No chance for BTC to skyrocket? Analysts reveal key to reducing positions, bearish on next cycle expectations

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Senior investor Alex Xu shares his decision to significantly reduce his BTC holdings, analyzing the move from multiple dimensions including the decline of narrative energy, rising opportunity costs, and competition from gold. This article is summarized from Alex Xu's analysis. (Previous context: Opinion: Why am I not bullish on Ethereum right now?) (Background supplement: Coinbase plans to "tokenize stocks"; will on-chain US stocks and STO become the next explosive narrative?) For most of the past few years, BTC has been my largest total asset position (though it is no longer). During this BTC bull market cycle, I unwound the small leverage I added during the deep bear market (around 1.1-1.2x, achieved through BTC collateralized lending) at 70,000. At 100,000-120,000, I reduced my BTC position from a full position to about 30%. There were some minor operations during this period, such as small additions when BTC pulled back to 50,000+ in 2024, and small additions when BTC dipped to 60,000 this February. These operations were based on my long-term bullish view on BTC. According to standard cyclical logic, now is a good time to accumulate more BTC and wait for the next bull market cycle. However, during the recent BTC rebound, I continued to reduce my BTC position, which was already down to 30%, at the 78,000-79,000 level. Investors should keep close track of their assets and conduct regular fundamental check-ups. The reduction of BTC is an action taken after continuous check-ups and deliberation, ultimately leading to my judgment to lower my expectations for BTC's market cap in the next bull market cycle. The core reasons are summarized as follows: First, the potential energy to drive BTC to surge in the next cycle is not as sufficient as in previous cycles. In previous cycles, BTC had the expectation of exponential expansion of the investor base, from niche geek financial experiments to mass and institutional asset allocation. In the past, this narrative was gradually realized in every cycle. In this 23-25 cycle, it penetrated the holdings of mainstream financial institutions through compliant ETF products, received strong support from TradFi institutions represented by BlackRock, and was heavily promoted by the president of the world's largest country. If the narrative is to be elevated to another dimension, it needs to penetrate the balance sheets of top sovereign nations in the next cycle, for example: 1. More sovereign funds (currently mainly Abu Dhabi) 2. Central bank reserves *Simple government fiscal reserves (such as US state treasuries) may not be enough; the purchasing power they can provide is relatively small, far less than that of traditional financial institutions. In my view, it will be difficult to achieve this leap in the next 2-3 years. In this bull market, everyone had the expectation that Bitcoin would enter the US Federal Reserve, but this hope was basically overturned by facts last year. Currently, there are very few US states that have passed Bitcoin reserve bills. At the peak in early 2025, there were more than 20 states in the US pushing for Bitcoin reserve bills, but now only a single-digit number have finally passed, and some are "half-crippled" reserve bills where the purchasing budget requires separate proposal approval. Currently, central banks of mainstream countries still have not shown obvious interest in BTC. The short history of consensus, high volatility, and the existence of gold as a competing product make it very difficult for BTC to enter central bank balance sheets. Second is the increase in my personal opportunity cost. Over the past six months, I have gradually discovered many good companies, and their current prices are quite attractive, which will be the main direction for rebalancing (the other part is to increase some cash reserves). Third is the negative impact of the overall depression of the crypto industry on the demand and consensus for Bitcoin. Currently, there are very few business models in the crypto industry that can be run successfully. Most Web3 models (SocialFi, GameFi, DePIN, distributed storage/computing...) have been gradually overturned by facts over time. In reality, the only thing that can generate positive cash flow and create profits is DeFi. However, DeFi's overall development in the second half of this cycle has been mediocre, one of the main reasons being the reduction of high-quality native assets in the industry, which has also led to a contraction in DeFi business (still mainly lending and DEX trading). The contraction of the entire crypto industry's foundation and the decrease in practitioners and investors will also cause the growth of the BTC holding base to slow down or even decline. *Hyperliquid, as an on-chain exchange, is an outlier that grows against

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