the sluggish market, capital is accelerating its retreat. Matrixport data shows that the Bitcoin spot ETF, a key indicator for institutions, has experienced net outflows for nine consecutive weeks, with a total outflow approaching $6 billion. If this month ends with net outflows, it will be the most significant capital withdrawal since the ETF’s listing in January 2024.

Trading activity has also plummeted. According to The Block, global spot trading volume on cryptocurrency exchanges in November dropped to $1.59 trillion, the lowest since June.

Market interest has also sharply declined. As a barometer of retail sentiment, Google Trends shows that the global search volume for “cryptocurrency” has continued to decline, with the US dropping to its lowest point in a year.

CryptoQuant analyst Darkfost also pointed out that the market sentiment index, built from media articles, X platform data, and other sources, indicates that the current consensus in the crypto market has shifted to bearish. However, he also believes that when a consensus forms, the market often reverses, proving that most people are wrong.

Can’t Beat Stocks, Can’t Compete with Precious Metals

While the crypto market remains weak, many traditional assets are particularly strong.

This year, neighboring major stock markets staged a “short squeeze” rally. The A-share market performed strongly, with an average first-day increase of over 256%, and no IPOs failed; the Hong Kong market rebounded, with over 40 stocks doubling in price; the US major indices closed strongly, with the S&P 500 up nearly 18%, the Dow Jones up 14.5%, and the Nasdaq up 22%; Korea’s Kospi also saw an astonishing surge, rising over 76%.

Retail investors are rushing in. For example, in the US stock market, KobeissiLetter data shows that this round of US stock market gains is historic—American households’ stock holdings now account for more than real estate in their net assets, a phenomenon that has only occurred three times in the past 65 years; JPMorgan analysts also pointed out that by 2025, retail investment in US stocks will grow by 53%, reaching $303 billion, becoming the main driver of the market rally.

In the battle of safe-haven assets, physical precious metals have also outperformed Bitcoin. Gold, silver, and platinum recently hit all-time highs, despite some sharp crashes, and their annual gains remain substantial. In comparison, Bitcoin’s status as “digital gold” is under severe challenge. The BTC-to-gold and BTC-to-silver ratios have fallen to their lowest levels since November 2023 and September 2023, respectively.

This has also attracted outside ridicule. For example, gold bull Peter Schiff openly stated that one of the best trades in 2025 would be “selling Bitcoin and buying silver.” The crypto Christmas rally did not happen, Bitcoin’s launchpad failed, and precious metals took off. If Bitcoin does not rise when tech stocks rally and also does not rise when gold and silver rally, then it may never go up.

Just a month ago, Peter Schiff was even defeated in a debate with CZ about the “value of gold and Bitcoin.”

The policy dividends that were highly anticipated for this year ultimately ended with Bitcoin closing the year with a downward annual line, and the performance of other crypto assets was even more dismal. According to CoinGecko data, this year only RWA, Layer1, and the US domestic narrative sectors saw gains; all other sectors declined by double digits, and the market lacked profit-making effects.

Capital is always profit-driven. When traditional markets offer more certain returns, the appeal of crypto assets plummets. To retain liquidity and users, many crypto platforms have started offering traditional assets, such as Binance, Kraken, Bitget, Hyperliquid, Robinhood, etc., providing tokenized stock services; on-chain commodities are also emerging, with tokenized gold trading volume surging; some crypto data companies are even beginning to include gold in their reserves to strengthen their balance sheets. (Related reading: After Gold and Silver Surge, On-Chain Commodities Trading Booms)

Stay within your circle of competence, don’t be a “fool” at the poker table

Crypto funds and attention are flowing out, even in “the big crypto country” South Korea, signs of cooling are evident—retail investors are abandoning coins for stocks, trying to find more stable and sustainable returns in larger pools.

However, as Buffett’s “fool” theory suggests, entering a new arena does not mean you have the qualification to stay at the table.

Take the US stock market as an example. For most people, opening an account takes only a few minutes, but that doesn’t mean the threshold is really low. Compared to the crypto market, the US stock market is a highly mature, deeply institutionalized system. Most retail investors face comprehensive disadvantages in information, resources, tools, experience, and risk management.

In the crypto space, retail investors can still catch some frontline sentiment and structural changes through communities, social media, and on-chain data, even sometimes dancing with whales. But in the US stock market, the opponents are often professional institutions with quantitative models, experienced analyst teams, industry research channels, and long-term data accumulation—competition is on a different level.

Moreover, many investors who transitioned from the crypto world to US stocks have not upgraded their cognitive frameworks accordingly. When facing complex variables like financial statements, industry barriers, business models, and macro policies, they still rely on emotional gambling and short-term thinking from their crypto trading experience, lacking the ability to understand and grasp the full business cycle.

The reason the US stock market has been able to sustain a long-term bull run is largely due to continuous improvements in corporate profitability, clear and stable shareholder return mechanisms, and a long-term competitive environment of survival of the fittest—companies like Microsoft, Amazon, Google, Apple have all endured multiple cycles, ultimately weathering volatility and accumulating value.

More importantly, most new entrants are in a severe survivor bias. Since the darkest days after the 2009 financial crisis, the US stock market has entered the longest bull market in history. This means young investors have not truly experienced a deep bear market, and the tailwinds have amplified market optimism, mistaking the Beta gains from the market rise as their own Alpha creation. According to a recent Coinbase report, about 45% of crypto investors in the US are from the younger demographic.

What looks like gold everywhere is actually full of peril; the real threshold is more about cognition. Rather than being led by narratives, it’s better to stay within your circle of competence, lower expectations, and patiently wait for the wind to come.