Market volatility weakens, Bitcoin enters an accumulation phase

Original Source: Carbon Chain Value

Original Title: Bitcoin Poised for Takeoff

The author is a professional investor with over 30 years of experience in traditional finance and macroeconomics on Wall Street.

The dilemma is real

Frankly, the current sentiment in the cryptocurrency market is very poor.

The S&P 500 is approaching historical highs. The Nasdaq is soaring. Gold prices have just broken through the $4,300 mark. Tech stocks are also trending upward. By all traditional indicators, we are in an environment of heightened risk appetite. Capital is flowing into risk assets. Investors are eager to buy.

And Bitcoin? Bitcoin... has done nothing.

Sideways movement. Consolidation. Stagnation. Dull. However you describe it, it can't hide the pervasive sense of frustration in the Bitcoin community. Twitter is filled with anxious questions in various forms: "Why hasn't Bitcoin soared like other cryptocurrencies?"

Cognitive dissonance is obvious. Bitcoin ETFs have been successfully launched, with inflows every month. Institutional adoption is accelerating. The "Genius Act" has passed, and the "Clarity Act" is about to be enacted. No regulatory crackdowns, no major hacks, no fundamental narrative collapse. All the things that should matter... have happened.

Yet, what we see now is other asset prices rising while Bitcoin stands still.

In recent years, my increasing connection with the cryptocurrency community has given me a unique perspective. I have observed both the traditional fiat financial system and the crypto ecosystem, and I have begun to notice a pattern that reminds me of the world I grew up in. The similarities between the two are obvious, and so are the differences. But sometimes, the similarities manifest in unexpected ways.

What if everyone is looking at it wrong?

What if there is nothing wrong with Bitcoin, and it is actually experiencing something akin to a Tradfi IPO?

The bridge connecting two worlds

The reason I have benefited so much from the crypto space is precisely because I never abandoned my understanding of traditional markets. I always carry this perspective. And increasingly, I find that although Bitcoin originated as a revolutionary, decentralized asset, the economic model it follows is as old as capitalism itself.

Early investors bear enormous risk. If the investment succeeds, they deserve substantial returns. But ultimately—and this is crucial—they need to realize those gains. They need liquidity, an exit, and diversification.

In traditional thinking, this moment is called the IPO (Initial Public Offering). It is the moment when early investors cash out, founders get rich, and venture capitalists return funds to limited partners. This is not a moment of failure, but of success. Companies do not disappear during IPOs; they transform, mature, and ownership becomes more dispersed.

Bitcoin has never had a traditional IPO, because it was never a company. But economic forces do not disappear because of structural differences; they simply manifest in different ways.

The divergence tells the story

Let's talk about what's actually happening in the market right now.

Bitcoin's price action has long been closely correlated with tech stocks, liquidity, and "risk appetite." For years, one could predict Bitcoin's movement by watching the Nasdaq. But this correlation has completely broken down recently, especially after December 2024.

This is confusing. It confuses algorithmic traders. It confuses momentum investors. When risk assets rise and Bitcoin doesn't participate, people assume "something is wrong with Bitcoin."

But what I learned from observing traditional markets is: this is exactly what happens during IPO distribution periods.

When a company goes public and early investors start selling shares, the stock price often consolidates even as the broader market rises. Why? Because there is a special dynamic at play. Early investors are not panic selling; they are methodically diversifying their holdings. They are very careful not to crash the price. They are patient—they've waited years for this moment, and can wait a few more months to ensure things are done right.

Meanwhile, new investors are also entering, but they are cautious. They are not chasing the rally, but buying the dips. They are waiting for the distribution to finish before taking aggressive positions.

The result? Sideways consolidation, which drives people crazy. The fundamentals are fine, the broader market is rising, but this stock... doesn't move. Don't believe it? Look at Circle or Coreweave. After their IPO pricing, both saw a surge, but then fell into consolidation.

Sound familiar?

If this were macro-driven weakness, Bitcoin's downtrend should be in sync with risk assets, not diverging from them. If this were truly a "crypto winter," we would see panic, capitulation, and a synchronized sell-off across the entire crypto market. Instead, what we see is something more specific: methodical, patient selling at stable prices.

This type of selling says, "I'm done, it's time to move on," not "I'm scared."

Mounting evidence

Then, I got confirmation that was unexpected but perhaps should have been anticipated.

In a recent Galaxy Digital earnings call, Mike Novogratz announced that Galaxy had sold $9 billion worth of Bitcoin for a client. $9 billion! Think about that number. This is not retail panic, nor a trader getting liquidated. This is one of the industry's OG players methodically closing out a position.

