Original Author: Jordi VisserTranslated by: LlamaC
When the Bitcoin community was in despair over its consolidation and weak performance relative to stocks, I wrote "Bitcoin's Silent IPO," arguing that Bitcoin's consolidation while other assets were rallying was frustrating, but not a weakness; rather, it was a necessary distribution phase. Early whales finally got their liquidity event, methodically selling their tokens to deep institutional buying created by ETFs and corporate treasuries. Like the end of a traditional IPO's lock-up period, the process was uncomfortable and agonizing, but ultimately healthy in the long run.
Now, the consolidation pattern has been broken. The distribution of the "silent IPO" led to a deeper pullback, and at the same time, the stock market finally began to correct, led by retail-heavy AI speculative stocks.
I highlighted this in my weekly video last weekend. This move has turned Bitcoin's year-to-date gains into a slight decline. The cognitive dissonance that once frustrated the crypto community has now evolved into genuine bearish sentiment and skepticism. The optimism of Liberation Day seems like a distant memory. Discussions about the end of the four-year cycle are growing louder. The argument that "Bitcoin has lost its upside" is echoing on the X platform, and those who once thought "this time is different" are now surrendering. This fall, the CMC Crypto Fear & Greed Index has fallen to the same level as near Liberation Day, at 15. All hope seems to have been dashed. Therefore, it's time to release Part Two. For me, the core idea of this story is the same as Liberation Day. Every asset is driven by advancements in artificial intelligence, and I will continue to argue that all investors will eventually realize in the coming years that they have missed a story. The purest AI story is Bitcoin. Aside from their similar birthdates—the Bitcoin white paper was published in 2008, and the 2009 Raina–Madhavan–Ng paper was the first influential study to demonstrate that GPUs could speed up deep learning by more than 70 times, effectively igniting the modern era of GPU-driven machine learning—both are part of exponential innovation and are indispensable. Exponential innovation reduces the necessity for people to work in offices or even at work. It leads to unequal wealth distribution, forcing governments worldwide to maintain deficits and driving up financial assets as a form of universal basic income (UBI). Today's UBI doesn't come from government checks, but from Universal Beta Income: your wealth grows because the system has no other choice. For those without assets, they will receive transfer payments as another form of UBI. This has created the K-shaped economy we've all heard about, with labor fears and wage pressures from job losses, coupled with government-driven UBI-fueled inflation, leading to widespread anger over the unaffordable cost of living. Bitcoin benefits from this spiraling worsening, remaining correlated with risk assets before artificial intelligence begins to devour capitalism and public markets. Stablecoins, combined with AI agents, increase the velocity of money, reducing the need for leverage; while tokenization allows concentrated dormant assets like real estate, private bonds, private equity, and venture capital to trade freely 24/7, reducing the leverage used to support their prices. As AI advances, its deflationary pressures will become apparent. By 2026, AI-powered drug discovery, self-driving taxis, and AI agents will help drive up prices due to increased profit margins and intensified competition from commoditized intelligence. And this is precisely what's fascinating right now: people worried that Bitcoin wouldn't keep pace with the stock market during its rise, but now its performance is finally exactly as expected. As the stock market corrected, especially those AI-related stocks chased by overvalued retail investors, Bitcoin also fell in tandem. The disagreements that puzzled everyone during the "silent IPO" period have vanished. Bitcoin is once again trading as a risk asset, correlated with growth expectations and liquidity conditions. In my view, this will create the purchasing power and energy necessary to start a new upward trend. This means that when I look at the landscape for 2026, I see it again: light at the end of the tunnel. Just as the tariff panic in April created buying opportunities for those who could see through the fear, this Bitcoin pullback—in sync with the weakness of broader risk assets—is laying the foundation for the next big rally. Why Bitcoin Rises Alongside Stocks is a Bullish Signal A long-standing misconception is that Bitcoin should trade independently of traditional risk assets. This argument holds that Bitcoin is digital gold, a tool for hedging the existing system, and uncorrelated with stocks. Therefore, if Bitcoin falls when the stock market falls, something must be wrong. This is incorrect. Bitcoin is a risk asset. I wrote about this in my Substack article, "Yes, Virginia, Bitcoin is a Risk Asset." Yes, it has store-of-value properties. Yes, it is decentralized. But from a market psychology and capital flow perspective, Bitcoin behaves like a high-beta risk asset. ETF buyers allocate Bitcoin alongside stocks, and when they hedge their portfolios, Bitcoin is sold along with the stocks. Retail traders use the same funds to trade cryptocurrencies and stocks. Even those worried about currency devaluation are more likely to increase their holdings during periods of strong economic growth and healthy cash flow. Therefore, when the Nasdaq falls, Bitcoin falls too. When AI stocks are hit, Bitcoin is hit as well. This isn't a flaw, but a characteristic. Given its holder base, this behavior is rational. This is why I'm bullish: if Bitcoin moves in tandem with risk assets, then Bitcoin's prospects are closely tied to