Joe Weisenthal and Tracy Alloway, in their assessment published following the sharp drop in Bitcoin (BTC), described the current situation as “the coldest crypto winter in history.”
Analysts noted that Bitcoin has fallen approximately 44% since its peak in October, and that many other crypto assets have experienced much deeper losses. While larger pullbacks have been seen in the past, the timing of the current decline and the accompanying structural issues make it one of the most psychologically challenging periods.
According to Weisenthal, the most important factor that distinguishes this decline is that it is occurring during a period of increasing uncertainty about the future of the dollar. While historically such macroeconomic stress environments are expected to create a favorable environment for Bitcoin, it is noteworthy that investors are once again choosing gold. The fact that Bitcoin has failed to gain strength even in a conjuncture where confidence in fiat currencies is being questioned weakens its “digital safe haven” thesis.
The analysis also indicated that the crypto market has moved away from the “early-stage” narrative. While the proliferation of ETFs and increased institutional access have made Bitcoin and other major crypto assets fully mainstream, price performance has not met expectations. The lack of significant value appreciation for existing token holders like ETH or SOL, despite increased institutional adoption, was highlighted as a notable paradox.
On the regulatory front, it was emphasized that the past narrative of “repressive regulation” has given way to a crypto-friendly political atmosphere. However, according to analysts, this positive policy environment is no longer enough to support prices. On the other hand, the rise of the artificial intelligence sector is diverting both investor interest and the technical talent pool away from the crypto ecosystem. It is stated that Bitcoin mining is struggling to compete with AI data centers, especially in terms of energy and infrastructure. This situation could put pressure on network security in the long term.
Another risk to Bitcoin’s security is the advancements in quantum computing. As longtime Bitcoin investor Nic Carter has also pointed out, discussions have been reignited regarding the potential threat that developments in quantum technology could pose to the current cryptographic infrastructure.
On the other hand, Tracy Alloway’s assessment goes beyond the crypto market, focusing on the sharp sell-off in the technology and software sectors. In what she calls a “SaaSpocalypse,” the iShares Expanded Tech-Software ETF has fallen 22% year-to-date, and the sharp losses seen in major fund managers are raising concerns about credit markets. According to Alloway, the main risk is the potential for the high credit exposure to software companies to spread into the financial system through private loan funds (BDCs), CLOs, and indirectly through the banking system.
Analysts note that credit risk in the software sector has become particularly sensitive since 2020 due to loans granted at peak valuations. The pressure on software companies from AI-driven transformations could increase the risk of default. In particular, the acceleration of rating downgrades and delays in credit rating processes could exacerbate market fragility.
*This is not investment advice.
