Unable to outperform the stock market and beat precious metals, is Crypto truly becoming an "outsider" in the bull market?

Author: Nancy, PANews

Last night (December 29), Bitcoin once again broke out of its "door-shaped" price action. Faced with this back-and-forth, stagnant trend, the market seems to have become numb.

It's only been three months since Bitcoin's peak, but investors feel like they've been in a deep winter for ages. This psychological collapse isn't just due to the decline in paper assets, but also to a shattering of confidence amidst soaring stock prices, record highs, and surging gold and silver prices...

Traditional assets are celebrating, while crypto assets have unexpectedly fallen behind. This stark contrast has led to players voting with their feet, shorting, cutting losses, and liquidating their positions, plunging the crypto market into unprecedented existential anxiety.

Hell Mode activated, trading activity plummeted to rock bottom.

Waiting and watching, and playing it safe, are becoming the main themes in the crypto market at the end of the year.

In fact, the market capitalization of stablecoins has quietly climbed to a staggering $300 billion. Historically, such a massive pool of off-exchange funds should fuel a bull market, foreshadowing a large-scale bubble. However, the reality is that the crypto market has not only failed to experience a collective frenzy, but has instead entered a period of turmoil.

Looking back at the year's cryptocurrency market performance, investor confidence has been severely shaken. Although Bitcoin and Ethereum reached all-time highs this year, they failed to maintain their momentum and both turned downwards. The altcoin market was even more devastating; even newly listed coins couldn't escape a downward spiral, with liquidity shortages becoming the norm.

In this meat grinder-like market, neither seasoned investors nor newcomers can escape unscathed. Even Bitcoin holders are having a tough time, with over 30% of Bitcoin currently showing losses. The last time such a supply loss occurred was in October 2023, when the price of BTC was around $26,000.

Amid the market downturn, funds are rapidly withdrawing. Matrixport data shows that Bitcoin spot ETFs, a bellwether for institutional investors, have seen net outflows for nine consecutive weeks, with a cumulative outflow of nearly $6 billion. If this month ends with net outflows, it will be the most significant round of fund withdrawals since the ETF's launch in January 2024.

Trading activity also plummeted. According to data from The Block, global cryptocurrency exchange spot trading volume fell to $1.59 trillion in November, the lowest level since June.

Market interest has plummeted. Google Trends, a bellwether for retail investor sentiment, shows that global searches for the term "cryptocurrency" continue to decline, with the US region seeing its lowest point in a year.

CryptoQuant analyst Darkfost also pointed out that a market sentiment index built based on media articles and X platform data shows that the current consensus in the crypto market has shifted to bearish. However, he also believes that when a consensus is formed, the market often reverses, proving the majority wrong.

Can't outperform the stock market, can't beat precious metals

The crypto market continues to be weak, while many traditional assets are performing exceptionally well.

This year, neighboring major stock markets witnessed a massive short squeeze. New A-share IPOs performed strongly, with an average first-day gain exceeding 256%, and none falling below their issue price; the Hong Kong stock market rebounded, with over 40 stocks more than doubling in price; the three major US stock indices closed strongly, with the S&P 500 rising nearly 18%, the Dow Jones Industrial Average up 14.5%, and the Nasdaq Composite gaining a remarkable 22%; and the South Korean KOSPI index saw an astonishing surge, rising over 76%.

Retail investors are rushing into the market. Taking the US stock market as an example, data from KobeissiLetter shows that this round of US stock market rise is historic, with US households' stock holdings now accounting for more of their net worth than real estate—a phenomenon that has only occurred three times in the past 65 years. JPMorgan analysts point out that by 2025, retail investor investment in the US stock market will increase by 53% to $303 billion, becoming the main driver of the stock market's rise.

In the battle of safe-haven assets, physical precious metals have decisively outperformed Bitcoin. Gold, silver, and platinum have all recently hit record highs, and despite a dramatic flash crash, their year-to-date gains remain substantial. In contrast, Bitcoin's status as "digital gold" is facing a severe challenge. The BTC-to-gold and-silver ratios have fallen to their lowest levels since November and September 2023, respectively.

