I've been around crypto markets for 8 years, and every now and again, you have a day where everything is on fire.
February 5th was one of those days.
Here's my attempt at a big-picture explanation about how we got there, and why there's still a bull case for the asset class + tech.
Feedback appreciated!
Backing up
Expectations for crypto going into 2025 were sky-high.
BTC started hitting new highs as soon as it was clear that Trump was going to win at the end of 2024. We were going from a Biden admin that was actively trying to kill the industry in the US, to a Trump admin that vowed to make America, "the crypto capital of the world."
Clear regulations were coming, Bitcoin had a fresh institutional narrative, and ETFs were ready to make it easy for big money to get exposure.
Record scratch
The world's biggest economy was finally embracing the technology we all spent 16 years building. Vibes were high.
Then came perhaps the dumbest thing I've ever seen in my 8 years in crypto.
The President of the United States of America - Donald J. Trump - launched his own shitcoin. Then his wife launched one too.
The conversation shifted overnight from "crypto will modernize financial markets" to "the president is running a pump and dump." A bunch of retail investors rushed into $TRUMP. Most got burned. And just like that, the people who've always hated this industry had a new reason to call the whole thing a scam.
Staying positive
Crypto has shrugged off embarrassment before, and there was still plenty to be positive about.
Billions were flowing into the Blackrock Bitcoin ETF. Stripe, Visa, and even 100-year old companies like MoneyGram were going all-in on stablecoins.
The Trump admin made good on passing federal stablecoin regulation, with the market structure bill (Clarity) that would set clear rules for the entire industry right behind it.
It was still game on.
10/10
Most market participants (myself included) were looking for the year to close out at all-time highs. The Fed was cutting rates, Bitcoin was revisiting its $125K ATH, and pundits were calling for $250K BTC, and $12K ETH alongside fresh highs for stocks and gold.
Then on October 10th, Trump announced 100% tariffs on China, and MSCI proposed kicking crypto-heavy companies out of the indexes that pension funds and ETFs track. That second one threatened to cut off one of the biggest sources of buying pressure for Bitcoin.
Markets sold off, and then the real carnage for crypto kicked in. Crypto investors were over-levered (as they tend to be), and then a glitch on Binance - the world's largest exchange - triggered the largest single day liquidation in crypto history. $30-40B in forced selling occurred, and some altcoins nuked 70% in a single day.
It's generally believed that this event temporarily broke crypto markets, and we decoupled from rising equities and commodities from there.
Down only
Next, the real pain. Crypto was down-only while everything else ripped.
The set-up for the ATHs prophesied by Tom Lee that would send us to Valhalla was there. Rate cuts, dollar weakness, risk-on everywhere.
The S&P closed the year at ATHs. Gold and silver went on biblical runs. Peter Schiff danced on our graves. And crypto just sat there and bled.
The re-coupling
In 2026, the rest of the market started falling too, and crypto fell with it.
The S&P started giving back trillions in gains and gold and silver had their worst sell-off in over 40 years.
On February 4th, hedge funds got crushed. Many chalk it up to a tech sell-off caused by fears that AI would render software companies obsolete. Either way, risk managers had to step in and cut positions, including Bitcoin, which they were now heavily exposed to through ETFs, options, etc.
Selling sent BTC downward, which triggered more mechanical selling, which then bled into crypto-native funds. Trend Research reportedly had a $2B ETH position on Aave that got liquidated, making things even worse.
Trad-fi selling begot crypto selling. Not the other way around.
The institutional adoption everyone fought for ended up being a double-edged sword. And that brings us to today.
Crypto is dead
Right on cue. The same people who have been wrong about crypto for over a decade crawled out of their holes to dance on our grave once more.
The digital gold thesis is invalidated. Crypto is not a debasement hedge. Even worse, a miner death spiral coming and everything is going to zero. It's been a scam all along.
The Elizabeth Warren tweet about how Bitcoin causes cancer should drop any day now.
Long live crypto
Critics are right that Bitcoin and the rest of the market disappointed in 2025. The reality is that this is all still an immature market, at just 17 years old. It still mostly trades like a tech stock, and last week showed that it's more intertwined with Wall Street than ever before.
The bright side? The same Wall Street plumbing that dragged crypto down last week can eventually drag it back up.
And the setup is there. The Trump admin and incoming Fed Chair have signaled that they plan on growing our way out of the debt crisis with lower rates and a weaker dollar to run the economy hot. A macro-economic recipe for sending risk assets higher. Crypto included.
Then don't forget the bigger story. Even our longest standing critics no longer deny that what we've built is real. Stablecoins are upgrading how money moves globally. The market structure bill will pass, paving the way for all of finance to be underpinned by blockchains. The entire financial system is being upgraded and at this point we're just working out the details.
Are we ever fully out of the woods? No. Macro risk can still drag us down. Quantum computing is a real threat to Bitcoin. Trump's antics have given Democrats a fresh reason to come after the industry once again the second they're back in power.
But a hundred years from now, that will all be noise, and an internet-based financial system will look inevitable. This part will be viewed as the messy beginning.
And then there's the real wild card. The merger of crypto and AI is inevitable. We just don't know what it looks like yet.
In short, we are still, in fact, early.
