Why Is Everything Pumping Except for Crypto

“Anything But Crypto - as long as you don't invest in Crypto, you can make money in everything else.”

Lately, the cryptocurrency market and global markets seem to be worlds apart.

Throughout 2025, gold surged over 60%, silver skyrocketed 210.9%, and the US Russell 2000 Index rose by 12.8%. Meanwhile, after a brief new all-time high, Bitcoin ended the year below its yearly open.

As 2026 began, the divergence only intensified. On January 20, both gold and silver hit new highs, the Russell 2000 Index outperformed the S&P 500 for 11 consecutive days, and China's Sci-Tech Innovation 50 Index saw a monthly increase of over 15%.

In contrast, Bitcoin saw six straight days of losses starting on January 21, dropping from $98,000 to below $90,000 without looking back.

Silver's performance over the past year

Post 1011, funds seemingly decisively exited the crypto sphere. With BTC oscillating below $100,000 for over three months, the market plunged into its "lowest volatility ever" phase.

Disappointment spread among crypto investors. When asked about those who left Crypto and made money in other markets, they even shared the "ABC" "strategy" - "Anything But Crypto," meaning that as long as you avoid Crypto, you can make money elsewhere.

The previous eagerly awaited "Mass Adoption" now seems to have arrived. However, it's not the decentralization application spread everyone anticipated, but Wall Street's-led, thorough "financialization."

This time, the American establishment and Wall Street have embraced Crypto like never before. The SEC approved a spot ETF; BlackRock and JPMorgan allocated assets to Ethereum; the US included Bitcoin in its national strategic reserves; several state pensions invested in Bitcoin; and even the NYSE announced plans to launch a cryptocurrency trading platform.

So, the question arises: why, when Bitcoin has received so much political and capital endorsement, does its price performance remain disappointing while precious metals and stock markets hit new highs?

When crypto investors have become accustomed to checking pre-market stock prices to gauge the crypto market's direction, why isn't Bitcoin rallying with them?

Why Is Bitcoin So Weak?

Leading Indicator

Bitcoin is a "leading indicator" of global risk assets, as repeatedly mentioned by Real Vision founder Raoul Pal in many of his articles. Since Bitcoin's price is purely driven by global liquidity and is not directly influenced by any country's financial reports or interest rates, its volatility often leads that of mainstream risk assets like the Nasdaq Index.

According to MacroMicro's data, Bitcoin's price turning points have led the S&P 500 Index multiple times in the past few years. Therefore, once the price-leading Bitcoin's upward momentum stalls and fails to make new highs, it serves as a strong warning signal that the upward momentum of other assets may also be nearing exhaustion.

Liquidity Contraction

Secondly, Bitcoin's price, up to today, remains highly correlated with global U.S. dollar net liquidity. Although the Fed cut rates in 2024 and 2025, the quantitative tightening (QT) that started in 2022 continues to drain liquidity from the market.

Bitcoin hit a new high in 2025 largely due to new funds flowing in through ETF approvals, but this did not change the fundamental tightness of global macro liquidity. Bitcoin's sideways movement is a direct response to this macro reality. In a cash-strapped environment, it is difficult for Bitcoin to kick off a super bull market.

Additionally, the second largest source of global liquidity—the yen—is also starting to tighten. In December 2025, the Bank of Japan raised the short-term policy rate to 0.75%, its highest level in nearly 30 years. This directly impacts a key funding source for global risk assets over the past few decades: yen carry trades.

Historical data shows that since 2024, the Bank of Japan's three rate hikes have been accompanied by Bitcoin's price dropping by over 20%. The synchronized tightening of the Fed and the Bank of Japan further exacerbates the global liquidity environment.

Price Drop in the Crypto Market with Each Bank of Japan Rate Hike

Geopolitical Conflict

Finally, the potential "black swan" of geopolitical politics continues to keep the market on edge, and a series of domestic and international actions by Trump at the beginning of 2026 has pushed this uncertainty to new heights.

Internationally, the actions of the Trump administration have been filled with unpredictability. From military intervention in Venezuela, including the arrest of its president (unprecedented in modern international relations history), to the imminent threat of war with Iran; from attempting to forcefully purchase Greenland to issuing new tariff threats against the EU. This series of radical unilateralist actions is intensifying conflicts among major powers.

Meanwhile, domestically in the United States, his measures have sparked deep-seated concerns among the populace regarding a constitutional crisis. Not only has he proposed renaming the "Department of Defense" to the "Department of War," but he has also ordered active-duty troops to prepare for potential domestic deployments.

These actions, combined with his previous hints of regret for not deploying the military and his unwillingness to accept defeat in the midterm elections, are making the public's worries increasingly clear: Will he refuse to accept defeat in the midterm elections and use force to seek reelection? This speculation and pressure have exacerbated internal conflicts in the United States, with signs of escalating protests across the country.

Last week, Trump invoked the Insurrection Act and deployed troops to Minnesota to quell protests, following which the Pentagon has ordered about 1500 active-duty soldiers to be on standby in Alaska

This normalization of conflict is dragging the world into a "gray zone" between localized warfare and a new Cold War. Traditional full-scale war has a relatively clear path, market expectations, and has even been accompanied by market intervention to "stabilize" it.

