Has the narrative of BTC as "digital gold" failed?

Author: @wuk_Bitcoin

This article does not discuss predictions or macro narratives; from Jason's perspective, it only talks about three things:

• How to view Bitcoin as an asset;
• How to understand this round of decline;
• How to look at the medium to long-term development of Bitcoin.

It must be made clear that what is discussed here is not investment advice, but a framework for thinking. Before any investment, first ask yourself one question: Can you bear the corresponding risks?

First: How to view Bitcoin as an asset

I still believe that Bitcoin is a brand new asset class, and in the long run, it is a superior "gold" asset.

(1) Limited supply, 21 million coins, written in code, and no one can change it. Gold still has new mining each year, but Bitcoin does not.

(2) Extremely transferable. Moving one hundred million dollars worth of gold from one country to another requires armed transport; moving one hundred million dollars worth of Bitcoin only requires a string of keys. In an era of increasing geopolitical tensions and global uncertainty, the transferability of an asset itself carries a premium.

(3) Auditable. Every transaction of Bitcoin is on-chain, and anyone can verify it. As for gold reserves, you can only trust the central bank's reports; in fact, the U.S. gold reserves have not undergone a real independent third-party audit for many years.

Some may say that Bitcoin is mainly used in gray areas, but this viewpoint is outdated. More and more countries and financial centers are legislating and regulating to push the gray areas out. Historically, most disruptive technologies have gone through this process; the early internet and early electronic payments were chaotic first, then became regulated. Another critical figure is that the global penetration rate of digital currencies is about 3%-4% today. You can compare this to the internet, which had a global penetration rate of about 5% when the bubble burst in 2000; e-commerce had a penetration rate of about 3% in China when Alibaba went public in 2014, and ten years later it reached 60%.

I am not saying that Bitcoin will definitely replicate this curve. Rather, if you believe this is a real and long-term valuable asset class, then 3%-4% means it is still very early. Early means opportunity, but it also means that volatility will be very high!

Second: How to understand this round of decline

First, let's lay out the facts: Bitcoin peaked in October 2025 at nearly $126,000. It then continued to decline for four months, with the most severe drop occurring on February 5-6, 2026, where it fell 15% in a single day, briefly dropping below $61,000. The fear and greed index fell to single digits, which is an extreme range that has only occurred a few times in history. Then the next day, it rebounded 11%, regaining the $70,000 mark.

This is Bitcoin; its volatility is several times that of traditional assets. If a 15% drop in a day keeps you awake at night, then this asset may not be suitable for you. This is not a matter of ability, but a matter of nerve endurance.

So why did it drop? My judgment is that this is a cyclical sell-off under high consensus. Bitcoin has a very clear four-year cycle because its mechanism is halving every four years. Historically, every 12-18 months after a halving, we see cyclical peaks followed by corrections. The last halving was in April 2024, and it peaked in October 2025, almost perfectly aligning with history. This is not a matter of meaning; it is consensus. And consensus means that veteran players who have experienced multiple cycles will begin to systematically sell during this period to lock in profits. Being bullish in the long term and selling in phases has never been contradictory. Gold fell from $1900 in 2011 to $1050 in 2015, a drop of 45%, and then rose to nearly $5000 today.

What is truly different this time is the ETF and turnover. In 2024, the U.S. approved the Bitcoin ETF, which is indeed significant because it provides a compliant entry point for a large amount of institutional capital. However, many people overlook this point; the ETF brought in new buyers but did not prompt old buyers to exit early. The past Bitcoin holders were mainly two types of people: early miners and the earliest believers (OGs), whose costs were extremely low, some even just a few hundred dollars. When Bitcoin saw a surge of institutional buying, rising to $120,000, would you sell if you were in their position? Most likely, you would. Therefore, I believe this round is essentially not about Bitcoin failing, but rather a historic turnover that Bitcoin must undergo before becoming a mainstream asset. From early believers to long-term institutional investors. The ETF is just the first step, and the turnover may not be over yet.

A frequently overlooked pattern: if you look at the major drawdowns in Bitcoin's history, you will find an interesting phenomenon.

In 2011, it fell from $32 to $2, a drop of 93%.

From 2013 to 2015, it fell from $1100 to $170, a drop of 85%.

From 2017 to 2018, it fell from around $20,000 to $3200, a drop of 84%.

From 2021 to 2022, it fell from $69,000 to $15,500, a drop of 77%.

From 2025 to 2026, it has dropped about 50% so far.

Each round of decline has been narrowing. This usually indicates one thing: the asset is maturing, and volatility is decreasing because the holder structure is changing. Of course, a 50% drawdown is still significant, but this is not a bug; it is a feature. High volatility is the price you pay for excess returns; if Bitcoin only had 5% volatility, its long-term returns would be similar to government bonds.

Third: So how to view the long term?

I have a simple framework: if you believe Bitcoin is digital gold, then its long-term value should be benchmarked against physical gold. Today, the market value of gold is about $20 trillion, and when Bitcoin was at $70,000, its total market value was about $1.4 trillion, only about 7% of gold. Even if this narrative only materializes halfway, with Bitcoin reaching 30%-50% of gold's market value, there is still significant upside potential from today's perspective.

But I must honestly tell you two things: I really do not advise you to buy now; the turnover may not be over, and the short-term market is still very fragile; a 50% drop may not be the bottom, and it could be, but no one knows; those who do are wise; there is still no investment advice here, and the volatility of digital assets is not suitable for most people.

What is the real risk? Some may ask if Bitcoin will go to zero; I personally feel that its probability of going to zero may be lower than its probability of moving towards half of gold's market value in the long term. The real risk often lies not in the asset itself, but in two things:

(1) Your position structure. If you are all in, using leverage, or using money you shouldn't be using, even if Bitcoin rises tenfold in the future, you may be forced to exit halfway, and in the worst way.

(2) The depth of your understanding of the asset. If you are only listening to others say it will rise, then you will definitely not be able to withstand a 50% drop. Only by truly understanding its underlying logic can you remain rational during a crash.

Let me give you a very simple math problem: if this cycle is the same as the last one, falling 75% from high to low, and you bought in when it was already down 50%, can you still bear another 50% drop? This is not a prediction; this is arithmetic.

Final Comparison

In 2000, there was a company we are all familiar with, whose stock price fell from $113 to $5.5, a drop of 95%. At that time, everyone said the internet bubble had burst, and e-commerce was failing. Today, this company's stock price is about $240, an increase of about 42 times; it is called Amazon. In hindsight, it is certainly easy, but the premise is: you have to survive to see that day.

Bitcoin is the same; the long-term logic has not changed, but the short-term volatility is enough to kill anyone who does not know how to manage their positions. So what is truly important is never whether it will rise, but whether you can survive until it rises to that day.

Finally, I want to ask a question: when gold rises by 60% while Bitcoin falls by 50%, do you think this indicates a failure of the narrative of digital gold, or does it suggest that this round of turnover has not yet ended? Is Bitcoin evolving from a speculative asset to a strategic asset? Or is it essentially just a speculation?

How you answer actually reveals your fundamental belief about this asset class.