those of risk assets. This means that to understand Bitcoin's future, we need to understand the future direction of the stock market. Let me tell you why I'm extremely bullish on risk assets before 2026. The Landscape in 2026: The Convergence of Fiscal, Monetary, and Artificial Intelligence Markets are climbing amid anxieties. Currently, this wall of anxieties is built by a combination of AI bubbles, recession fears, and cryptocurrency pessimism. But the outlook for 2026 remains compelling. Fiscal support continues. The Infrastructure Act, the Chip Act, and the Inflation Reduction Act are not just empty words; they are multi-trillion-dollar spending plans that are creating real economic activity and deficits. This "big and beautiful" package of bills was introduced ahead of the midterm elections. Data centers are being built at an unprecedented pace, semiconductor factories are springing up, and power infrastructure is being upgraded. The Federal Reserve has room to cut interest rates. Inflation is currently under control. Wages, housing, and oil prices have been under pressure this year, so as the effects of tariffs materialize, inflation should remain manageable relative to the weakness in the labor market. Artificial intelligence is both a deflationary force and a weakening force for the workforce. A breakthrough in artificial intelligence is imminent. The development of artificial intelligence over the past year has been astonishing. We are about to see tangible, real-world breakthroughs that will attract mainstream attention: AI-driven drug discovery: The first drugs discovered by artificial intelligence are nearing clinical trials. Once we receive positive news in this area, its impact on healthcare and economic productivity will be phenomenal. In terms of performance so far in November, pharmaceutical stocks are experiencing their best month in 30 years. Every pharmaceutical company will be racing to integrate artificial intelligence into its R&D. Billions of dollars will flow into the AI healthcare sector. Autonomous Vehicles: After years of "five-year promises," we are at a turning point. Waymo is expanding. Tesla's FSD continues to improve. Chinese companies are deploying driverless taxis on a large scale. When autonomous vehicles become mainstream in major cities by 2026, speculation about humanoid robots will explode. AI Agents and Productivity: AI agents capable of autonomously performing complex tasks will become ubiquitous, permeating areas such as enterprise software, customer service, and creative industries. The impact on productivity will be enormous, expanding profit margins across the entire economy. AI is making all industries more efficient, more productive, and more profitable. Manufacturing is expanding. The construction of artificial intelligence infrastructure is driving the revival of US manufacturing. After years of contraction, manufacturing is showing signs of recovery. I believe that, driven by the aforementioned catalysts, the Purchasing Managers' Index (PMI) will rise in 2026. Historically, cryptocurrencies, especially altcoins, have performed exceptionally well when the PMI rises. Bears will shout "AI bubble!" Perhaps. But the duration and magnitude of bubbles always exceed everyone's expectations. The dot-com bubble didn't peak when valuations first appeared insane in 1997, but rather three years later in March 2000. From the end of 1994 to the end of 1999, the Nasdaq 100, famously known as QQQ, rose by 800%. QQQ, however, has risen by less than 100% in the past five years. Compared to the dot-com bubble, this is hardly a bubble. If we're in an AI bubble, it's only in the early to mid-stages. The mainstream hasn't fully entered the market yet. Your relatives won't be asking about AI stocks at the Thanksgiving dinner table. That's a matter for the future, and I believe in cryptocurrencies. A bubble bursting requires a catalyst, usually the Federal Reserve taking aggressive tightening measures during a weak economy. But the Fed has already finished tightening. They'll likely start cutting rates in 2026 rather than initiating a new tightening cycle. Therefore, the typical catalyst doesn't exist. Bitcoin's 2026 Catalyst If risk assets perform strongly in 2026, then as a high-beta risk asset, Bitcoin should significantly outperform the market. But there are some catalysts unique to Bitcoin that make its prospects even more compelling. The Clarity Act: For years, regulatory uncertainty has hampered the growth of cryptocurrencies. The Clarity Act, expected to pass by the end of 2025 or early 2026, will provide a clear regulatory framework, establish clarity of jurisdiction, and eliminate legal ambiguity that has deterred institutional investors. Those who have been saying "we're waiting for regulatory clarity," including some of the largest asset managers and pension funds, will finally be licensed to allocate assets. The ETF inflows we're currently seeing will be negligible compared to the impending surge in funding. Tokenization is scaling up: Major financial institutions are tokenizing Treasury bills, real estate, commodities, and stocks. JPMorgan Chase, BlackRock, Franklin Templeton, and others are building tokenization platforms. This validates the value of the entire crypto infrastructure and proves that blockchain isn't just for digital gold. As tokenization scales and dormant assets begin to trade 24/7 with lower leverage requirements, Bitcoin's role as a neutral settlement asset—the TCP/IP of digital finance—will become increasingly prominent. The accelerating development of stablecoins: This is the most undervalued bullish factor. Stablecoin adoption is exploding globally, especially in developing countries. Tether and USDC are becoming the primary dollar payment channels in most economies worldwide. When someone in Nigeria receives a payment in USDC instead of