However, this kind of localized conflict is characterized by extreme uncertainty, full of "unknown unknowns." For venture capital markets that rely heavily on stable expectations, this uncertainty is deadly. When large capital cannot assess the future direction, the most rational choice is to increase cash holdings, exit and observe, rather than allocate funds to high-risk, high-volatility assets.

Why Aren't Other Assets Falling?

In stark contrast to the quietness in the cryptocurrency space, since 2025, various markets such as precious metals, US stocks, and A-shares have been rising one after another. However, the rise in these markets is not due to a general improvement in macro and liquidity fundamentals but is a structurally driven rally by sovereign will and industrial policy in the context of major power games.

The rise in gold prices is a reaction of sovereign nations to the existing international order, rooted in the credit cracks of the dollar system. The global financial crisis of 2008 and the freezing of Russia's foreign exchange reserves in 2022 shattered the "risk-free" myth of the dollar and US Treasury bonds as the ultimate global reserve assets. In this context, global central banks have become "price-insensitive buyers." They buy gold not to make short-term profits but to find an ultimate value storage medium that does not depend on any single sovereign credit.

According to the World Gold Council, in 2022 and 2023, global central banks have had net gold purchases exceeding 1000 tons for two consecutive years, setting a historical record. The main driving force behind this gold rally has been official forces rather than market-driven speculative forces.

A comparison between the proportion of gold and U.S. treasuries in sovereign central bank reserves, by 2025, total gold reserves have surpassed U.S. treasuries

The stock market's rise, on the other hand, is a reflection of national industrial policies. Whether it's the U.S.'s "AI Nationalization" strategy or China's "Industrial Autonomy" policy, it represents state power deeply intervening and directing the flow of capital.

In the case of the U.S., through the "Chip and Science Act," the AI industry has been elevated to a strategic level of national security. Funds have notably flowed out of large-cap tech stocks and poured into smaller and mid-cap stocks that are more growth-oriented and align with policy directives.

In China's A-share market, funds are similarly highly concentrated in sectors closely related to national security and industrial upgrading such as "tech innovation" and "defense industry." This market driven strongly by the government differs inherently in pricing logic from Bitcoin, which relies on purely market-driven liquidity.

Will History Repeat Itself?

Historically, Bitcoin has not been immune to instances of divergent performance from other assets. However, each instance of divergence has ultimately ended with Bitcoin staging a strong rebound.

Historically, extreme oversold conditions, as measured by Bitcoin's RSI (Relative Strength Index) relative to gold, have occurred a total of 4 times in 2015, 2018, 2022, and 2025.

Every time Bitcoin has been severely undervalued relative to gold, it has foreshadowed a rebound in the exchange rate or Bitcoin price.

Historical trend of Bitcoin/Gold, with RSI indicator below

In 2015, at the end of a bear market, Bitcoin's RSI relative to gold dropped below 30, leading to the start of the super bull market from 2016 to 2017.

In 2018, amid a bear market, Bitcoin fell by over 40% while gold rose nearly 6%. After the RSI dropped below 30, Bitcoin rebounded by over 770% from the 2020 low.

In 2022, during a bear market, Bitcoin experienced a nearly 60% drop. After the RSI fell below 30, Bitcoin rebounded, once again outperforming gold.

From late 2025 to now, we have witnessed this historic oversold signal for the fourth time. Gold surged by 64% in 2025, while Bitcoin's RSI relative to gold once again fell into the oversold range.

Is It Still Wise to Chase Other Assets Now?

In the midst of the "ABC" frenzy, selling off cryptocurrency assets easily to chase other seemingly more prosperous markets may be a dangerous decision.

When small-cap stocks in the U.S. lead the rally, it has historically been the final festive period before a liquidity drought at the end of a bull market. The Russell 2000 Index has already risen by over 45% since its 2025 low, but most of its component stocks have relatively poor profitability and are very sensitive to interest rate changes. Once the Federal Reserve's monetary policy falls short of expectations, the vulnerability of these companies will be immediately exposed.

Furthermore, the frenzy in the AI sector is exhibiting typical bubble characteristics. Whether it's Deutsche Bank's survey or Bridgewater Associates founder Dalio's warning, they all list the AI bubble as the biggest risk in the 2026 market.

Star companies like NVIDIA and Palantir have already reached historical highs in valuation, and whether their earnings growth can support such high valuations is increasingly being questioned. The deeper risk lies in AI's enormous energy consumption potentially triggering a new round of inflationary pressure, thereby forcing central banks to tighten monetary policy and burst the asset bubble.

According to a January survey of Bank of America fund managers, current global investor sentiment has hit a new high since July 2021, and global growth expectations are soaring. The cash holdings ratio has dropped to a historic low of 3.2%, and protection measures against market pullbacks are at their lowest level since January 2018.

On one side, we have soaring sovereign assets and generally optimistic investor sentiment; on the other, escalating geopolitical conflicts.

Against this backdrop, Bitcoin's "stagnation" is not as simple as "underperforming the broader market." It is more like a sober signal, an early warning of greater future risks, and a gathering of strength for a larger narrative shift.

For the true long-termist, this is precisely the moment to stress-test beliefs, resist temptation, and prepare for the upcoming crisis and opportunity.