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AceCamp Production | $70,000 BTC Is Not the Bottom: Six Dimensions Analyze Why Bitcoin Has Fallen Into a 'Death Spiral'
This article was first published on the AceCamp official website on February 5, 2026, offering fresh information ahead of the curve!
Phase One (2009–2013): 'Electronic cash' experiment against fiat currency
– Background: Born in the context of the 2008 subprime crisis, Satoshi Nakamoto inscribed a critique of bank bailouts in the genesis block. The 2013 Cyprus financial crisis triggered the first large-scale demand for safe-haven assets, rapidly driving the price of Bitcoin to $260.
– Underlying Logic:
1. Decentralized payments: Establishing a trust system that does not rely on intermediaries.
2. Censorship resistance:Borderless value exchange, free from government regulation and immune to confiscation, making it an excellent tool for evading capital controls and transferring assets.
3. Technical security: Relying on the PoW consensus mechanism to ensure the ledger is tamper-proof and prevent double-spending.
Phase Two (2014–2017): Blockchain concept rivalry and retail speculation dominance
– Background: Centered around the 2017 ICO (Initial Coin Offering) frenzy, the price surged from $1,000 to $20,000.
– Underlying Logic: Crowdfunding wealth creation driven by a wealth effect. Bitcoin became the base currency for entering the crypto market, with its casino-like characteristics and high return expectations attracting retail funds globally.
– Background: The 2020 global pandemic triggered excessive liquidity worldwide, with institutions like MSTR and Tesla entering the market. However, in 2022, the Fed initiated aggressive interest rate hikes, coupled with FTX's misuse of user funds, triggering a chain reaction of collapses among crypto lending firms and institutions like Three Arrows Capital.
– Underlying Logic:
1. Scarcity against inflation: A fixed supply of 21 million coins compared to uncontrolled fiat money printing, resulting in a decline in real purchasing power.
2. Safe haven attribute discredited: During periods of tightening liquidity, Bitcoin behaves as a 'high-leverage Nasdaq index' rather than an independent safe haven asset.
Phase Four (2024–2025): Compliance, institutional adoption, and national strategic reserves
– Background: The spot ETF was approved in January 2024; Trump signed the GENIUS Act (stablecoin regulation bill) and launched the National Digital Asset Reserve in July 2025.
– Underlying Logic:
1. Mainstream asset allocation: Through ETFs and pension plans (401K), entering the traditional financial system.
2. Extension of dollar hegemony: Through compliant stablecoins pegged 1:1 to US Treasuries, the crypto market becomes a new pool of purchasing power for US debt. Bitcoin's inclusion in national strategy marks its transformation from 'illegal asset' to 'national collateral'.
Phase Five (End of 2025 – 2026): Global Macro Risk Barometer
– Background: After Bitcoin surged to $120,000, it was impacted by Trump's tariff policy tweets. On October 10, 2025, tariff threats and Binance's network outage triggered a Bitcoin crash (with $28 billion deleveraged); In January 2026, the 'Greenland Shock' and the 'Wash Effect' (QT advocacy) caused a sharp correction in global risk assets.
– Underlying Logic:
1. Leading indicators of liquidity: Highly sensitive to Fed interest rate policies and QT (quantitative tightening), showing a strong positive correlation with the Nasdaq index.
2. Risk-on assets: Diverging from gold amid geopolitical volatility, Bitcoin reacts sharply to trade wars and geopolitical tensions. When the market seeks a safety net, funds flow into physical gold while Bitcoin is sold off.
3. Endogenous liquidity trap: The largest centralized exchanges exploit pricing mechanisms and software glitches to liquidate leveraged positions, harvesting retail investors, while ETF inflows and outflows exacerbate declines by chasing gains and fleeing losses.
II. Core viewpoint: Bitcoin has entered a downward death spiral.
The author believes that the current price support level of $70,000 is extremely fragile, and the market is entering a new round of spiraling declines. Based on the following arguments:
1. Wealth effect shift and capital diversion
Bitcoin's uniqueness as a speculative vehicle is diminishing. With strong performances in US stocks (e.g., SNDK up over 100%, Micron over 40%), gold (>30%), and silver (>70%) since early 2026, risk-return-seeking capital is flowing into assets with stronger wealth effects, eroding Bitcoin’s yield advantage compared to other major asset classes.