This has drawn ridicule from outside the crypto community. For example, Peter Schiff, a staunch gold enthusiast, bluntly stated that one of the best trades of 2025 is "sell Bitcoin and buy silver," arguing that the crypto Christmas rally didn't happen, Bitcoin's launch pad malfunctioned, and precious metals took off. He added that if Bitcoin doesn't rise when tech stocks rise, and doesn't rise when gold and silver rise, then it may never rise.

Just a month ago, Peter Schiff was at a disadvantage in a debate with CZ about the value of gold and Bitcoin .

What was expected to be a year of policy dividends ended with Bitcoin closing lower for the year, and other crypto assets fared even worse. According to CoinGecko data, only RWA, Layer 1, and the US domestic narrative sector recorded gains this year, while the rest of the sectors experienced double-digit declines, indicating a lack of profit-making opportunities in the market.

Capital is always profit-driven. When traditional markets offer more certain returns, the appeal of crypto assets plummets. To retain liquidity and users, many crypto platforms have begun offering related traditional assets; for example, Binance, Kraken, Bitget, Hyperliquid, and Robinhood offer tokenized stocks. On-chain commodities are also emerging, with a surge in tokenized gold trading volume. Some crypto DAT companies have even begun including gold in their reserve assets to enhance the robustness of their balance sheets. (Related reading: After the gold and silver price surge, an on-chain commodity trading boom has begun )

Stay within your circle of competence; don't be a "fool" at the poker table.

Crypto funds and attention are flowing out, and even South Korea, a major cryptocurrency trading nation, is showing clear signs of cooling down. Retail investors are abandoning cryptocurrencies and investing in stocks, trying to find more stable and sustainable returns in larger pools.

However, just like Buffett's "fool at the poker table" theory, entering a new arena does not equate to having the right to stay at the poker table.

Taking the US stock market as an example, opening an account only takes a few minutes for most people, but this doesn't mean the barrier to entry is really low. Compared to the crypto market, the US stock market is a highly mature and deeply institutionalized system. The vast majority of retail investors face a comprehensive disadvantage in terms of information, resources, tools, experience, and risk control capabilities.

In the crypto space, retail investors can still capture some firsthand sentiment and structural changes through communities, social media, and on-chain data, and even dance with the big players at certain times. However, in the US stock market, they are often facing off against professional institutions with quantitative models, experienced analyst teams, industry research channels, and long-term data accumulation, making the competition significantly more difficult.

Furthermore, many investors who have moved from cryptocurrency to US stocks have not simultaneously upgraded their cognitive framework. When faced with complex variables such as financial statements, industry barriers, business models, and macroeconomic policies, they still rely on the emotional speculation and short-term thinking they used when trading cryptocurrencies, lacking the ability to understand and grasp the complete business cycle.

The reason why the US stock market has been able to achieve a long-term bull market is largely due to the continuous improvement of corporate profitability, a clear and stable shareholder return mechanism, and a long-term competitive environment that weeds out the weak. Companies including Microsoft, Amazon, Google, and Apple have all undergone several cycles of testing, ultimately weathering the fluctuations and accumulating value.

More importantly, most newcomers are suffering from severe survivorship bias. Since the darkest period following the 2009 financial crisis, the US stock market has embarked on the longest bull market in history. This means that young investors haven't truly experienced the full impact of a deep bear market; the favorable winds amplify their optimism about the market, mistaking the beta gains from the market rise for alpha created by their own abilities. According to a recent report by Coinbase, approximately 45% of US investors holding crypto assets are from the younger generation.

What seems like a land of opportunity is actually fraught with peril, with the real hurdles lying in one's understanding. Rather than being led astray by narratives, it's better to safeguard your own circle of competence, lower your expectations, and patiently wait for the right opportunity.