Bitcoin falls below $70,000! Three major investment logics have failed successively, and the market re-evaluates the myth of "digital gold".

As the price of Bitcoin continues to decline, the world's largest cryptocurrency is facing one of the most severe trust crises in recent years. This week, Bitcoin fell below the $70,000 mark, briefly touching near $67,000, a cumulative retracement of over 46% from its historical high of $126,000 set in October last year. Over the past 12 months, Bitcoin has accumulated a decline of 36%, not only underperforming major U.S. stock indices, but also failing to live up to its core investment logic of being a "digital gold," "inflation hedge asset," and "safe haven tool" that supporters have repeatedly emphasized. At the same time, stocks related to cryptocurrencies have also been hit by selling pressure. Strategy (MSTR.US), seen as a "Bitcoin shadow stock," has accumulated a decline of over 23% in the past month, retracing over 70% from its 52-week high; the largest U.S. cryptocurrency exchange, Coinbase (COIN.US), has fallen by over 23% year-to-date, dropping by over 60% from its 52-week high. For a long time, one of the most important investment logics for Bitcoin has been its perception as a substitute for gold in the digital age. Supporters argue that unlike fiat currencies that central banks can infinitely expand, the total supply of Bitcoin is strictly limited to 21 million coins, making it inherently scarce and able to preserve purchasing power during periods of currency devaluation and rising inflation. This logic has helped Bitcoin transition from the geek circle to the mainstream financial market, and has spurred Wall Street institutions such as BlackRock, Inc., Fidelity, and others to launch Bitcoin spot ETFs. However, recent market performance has challenged this theory. Against the backdrop of rising global energy prices and renewed inflation pressures in the U.S., Bitcoin has not benefited as expected, but instead continued to weaken. Data shows that the U.S. personal consumption expenditure (PCE) price index rose by 3.8% year-on-year, marking the largest increase since 2023; the core PCE, which excludes food and energy prices, rose by 3.3% year-on-year. Meanwhile, Loretta Mester, President of the Federal Reserve Bank of Cleveland, recently warned that if inflation pressures persist, the Fed may need to take further action. Traditionally, rising inflation should be good for Bitcoin. However, reality has proven otherwise. Over the past year, Bitcoin has not only failed to hedge against inflation, but the actual purchasing power for holders has decreased by about 39%. Cam Harvey, Research Director of Research Affiliates and Professor of Finance at Duke University, said, "If investors view Bitcoin as a short-term inflation hedge tool, they may need to reassess this judgment. The randomness of Bitcoin price fluctuations is too high, which can easily disappoint investors." Not only is the inflation hedge logic being questioned, but Bitcoin's narrative as a safe haven asset is also facing challenges. With tensions in the Middle East continuing to escalate, market safe-haven sentiment has noticeably increased. According to the views of many cryptocurrency supporters, political conflicts often favor Bitcoin because investors seek refuge in assets outside the traditional financial system. However, the reality is that gold has surged significantly, while Bitcoin continues to decline. Billionaire investor Mark Cuban recently publicly stated that he has sold most of his Bitcoin holdings. "This may upset some people, but I believe Bitcoin has deviated from its original purpose," Cuban said on a podcast. "After the U.S.-Iran war broke out, I originally expected Bitcoin to rise, but the result was completely the opposite, and gold hit new highs. This is very disappointing." For an increasing number of institutional investors, Bitcoin seems more like a high-volatility risk asset rather than a traditional safe-haven asset. The recent decline in Bitcoin has been accompanied by continuous outflows of funds. With Bitcoin spot ETFs facing redemptions and concerns about interest rates and inflation prospects rising, the cryptocurrency market as a whole is under pressure. Data shows that the liquidation scale in the digital asset market reached about $1.5 billion in the past 24 hours, marking the largest daily settlement scale since February this year, with Bitcoin-related positions accounting for a significant proportion. Meanwhile, Bitcoin has not been able to keep up with the recent rise in risk assets. Over the past month, major U.S. stock indices have continued to hit new highs, while Bitcoin has accumulated a decline of about 14%, indicating that funds are flowing into traditional stock markets rather than cryptocurrency assets. The decline in Bitcoin is also spreading to cryptocurrency concept stocks. Strategy has become a focus of the market. This week, the company disclosed the sale of 32 Bitcoins, with trading volume of about $2.5 million. Despite this amount accounting for only a tiny fraction of its over $56 billion Bitcoin holdings, the market reacted strongly to this news. Strategy's stock price fell by over 9% on Tuesday, with a cumulative decline of nearly 15% in the past five trading days, retracting over 70% from its 52-week high of $457.22. However, some Wall Street institutions still remain optimistic. TD Cowen maintains a target price of $400 for Strategy, indicating nearly 200% upside potential from the current stock price. Coinbase has also not been spared. The company's stock price fell by over 4.5% on Tuesday, with a year-to-date decline of over 23%. Compass Point reiterated a target price of $140 this week, implying further downside potential for the stock price. Furthermore, Ethereum reserve concept stocks BitMine Immersion Technologies (BMNR.US), Sharplink (SBET.US), and Bitcoin mining company CleanSpark (CLSK.US) have all experienced significant declines. The most commonly cited point by supporters is that Bitcoin's total supply is fixed, making it inherently scarce. However, more and more critics believe that the real problem in the market has never been supply, but demand. Steve Sosnick, Chief Strategist at Interactive Brokers, points out that fixed supply only makes sense when demand continues to grow. "If, aside from speculation and value preservation, Bitcoin temporarily lacks more convincing use cases, then the limited supply feature will only be effective when demand is increasing, and its attractiveness will significantly decline when demand stagnates or even decreases." From this perspective, this round of adjustment is not just a price decline, but a reexamination of the investment logic of Bitcoin by the market. When the three major narratives of "digital gold," "inflation hedge tool," and "safe haven asset" are simultaneously challenged, whether Bitcoin can find new value support in the future will be crucial in determining the direction of the next cycle.