Bitcoin Has Changed — And Ignoring It Is Costing People Money

I’ve spent a lot of time over the last few years trying to reconcile two versions of Bitcoin in my head.

One is the Bitcoin I learned about years ago.

The other is the Bitcoin we’re actually trading & investing in today.

For a long time, it was easy to blur the two together.

It felt comfortable to repeat the old narratives that Bitcoin was created on — peer-to-peer cash, decentralized money, digital gold, an uncorrelated hedge against the system.

But when you slow down and look at the data instead of the slogans, some things become clear.

Bitcoin has changed.

Not overnight. Not dramatically. But structurally, behaviorally, and financially, it is no longer the asset most people think they are holding.

Bitcoin is no longer being used as peer-to-peer electronic cash in any meaningful way.

That does not mean the original idea was wrong. It means the market chose convenience over ideology.

Since the launch of Bitcoin ETFs in early 2024, the number of Bitcoin addresses holding at least 1 full BTC has been declining.

This is not a philosophical argument. It is an observable, measurable trend.

Instead of self-custody, investors are choosing brokerage accounts. Instead of private keys, they are choosing ticker symbols.

From a convenience perspective, this makes sense. ETFs are simple. They fit cleanly into retirement accounts. They remove friction and operational risk.

But the trade-off is that Bitcoin’s decentralization as a store of value is weakening, not strengthening, as was the vision when it was created.

Ownership is concentrating.

Custody is being abstracted away.

Bitcoin increasingly resembles a traditional financial product wrapped in a familiar structure rather than sovereign money.

And whenever this “Bitcoin being used as a transactional medium” topic comes up, people have the same response —

“But Lightning fixes this.”

I used to believe that too earlier.

The problem is that Lightning adoption has stalled. The number of Lightning nodes peaked in 2022. Network capacity stopped growing meaningfully in early 2023. There is literally no expansion.

There is a clear stagnation.

Without sustained growth in Lightning usage, Bitcoin’s role as day-to-day money remains theoretical at best.

Markets do not price theory. They price behavior. And current behavior is getting very clear.

Bitcoin is just being held, traded, and speculated on — not really spent.

Bitcoin’s scarcity has not disappeared. Annual mining inflation remains around 0.85%. That part of the thesis is intact.

Over the last four and a half years, Bitcoin has underperformed technology stocks by roughly 25%. This is not cherry-picking data. It is a straightforward comparison between Bitcoin and the NASDAQ 100 over the same period.

If Bitcoin were truly behaving as “digital gold,” its performance and correlations would reflect that.

They do not.

Bitcoin shows weak correlation with gold. It shows a strong correlation with risk-on assets. Bitcoin is being priced like high-beta tech, not like a hedge.

Narratives are loud.

Correlations are honest.

Bitcoin’s persistent correlation with technology stocks — and its weak relationship with gold — undermines the “gold 2.0” narrative more effectively than any opinion ever could.

Markets vote with capital, not words. And capital has been voting consistently. Bitcoin belongs in the risk-on bucket.

This does not make Bitcoin inferior or irrelevant. It simply means the old playbooks are outdated.

This cycle diverges sharply from past behavior.

In previous cycles, long-term holders primarily sold near new all-time highs.

That pattern held in 2017, 2018, and even during rallies toward $70,000.

This time is different. Long-term holders have been selling into declining prices. That behavior is historically unusual, and it matters.

It also suggests that experienced participants are de-risking earlier in the cycle.

At the same time, short-term holders are realizing losses at levels rarely seen in prior bear markets. They are panicking faster. Selling more aggressively. Absorbing most of the downside.

The current market structure looks unbalanced. Long-term holders remain largely profitable, with an average cost basis near $36,000.

Short-term holders are deeply underwater. The realized profit-to-loss ratio is negative overall, yet positive for long-term holders.

In simple terms:

This is not how strong, sustainable rallies usually begin. So it’s wrong to expect that we’d see anything close to the $126k high anytime soon in this cycle. There simply isn’t any momentum for a new high.

Historically, major bear market bottoms formed when Bitcoin fell below the long-term holder cost basis.

This occurred in 2015. It occurred again in 2019. And it repeated in 2022.

Today, price remains above that level. At the same time, roughly 65% of Bitcoin’s circulating supply is still in profit. In previous cycles, the most compelling accumulation zones appeared when that figure dropped below 50%.

We are not there yet. That does guarantee further downside. But there would be relief rallies for sure, as we saw the start of December with Bitcoin reaching $95k. Expect that there would be a prolonged chopping at these price ranges and slow formation of lower highs and lower lows. Don’t expect a new high topping $126k.

But it does suggest that conditions for a durable bottom are not fully in place.

This is where nuance becomes essential.

Dollar-cost averaging into Bitcoin over long horizons is effective. For example, investing $1,000 per month over six years — roughly $74,000 total — would have grown to approximately $261,000.

That outcome is not luck. It is the result of discipline and time.

The overlooked variable is duration. Six-year horizons smooth volatility. Three-year horizons often amplify pain.

Bitcoin rewards patience. It punishes impatience.

Altcoins are not underperforming Bitcoin due to bad luck.

They are structurally impaired.

The core issue is relentless supply expansion — Every week, massive amounts of new tokens enter the market through:

Demand simply cannot keep pace.

More than 95% of the altcoin projects follow the same pattern. Rising circulating supply leads to persistent underperformance. It’s a simple match, nothing else.

Worldcoin is down roughly 97% against Bitcoin.

ZK Zinc has fallen more than 90%.

This is not a technology problem. It is a token economics problem.

My approach has evolved as the market has changed.

I no longer treat Bitcoin as a blind, permanent hold.

I view it as a cyclical risk asset that can be evaluated using on-chain data. At the same time, I see many altcoins as structurally shortable relative to Bitcoin due to continuous dilution.

My current framework is simple:

This approach has preserved capital for me far more effectively than narrative-driven optimism, particularly this cycle.

Current conditions point to a clear transition (not renewal of the bull).

Excitement is fading, but has not extinguished.

The Realized HODL Ratio is declining, though not yet at contrarian buy levels. Long-term holders are selling methodically, not panicking. Short-term holders are capitulating aggressively. Stablecoin supply growth remains muted. Institutional enthusiasm has cooled.

This for sure does not resemble the start of a new bull cycle. It resembles the middle of a repricing phase, where you expect chopping at the same price range of the large caps and slow bleeding of poor alts.

So I am positioning myself so that I am completely in Bitcoin and some selected large caps (with good tokenomics) only, and short the small amount of alts that I have specifically kept for that purpose. Because the price of neither BTC nor alts is certain, but the thing that is certain for sure is that Alts (with poor tokenomics) will always underperform against BTC.

Bitcoin is not dead. But it is not the asset it once was either.

The market has matured. Narratives have weakened. Blind buy-and-hold strategies no longer offer the same edge.

The opportunity ahead lies in adaptation, not denial. That means watching on-chain data. Respecting supply dynamics. And letting time — not hope — have the final say.