But they are taking profits, realizing gains. When an asset matures and finally has enough liquidity to support large-scale exits, this is exactly what early investors are supposed to do.

But the fact is: that OG is not alone.

If you know how to read on-chain data, you can see the signs. Some old coins, those that haven't moved in years—some dormant since Bitcoin was in single digits—are suddenly active. Not all at once, and not in panic, but steadily since the start of this year, especially after summer. This is a gradual process. Addresses that accumulated Bitcoin during its cypherpunk experimental phase are finally moving their holdings.

Look at the Fear and Greed Index, look at social sentiment. Morale is low, retail is collapsing. This is exactly the sentiment expected when smart money is transferring funds to weaker hands.

But most people miss one point: if you understand the stage we're in, this sentiment is actually bullish.

The psychology of original holders

Put yourself in their shoes: if you mined Bitcoin in 2010, or bought it at $100 or even $1,000, how would you feel?

You survived the Mt. Gox collapse, multiple China bans, the 2018 bear market, the COVID-19 pandemic, regulatory uncertainty, and over a decade of mainstream media calling it a scam.

You believed when almost no one else did. You took the risk. In the end, you won. Bitcoin's success has far exceeded almost everyone's expectations.

So what now?

You have generational wealth. Life circumstances change. Maybe you're about to retire. Maybe your kids are in college. Maybe you want to diversify into AI, or buy a yacht like Jeff Bezos, start a company, or simply enjoy the fruits of your patience.

And, for the first time ever, you can exit your position without crashing the market.

This is new.

For years, Bitcoin lacked liquidity. Imagine selling $100 million worth of Bitcoin in 2015—the price would have crashed. Try selling $1 billion in 2019—same problem. The market simply couldn't absorb such massive selling.

But now? ETFs are providing institutional demand. Large companies hold Bitcoin on their balance sheets. Sovereign wealth funds are getting involved. The market has finally matured to the point where early holders can exit large positions without causing chaos.

The key is: they choose to transact in an environment of high risk appetite precisely because buyers have ample funds. When stocks are rising, market confidence is high, and liquidity is abundant, it's the best time to allocate funds. Selling in panic would crash Bitcoin. Selling when other assets are strong? That's smart business.

This is what the old whales have been waiting for. Not price—they've always had price. Liquidity. Market depth. And the ability to truly exit.

Mission accomplished. Bitcoin has proven its value. Now, the reward arrives.

Why this isn't a bear market

I can almost hear the skeptics: "This sounds like you're making excuses for an impending bear market as the four-year cycle ends."

Fair enough. So let's talk about why this is fundamentally different.

Bear markets are driven by fear, by changes in the macro environment, and by loss of confidence in the underlying market narrative. Remember 2018? Exchanges collapsed, ICO scams were exposed, and the whole market was rife with fraud. People sold Bitcoin because they feared it would go to zero.

Remember March 2020? The global pandemic hit, everything crashed. People needed cash to survive and sold off assets.

That's not the case now.

Currently, Bitcoin's fundamentals are arguably the strongest in history. ETF approval—once thought impossible by everyone—is now a reality. Institutional adoption is accelerating. The quadrennial halving arrived on schedule, like clockwork. The network is more secure than ever. Hashrate is at an all-time high. Stablecoin adoption is accelerating, tokenization is imminent, and network effects are about to explode. The dream of crypto is finally becoming reality.

Even so, everyone must remember: crypto is only three years removed from its darkest days, when prices crashed, fraud was exposed, and regulators cracked down hard. Altcoin prices are still 20% to 50% below their previous highs. For the past two years, Bitcoin has been the backbone of the entire crypto market.

Before the crypto bubble burst, venture capital and hedge funds were the main investors in crypto, but they have yet to recover. The rise of AI has disrupted investment in crypto and SaaS, and they are still licking their wounds.

Sellers are not selling because they've lost confidence, but because they've won.

This is the key difference.

In a bear market, there are few buyers. Prices crash because everyone wants to sell and no one wants to buy. But look at the reality: Bitcoin is consolidating, not crashing. Every dip is bought. Prices are not making new lows, but oscillating within a range.

Buyers are entering, just not aggressively or impulsively. They are patiently accumulating, waiting for the distribution to finish.

This is exactly the pattern seen after large IPO lock-up periods end. The stock doesn't crash, but consolidates. Early investors sell, new long-term investors buy. Ownership shifts from visionary investors to institutional hands.