2. ETFs shifting from 'support' to 'volatility amplifier'
The 2024 rally was supported by new Wall Street capital, but starting from late 2025, ETF flows began showing significant pro-cyclical characteristics (chasing gains and fleeing losses). Once prices break below key psychological levels, net ETF outflows will create negative feedback, accelerating rather than slowing the price collapse.
3. Policy benefits exhausted and strategic reserves diluted
The positive impact of Trump administration's crypto policy has largely run its course. The so-called 'national reserve' is currently limited to the allocation of existing confiscated assets (approximately 330,000 coins) and has not generated real buying pressure in the secondary market. With the implementation of the GENIUS Act, the narrative premium quickly faded. On February 4, US Treasury Secretary Scott Bessent testified before Congress, stating: 'The US government will not require private banks to purchase Bitcoin as a bailout measure during market downturns.' Previously, Senator Cynthia Lummis had suggested that Bessent utilize US gold reserves to buy Bitcoin, but this proposal appears to have been rejected for now.
4. Joint Blow to Industry Credibility and Security
The '10/10 Binance incident' demonstrated the vulnerability of centralized platforms during extreme market conditions (a software malfunction triggered $280 billion worth of forced liquidations); additionally, the Trump administration’s massive seizure of Cambodia-based pig-butchering scheme assets in October 2025 shattered some investors’ belief that Bitcoin could evade government confiscation, weakening its underlying demand logic.
5. 'Warsh Effect' and Disappointment in Monetary Policy Expectations
On January 30, 2026, Trump officially nominated Kevin Warsh to succeed Powell, who is set to step down in May, triggering significant volatility in the crypto market.
- Powell hints at pausing rate cuts: Current Chair Powell displayed unusually strong independence at the January monetary policy meeting, clearly stating that 'policy is not significantly constrained,' signaling that he would never cut rates to cater to White House political demands before his term ends in May. This 'gatekeeper' stance dashed market hopes for liquidity easing in the first half of the year.
- Warsh’s 'hawkish rate-cut' paradox: Incoming Chair Warsh advocates for an extremely unique policy mix – 'rate cuts combined with quantitative tightening (QT).' He believes that benchmark interest rates should be lowered to support the real economy while simultaneously reducing the Federal Reserve’s balance sheet to withdraw excess financial system liquidity.
- Reversal of the Liquidity Feast: This policy combination, compounded by fiscal indiscipline, will inevitably squeeze market liquidity, delivering a precise blow to risk-on assets like Bitcoin. The market simultaneously expects the Fed Chair to maintain independence without catering to political demands while hoping Warsh will pivot toward maintaining loose liquidity in QT, which itself is contradictory (the author also believes Warsh will likely eventually yield). However, such yielding is unlikely to occur before he takes office, meaning Bitcoin lost its stabilization momentum before the Fed Chair transition.
6. Potential Institutional Capital Siege Triggered by Transparent Treasury Company Cost Lines
The crypto market has become a battleground for institutional sieges against treasury companies. Since these companies mostly buy Bitcoin through financing or stock issuance, their cost lines are transparent, and they lack subsequent fundraising capabilities:
– MSTR (Strategy): Holding approximately 713,000 Bitcoin, with an average cost of around $76,000. $Strategy (MSTR.US)$
– Metaplanet: Holding approximately 35,000 Bitcoin, with an average cost of around $108,000.
– Ethereum giants (BMNR/SBET): Combined holdings of nearly 5 million ETH, with an average cost in the range of $3,400-$4,000.
If the cryptocurrency price remains below the aforementioned cost level for an extended period, treasury companies will face operational cash flow disruptions or bond repayment pressures. Due to their massive holding sizes, any 'forced sales' will lead to amplified declines in BTC and ETH prices.
Risk Warning: The above content is compiled based on public information and does not represent any investment advice. Please bear your own risks.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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