Primitive Ventures: The crypto world feels a bit dead

Author: Dovey Wan, Founding Partner of Primitive Ventures

Translation: Dayu

By 2025, the cryptocurrency industry has nearly achieved all its expected goals. Structurally, this should have been a glorious year.

But why does it feel… so lethargic?

It’s not just “prices haven’t risen” and it’s over. Bitcoin hit a new high. But the atmosphere, sentiment, internal confirmations, follow-up from other cryptocurrencies, and retail enthusiasm have all changed. Perhaps most concerning is that the former “hot money leading assets” have now lost their appeal in terms of wealth effect and volatility.

Related crypto assets are no longer synchronized with Bitcoin and Ethereum as in previous cycles:

1. Memecoins topped the charts from Q4 2024 to Q1 2025, with the launch of Trump tokens pushing this trend to a new peak.

2. Crypto stocks peaked around the Circle IPO and began to decline from May to August 2025.

3. Most altcoins never formed sustained trends. During upward movements, there was asymmetry; during declines, all participants dominated.

Looking at it on a larger scale, the situation becomes even stranger.

Despite a friendly policy environment, Bitcoin’s performance in 2025 was almost inferior to all mainstream traditional financial assets, including gold, US stocks, Hong Kong stocks, A-shares, and even some bond benchmarks.

(Compared to other assets, Bitcoin’s performance is extremely poor)

This is the first time Bitcoin’s performance has decoupled from all other asset classes.

This divergence is crucial: prices hit new highs, but internal confirmation did not follow, while other markets performed better. This reveals a simple yet unsettling fact: Bitcoin’s liquidity supply chain has undergone significant changes, and its original four-year settlement cycle has been altered by larger forces in other markets.

Therefore, we will delve into who is buying at high levels, who is exiting the market, and where the bottom of the price is.

Great Divide: Onshore vs. Offshore Operations

We have experienced three distinctly different phases in this cycle—

• Phase A (November 2024 to January 2025): Trump’s victory and a more friendly regulatory environment triggered a collective FOMO among domestic and overseas investors. Bitcoin’s price first broke through the $100,000 mark.
• Phase B (April to mid-August 2025): After deleveraging sell-offs, BTC recovered its upward momentum and broke through $120,000.
• Phase C (early October 2025): BTC hit the current local all-time high in early October, then experienced a flash crash on October 10, entering a correction phase.

In each phase, we saw a huge disparity between US buying and overseas selling—

Spot: Onshore buying breaks through the rally, offshore selling strengthens on rallies.

• Coinbase Premium remained positive during Phases A, B, and C. High levels of buying demand mainly came from domestic spot funds.
• Coinbase BTC balances declined throughout the cycle. The available inventory in the US decreased.
• As prices rebounded in Phases B and C, Binance balances increased significantly. Offshore spot holders replenished inventories, and potential selling pressure also increased.

Futures: Offshore leverage rises, onshore positions decline

Open interest in offshore perpetual contracts (Binance and other offshore platforms) increased during Phases B and C. Leverage rose. Even after October 10, leverage quickly fell back and recovered to or exceeded previous peaks.

Since early 2025, onshore open interest (CME) has been declining. Institutional investors have not increased risk exposure despite new contract highs.

Meanwhile, Bitcoin volatility diverged from price movements.

In August 2025, when Bitcoin first broke $120,000, DVOL approached a local low. The options market did not sufficiently compensate for ongoing risks.

Every “top” seems to reflect a divergence between domestic and overseas traders. When domestic spot funds push prices higher, overseas spot traders tend to sell. When offshore leverage capital chases the rally, domestic futures and options traders reduce holdings and stay on the sidelines.

Where are the marginal buyers? Who can still step in?

Glassnode estimates that the amount of Bitcoin held by institutions and DAT-like tools increased from about 197,000 BTC at the beginning of 2023 to approximately 1.08 million BTC by the end of 2025, a net increase of about 890,000 BTC over two years. DAT has become one of the largest structural investment tools within the Bitcoin system.

Another often misunderstood area is ETFs. By the end of 2025, US spot Bitcoin ETFs held about 1.36 million BTC, a 23% increase year-over-year, accounting for about 6.8% of circulating supply.

Institutional investors (13F filers) hold less than a quarter of the total ETF holdings, most of which are hedge funds and investment advisors, clearly not the “diamond hands” family members we are familiar with.

Retail investors are dying

Since early 2025, traffic data from Binance, Coinbase, and other top exchanges clearly indicate that after Trump sold off his “meme coins,” retail investor sentiment has remained weak.

Additionally, since early 2024, overall social sentiment among retail investors has been actually bearish.

Since reaching a peak in 2021, overall website traffic has been declining.

Bitcoin’s new highs did not bring traffic back to previous levels.

You can read more about this topic in our article from last year: “Who Are the Edge Buyers?”