Lessons from traditional markets

If you want to understand Bitcoin's current phase, look at what happened to the greatest tech companies after their IPOs.

Amazon went public in 1997 at $18 per share. Within three years, the stock soared to $100. However, for the next two years, despite the continued growth of the internet, Amazon's stock barely moved. Why? Because early investors and employees were finally cashing out. They started selling shares. Many who believed in Amazon at $1 sold at $100. They weren't wrong—they made 100x returns. But Amazon's stock had to digest this selling before it could rise again.

Google went public in 2004. For nearly two years after listing, its stock consolidated. Facebook was similar—between 2012 and 2013, the end of the lock-up period caused major volatility and sideways movement.

This is normal. This is healthy. This is what success looks like.

At this stage, companies don't go bankrupt, and assets don't disappear. What happens is a transfer of ownership. Early investors pass the baton to a new generation of holders who buy at higher prices and have different investment horizons.

From cypherpunks to institutions; from libertarian idealists to corporate treasuries; from devout believers to fiduciaries managing tens of billions of dollars.

Neither good nor bad—just evolution, the natural lifecycle of a successful asset.

The handover ceremony

This transition is profound and worth celebrating.

Bitcoin was born from an idea. It was created by a group of cypherpunks who believed in decentralization, escaping government control, and valuing mathematical certainty over institutional trust. Early adopters were rebels, outcasts, and visionary pioneers who saw what others could not.

These people are getting their happy ending. They are passing the torch. And those taking the torch are institutions who care less about ideology and more about returns. BlackRock doesn't care about "being your own bank." They care about portfolio diversification and risk-adjusted returns.

Is this a loss? In some ways, yes. Bitcoin may never again have the explosive upside of its early days. The era of 100x returns in a year may be gone. As ownership becomes more dispersed, the volatility that once created massive wealth will gradually diminish.

But it is also a victory. Because Bitcoin has survived long enough to become boring. It has succeeded so thoroughly that the original believers can now cash out. It has proven its value—even the world's most conservative financial institutions are buying it.

More importantly, from a market structure perspective, this distribution is extremely bullish in the long run.

Why diversification is better than concentration

One thing I learned from observing traditional markets also applies perfectly to Bitcoin: concentration is fragile, decentralization is antifragile.

When Bitcoin was held mainly by a few thousand early users, the market itself was highly unstable. The actions of a few wallets could have a huge impact on price. One person's decision to sell could trigger a chain reaction across the market. Volatility was extreme because the holder base was unstable.

But as ownership disperses, millions of investors hold smaller positions instead of thousands holding large ones, and the market becomes structurally more stable.

Think practically: if 100 people own 50% of the supply, and one decides to sell, 0.5% of the supply hits the market. Enough to move the market. But if 1 million people own 50%, and 10,000 decide to sell, that's still only 0.5% of the supply, but it's spread across thousands of trades, over time, on different platforms, at different times and prices. The impact is fully diluted.

This is exactly what happens after IPOs. The initial shareholder base is very small—founders, early employees, and VCs. After the IPO and lock-up expiration, ownership disperses. The shareholder count goes from hundreds to millions, including index funds, retail, and institutions.

Stock volatility drops, not because the company is less attractive, but because the ownership structure is more robust.

Bitcoin is now undergoing this transformation. The "OGs" who could once move the market single-handedly are now selling Bitcoin to thousands of institutional investors via ETFs, to millions of retail investors via exchanges, and to corporate treasuries and pension funds.

Every Bitcoin that moves from a concentrated holder to a dispersed one strengthens the network, stabilizes the price, and matures the asset.

Yes, this means the days of wild 10x runs may be over. But it also means the risk of catastrophic crashes from concentrated selling is falling.

A dispersed holder base is what separates a speculative asset from a lasting store of value. It's what allows an asset to evolve from "magical internet money" to "global monetary asset."

The future timeline

If this thesis is correct (and I believe the evidence strongly suggests it is), what should investors expect?

First, be patient. IPO distribution periods typically last 6–18 months. We may already be several months into this process, but it may not be over yet. Also, Bitcoin's cycles move faster than fiat assets. I think Bitcoin's price has already exceeded the six-month cycle. For now, expect continued consolidation. Bitcoin will not rise like risk assets and will likely continue to disappoint the market. Sentiment will remain low for a while, but beware—there will be no clear signal, and the rally will start quietly, because the bullish factors are already in place.

Second, volatility will decrease. As ownership disperses, the wild swings common in previous cycles will moderate. The 80% drawdowns of the past may fall to 50%, and 50% drawdowns to 30%. 10x rallies may become 3x. This will disappoint gamblers but excite risk managers.