Naira, when Argentine businesses hold dollar-denominated stablecoins instead of pesos, and when cross-border payments are made through stablecoins instead of correspondent banks, crypto infrastructure becomes an indispensable part of global commerce. Stablecoins and Bitcoin are not competitors, but rather a two-part system. Stablecoins are the medium of exchange in the digital economy, while Bitcoin is its store of value. As more activity and capital flow into the digital economy, naturally, more of it will flow into Bitcoin. You can think of stablecoins as the M2 of the digital world, while tokenization is the bridge that brings traditional fiat assets into the system. This creates a powerful network effect: stablecoin adoption brings millions of new users into the crypto space, and these users, after leaving stablecoins, ultimately need a place to store value long-term. Bitcoin becomes the default choice. The network effect of stablecoin growth will accelerate Bitcoin's adoption in a way that is difficult to model but obvious. History Repeats Itself Decades of market experience have taught me one thing: initial lows are often retested. We saw this in April, with the market bottoming out, then retesting the lows before starting to rise. This is a normal and healthy pattern, as the market needs to build support and shake out weak hands during this process. I expect Bitcoin may follow a similar pattern. We may have already hit an initial low, but it's likely to be retested in the coming weeks. Another wave of selling may occur as the last wave of weak hands capitulates. There might even be a final shakeout, briefly pushing Bitcoin to even lower levels. If a double bottom does occur, it will be the best investment opportunity of the year. Because during a double bottom, the smart money that missed the first bottom will get a second chance. A double bottom with shrinking volume and diminishing panic will confirm that the initial low was the true bottom. I will not wait for a double bottom. I believe that for both Bitcoin and stocks, the current area is an excellent time to capitalize on market fear when greed is extremely low. Bitcoin has fallen this year. The sell-off from early holders (OG) of the "silent IPO" may not be over yet, but it is in its later stages. Ownership is more dispersed than ever before. Retail investors are pessimistic and holding on. ETF buyers are patiently accumulating. And those who bought to hedge against fiat currency devaluation continue to systematically accumulate. Developing countries are steadily adopting Bitcoin as their financial infrastructure. Meanwhile, the outlook for 2026 looks exceptionally bright. Fiscal support will continue. Monetary policy will provide a tailwind. Breakthroughs in artificial intelligence will drive speculative activity and real profit growth. Manufacturing is expanding. The Clarity Act will bring regulatory certainty. Tokenization is scaling up. Stablecoins are accelerating network effects. Bitcoin's price action is in line with risk assets. Risk assets are poised for strong performance in 2026. Therefore, Bitcoin is also expected to perform strongly in 2026. The light is there. I always think back to Liberation Day. The S&P 500 fell 20%, economists predicted a recession, and people panicked and sold off. I thought that six months later, we would see that the panic was unnecessary. And I was right. Today, I feel the same way about Bitcoin. Yes, this pullback has been painful. Yes, market sentiment is terrible. The Fear & Greed Index is 15, on par with the lows of Liberation Day. But pullbacks in a bull market always feel like the end of the world. Every pullback seems different. They always convince people that the rally is over. And for those who can see through the fear, it's always a buying opportunity. In my trading career, I've experienced enough crises—Mexico in 1994, Brazil in 1998, the Global Financial Crisis (GFC), the COVID-19 pandemic, Liberation Day—so I know that while these moments are unsettling, they are not as terrible as they seem. One truth emerges: if you can see through the fear, these periods offer the best investment opportunities. Bitcoin hasn't crashed, and digital assets won't die. Everything that's happening now makes sense: a maturing risk asset is still recovering from the winter of 2022. During this period of uncertainty and positioning, it is pulling back along with other risk assets. Unlike in April, this pullback is narrower, primarily concentrated in growth stocks and cryptocurrencies, rather than a broad market panic. This is a healthier state, meaning the market is differentiating itself. It also means that when the recovery arrives, it may be more rapid and concentrated. For those with foresight, now is the time to accumulate. Not reckless, not leveraged, and not with money you can't afford to lose. But thoughtful, fundamental-based, and decisive action. In an era where AI drives investment alpha returns, markets will be volatile. Given the difficulties governments face in navigating this disruptive force, there will be some thrilling moments ahead. Doubts will be rampant, and headlines about crashes and bear markets will be everywhere. Ignore them and focus on the fundamentals. Artificial intelligence is the most important and powerful innovation of our lifetime, and it will bring better days in the coming years. When everyone sees the light, it's too late to enter the market. Now is the time for cryptocurrency; the fear and greed index is only 15, the crowd is surrendering, and the tunnel is still dark. Six months from now, like Liberation Day, the narrative surrounding Bitcoin will be completely different. Looking back at the current prices and market sentiment, we'll wonder why we doubted it in the first place. The light is there. You just need to be willing to see it.
Jixu
Davin
Aaron
Jasper
Joy
Hui Xin