Crypto confusion?
If you’ve been watching bitcoin lately, especially from the sidelines, you might feel conflicted.
After all, prices are down sharply from recent highs. Headlines talk about “selling pressure” and the recent struggles of crypto treasury companies. Significantly, long-time hodlers are cashing out. Some commentators are asking whether confidence in crypto itself is cracking.
Now, I’ve been doing this for a decade now, and I can tell you one thing: None of this feels like past crypto panics.
I mean, compare today to the FTX collapse. There’s no contagion, no cascade of fear. No frantic rush for the exits. Most importantly of all, there’s no widespread loss of belief in blockchain technology itself.
That disconnect is important.
Today, I’m going to explain exactly why. I know we spend a lot of time focusing on crypto prices. But when prices fall without panic, something different is happening beneath the surface.
Let’s take a look…
Why bitcoin’s price can fall despite unchanged potential
Most investors think falling prices are a verdict that investors have lost faith in an asset’s potential. Sometimes that’s true – but not always.
Especially in markets that are still evolving. Whales hold about 15% of all bitcoin. Back in October, we saw reports of bitcoin whales liquidating portions of their positions. They’ve been holding bitcoin since its four-digit-price days. Think about that for a moment. Many of those old whales have been sitting on massive paper profits. But they couldn’t realize those profits. Selling in meaningful volume was difficult without disrupting the market.
That’s no longer the case.
Bitcoin now has something it never had before: deep, institutional liquidity.
In plain English, that means early holders finally have an efficient way to cash out their paper profits – without collapsing prices or sparking a panic in the process.
This isn’t a rush for the exits.
It’s a long-planned handoff.
The quiet handoff behind the scenes
For much of bitcoin’s history, large holders were effectively stuck. Selling meaningful amounts in thin markets, with volatile exchanges? Bad idea. You’re looking at haircuts at best, and the risk of moving the market at worst. Many early bitcoin owners simply held on, waiting for the crypto market to mature.
That changed with the arrival of institutional buyers and crypto ETFs.
According to Bloomberg, blockchain data shows that coins held for years are now being sold at some of the fastest rates in recent memory. Since early 2023, roughly 1.6 million bitcoin that had been dormant for at least two years have re-entered circulation – representing well over $100 billion in value at recent prices.
Bloomberg says “long-term buyers cashing out.” While that’s true, it’s only half the story.
Because, remember, they couldn’t sell if there wasn’t a buyer. So who’s buying?
Not the same crowd as before.
Instead of small-time traders chasing momentum, much of the demand has come from institutions, from funds, ETFs, and pension funds – buyers who think in years, not days.
It’s like when a company goes public. After an IPO, the founder might sell shares. That doesn’t mean the business is failing! It means the market has matured enough to allow early participants to step back – while new owners step in.
A buddy of mine founded a digital media company and took it public. He first sold some of his shares to help pay for his daughter’s wedding. He told me, “I got angry calls from a few people, demanding to know what was going on. I asked them if they had any idea how much a wedding cake costs. Once I explained the situation, they understood. But their knee-jerk response when they saw my Form 4 was, He’s giving up on us.”
I see the same story playing out right now with bitcoin.
Why this feels different from past crypto sell-offs
Earlier crypto downturns followed a familiar script. Prices surged on speculation and leverage. Borrowed money amplified gains – and then amplified losses. When sentiment turned, forced liquidations created sudden, violent crashes. Steep price drops that persisted for months, the notorious “crypto winter.”
This cycle looks different.
Today’s prices are being driven less by leverage and more by voluntary selling. How do we know? Trading volumes are lower. Derivatives activity has cooled. Fewer participants are trying to game short-term price movements.
As Bloomberg notes, the result is a slower, steadier decline rather than a dramatic collapse. That makes it harder to reverse quickly, but also less terrifying, less chaotic.
This matters: Bitcoin isn’t acting like a speculative toy asset anymore. It’s starting to behave like a mature asset.
What this means for long-term investors
Maturity changes the investment experience – for better and for worse.
On the one hand, explosive price surges may become less common. Greater liquidity and a more active market mean lower volatility – which, regular readers know, means smaller gains and smaller losses on average.
On the other, catastrophic crashes driven by massive leverage and utter panic should also become rarer.
Investors participating in a more institutional, highly liquid market tend to benefit less from perfect timing – and more from time spent invested in the market.
When a market matures, boring stuff like structure and plumbing and participation matters more than hype. Investors in a mature market care about:
- How gains are taxed
- Where assets are held
- Whether sellers can always find ready buyers (and vice versa).
For investors thinking long-term, these changes are not a drawback.
They’re a sign that bitcoin is entering a new phase of adoption. Yes, it’s likely to be less exciting. But let’s be honest, crypto is plenty exciting enough already.
The bigger picture: Crypto in transition, not in trouble
Let’s be perfectly clear: Volatility hasn’t disappeared, and it never will. But in more mature markets, its impact can be managed.
As crypto grows up, how you hold it can matter as much as whether you hold it. Long-term, tax-advantaged accounts reduce the friction of crypto ownership. Especially during periods when prices move sideways or retrace while ownership reshuffles.
I believe that owning crypto in a Digital IRA simply aligns better with slower, institutionally driven markets, where patience matters more than constant trading.
What we’re seeing now isn’t the end of crypto. It isn’t a collapse in confidence or a repudiation of the asset class. No, it’s a transition – from early adoption to institutional integration, from thin markets to deeper ones, from speculation-driven cycles to structurally driven ones.
And understanding that difference can change how we interpret moments like this one. For investors thinking about crypto over years, not months, understanding these shifts matters. And if you aren’t yet benefiting from exposure to the future of money, I strongly recommend you learn more about the benefits of diversifying with cryptocurrency.