Exchanges have also adjusted their strategies. Faced with high customer acquisition costs and low activity from old users, exchanges have shifted from “seeking growth” to “retaining existing capital through yield products and multi-asset trading (actively listing US stocks, gold, and forex).”

Other places, bull markets everywhere

The true “wealth effect” in 2025 is not reflected in the crypto space: S&P 500 (+18%), Nasdaq (+22%), Nikkei (+27%), Hang Seng (+30%), KOSPI (+75%), and even A-shares rose by 19%, all achieving strong growth. Gold (+70%) and silver (+144%) also surged significantly, making “digital gold” seem somewhat ridiculous in comparison.

Artificial intelligence stocks, 0DTE (zero-day trading), and commodities like gold and silver further diminished its appeal.

Speculative funds did not rotate into alternative investments. Many completely exited and returned to stock volatility markets, while new speculators happily profited in US stocks or their home markets.

Even Korean retail investors sold off Upbit, shifting their bets to KOSPI and US stocks: Upbit’s average daily trading volume in 2025 dropped about 80% compared to 2024. Meanwhile, KOSPI rose over 75%. Korean retail investors net bought about $31 billion worth of US stocks.

Who is the biggest seller?

Every cycle has a big player selling at local highs, but interestingly, the timing of the sellers’ exits in this cycle coincides with the divergence in RS.

Bitcoin had been closely correlated with US tech stocks until around August 2025, when Bitcoin started lagging behind ARKK and Nvidia significantly, followed by the crash on October 10, which it has yet to recover from.

Before this divergence appeared, in late July, Galaxy disclosed in its earnings report and media briefing that it executed a sell order of over 80,000 BTC on behalf of an old holder. This transaction brought the “Whale profits from the Satoshi era” phenomenon into the public eye.

Mining companies sell assets for AI capital expenditure

From the 2024 Bitcoin halving to the end of 2025, miner reserves experienced the most sustained decline since 2021. By year-end, reserves were about 1.806 million BTC. Hash rate decreased by approximately 15% year-over-year.

• According to the “AI Outflow Plan,” miners transferred about $5.6 billion worth of Bitcoin to exchanges to fund AI data centers.
• Companies like Bitfarms, Hut 8, Cipher, Iren are transforming sites into AI and high-performance computing parks, signing 10-15 year computing contracts, viewing electricity and land as “gold in the AI era.”
• Riot is a representative of HODL; in April 2025, the company announced it would start selling all mined coins monthly.

It is estimated that by 2027, about 20% of mining power capacity could be redeployed for AI workloads.

China has taken more stringent measures. In December 2025, Xinjiang once again became a target for the People’s Bank of China and various ministries. About 400,000 ASIC miners were forced offline, causing global hash rate to drop by 8% to 10% within days.

Gray Whale: Bitcoin’s Black Hangover

Similar to the impact of the PlusToken scam in the 2021 cycle, several large-scale fraud and gambling cases in 2025—including Qian Zhimin’s Ponzi scheme/cult network and the Cambodia Prince Group/Chen Zhi case—are likely the main behind-the-scenes drivers pushing Bitcoin prices higher.

Both cases involved the seizure of tens of thousands of BTC, totaling or exceeding 100,000 black coins.

This may also increase potential government selling pressure and significantly suppress large gray markets holding Bitcoin long-term, which could cause short- to medium-term selling pressure but overall be positive in the long run.

2026 Outlook

Under this new structure, the traditional “four-year halving cycle” is no longer a feasible self-fulfilling path.

The next phase of the regime is mainly driven by two axes:

• Vertical domain: macro liquidity and credit conditions, interest rates, fiscal stance, AI investment cycle.
• Horizontal analysis: valuation and premium levels of DAT, ETFs, and other Bitcoin substitutes.

Early winners of Bitcoin, including veteran players, miners, and Asian gray whales, are distributing tokens to passive ETF holders, DAT structures, and long-term national capital.

Bitcoin’s development trajectory seems similar to that of FAANG from 2013 to 2020: the market is slowly shifting from early retail and growth fund-led high-beta investment strategies to passive allocation strategies dominated by index funds, pension funds, and sovereign wealth funds.

Bitcoin is now an easily accessible crypto asset without needing to engage directly with cryptocurrencies. You can buy through brokerage accounts, custody like ETFs, handle clear accounting, and explain your investment thesis to traders and committees in five sentences.

Most other crypto assets are valued not based on their actual utility or legality in physical markets and Wall Street.

We always look forward to a new bull market, but if this bull market is not just about price increases but also utility growth—transforming ETF legitimacy into on-chain demand, turning passive holdings into active use, and generating real returns rather than shifting narratives—that would be ideal.

If that happens, today’s “standby players” won’t look like a bunch of trapped fools in a cycle, but rather the first investors of a new cycle.

Bitcoin will ultimately become a national reserve asset.

Code is devouring banks.

Cryptocurrency still needs to evolve into a new civilizational tool.