Third, Bitcoin's correlation with traditional risk assets may return, but only after the current distribution phase is complete. Once the old whales stop selling and ownership is fully dispersed, Bitcoin may once again move with market sentiment—just more stably and with less volatility.

Fourth, and most crucially: only after Bitcoin's distribution is largely complete will sentiment improve. People are down because they don't understand what stage we're in. They're waiting for Bitcoin to "catch up" with stocks. They're worried about the four-year cycle. Be patient. Once the selling pressure is gone, once the original supply patiently accumulated by institutions is absorbed, the path forward will become clearer.

The exact timeline is unknowable. But if you've seen this pattern in traditional markets, it's recognizable.

The maturation of an asset class

Every revolutionary technology undergoes this process of evolution.

The early internet had a group of true believers who started companies with no business model, just a conviction that network connectivity would change the world. They were right. Many made huge fortunes. Then the internet bubble burst, the industry consolidated, and ownership shifted. Dreamers gave way to doers. The internet didn't die—it actually fulfilled its promise, just over a longer timeline than early expectations.

Personal computers, mobile phones, cloud computing, AI... every transformative technology follows a similar trajectory. Early supporters take huge risks. If the technology succeeds, they deserve great rewards. Eventually, they realize those rewards. Then comes a transition period that looks like failure but actually signals maturity.

Bitcoin is following this pattern exactly.

Bitcoin's OG holders took risks when Bitcoin could have gone to zero. They endured ridicule, regulatory uncertainty, and technical growing pains. They built infrastructure, survived the Mt. Gox collapse, weathered scaling wars, and evangelized Bitcoin when no one cared.

They won. They succeeded. Bitcoin is now a $1 trillion+ asset recognized by the world's largest financial institutions.

Now they are enjoying the profits they worked so hard to earn.

This is not the end of Bitcoin, nor even the beginning of the end, but the end of the beginning.

From speculation to institutionalization. From cypherpunk experiment to global asset. From concentration to dispersion. From volatility to stability. From revolutionary to foundational.

Opportunities in the distribution phase

What convinces me of this is: I now understand both sides.

I understand how traditional finance works. I understand the IPO model, lock-up expirations, and institutional accumulation. I also understand the crypto community—their hopes, frustrations, and their conviction that this time is different.

Sometimes things are different, sometimes not.

Bitcoin's current situation is not different. The economic forces that have governed markets for centuries are still at play, just in a new context.

The frustration everyone feels now? It's not a sign of failure. It's a sign we're in the hardest part of the journey, where early believers are exiting and late believers feel left out. It's uncomfortable, it's frustrating, but it's necessary.

And for long-term investors, the crucial insight is: once this distribution phase is complete, Bitcoin's structure will be stronger than ever.

When an asset is held by millions instead of thousands of early whales, it becomes more resilient, less susceptible to manipulation by single entities, more stable, more mature, and better able to absorb real capital without wild swings.

The IPO is nearing its end. The OG whales are getting their rewards. And what emerges is a Bitcoin ready for its next phase: no longer a speculative tool for chasing massive returns, but a foundational monetary asset with a distributed, stable holder base.

For those who entered at $100 dreaming of making $10 million, this may sound boring. But for institutions managing trillions, companies seeking diversification, and nations exploring reserve assets, boring is exactly what they want.

The excitement of concentrated bets is being replaced by the steady strategy of distributed investment. Early investors are passing the baton to long-term holders buying at higher prices with different motivations.

This is what success looks like. This is Bitcoin's IPO.

Once this process is complete, once distribution is done, once ownership is sufficiently dispersed, true institutional adoption can truly begin. Because only then can the market absorb real capital without being affected by massive concentrated positions waiting to exit.

Market consolidation is frustrating, sentiment is terrible, and divergence from risk assets is confusing.

But the fundamentals are stronger than ever. And the shift in Bitcoin holdings from concentration to dispersion is exactly what it needs to evolve from a revolutionary experiment to a lasting monetary asset.

The OG whales are cashing out and leaving. Let them go. This is their deserved reward. The Bitcoin they leave behind will be stronger, more dispersed, and more resilient than the version they accumulated.

That is not a reason for despair, but a reason to accumulate.

The volatility of Bitcoin's early days was its necessary price, and its stability will be the proof of its maturity.

Dear readers, please star "Carbon Chain Value," or you may miss the latest updates. We hope every piece of content we carefully create and curate brings rational thinking and inspiration to our readers.