Written by: Uchiha Naruto, Deep Tide TechFlow

The Spring Festival holiday has ended, and Bitcoin has quietly fallen below 64,000 dollars.

No crash, no black swan, no exchange or project running away with money, just that dull knife feeling of flesh being cut.

Each day it falls a little, each day it falls a little, the market value has evaporated by over one trillion dollars, yet there hasn't even been a decent news story.

Just then, on February 21, Bloomberg published an article titled "Bitcoin's $1 Trillion Identity Crisis is Coming from All Directions," with three core judgments: Gold has stolen Bitcoin's narrative as a macro hedge, stablecoins are taking the narrative of payments, and prediction markets are seizing the narrative of speculation.

In my opinion, Bloomberg got two-thirds correct, but the most crucial one-third went unseen by Bloomberg.

There are a few data points that cannot be ignored

Content creators easily fall into a trap: when they see top media criticizing their held assets, their first reaction is "they don't understand," and then they begin to seek rebuttal angles.

However, there are several hard data points in this Bloomberg article.

In the past three months, gold and gold-themed ETFs listed in the U.S. have attracted over 16 billion dollars in net inflows. During the same period, Bitcoin spot ETFs saw outflows of 3.3 billion dollars. This comparison is especially striking at the beginning of this year; geopolitical tensions, a weakening dollar, and fluctuating tariffs are all the macro environments where "digital gold" should perform, yet risk-averse funds have gone to buy gold bars.

More specifically, on January 26, 2026, the day the Federal Reserve sent a hawkish signal, gold rose by 3.5% while Bitcoin fell by 15%. The correlation between the two became negative 0.27. If "digital gold" means "rising with real gold in times of crisis," Bitcoin failed this test.

The pivot of original Bitcoin supporter, Twitter founder Jack Dorsey, towards stablecoins is also not a trivial matter. His position in the crypto circle speaks for itself; he wrote Bitcoin payments into Cash App's DNA, and last November he announced support for stablecoins.

Polymarket’s recent explosion is also a fact. Betting on elections, tariffs, and the Fed, it is even more compliant than casinos. For those who entered the crypto market seeking "excitement," this is a quicker and more straightforward alternative.

All of the above, Bloomberg was correct about.

But...

The implicit logic throughout the Bloomberg article is: The value of Bitcoin comes from the narrative function it serves. These functions are being taken away by other things, so Bitcoin's value is eroding.

This logic itself has an unarticulated premise: It believes Bitcoin must "win" a specific function to have the qualification to exist.

Gold cannot win against this logic either. Gold is not the best payment tool, nor is it the best speculative tool; in certain inflation hedging scenarios, TIPS (Treasury Inflation-Protected Securities) are more effective than it.

But gold is still gold. After thousands of years, no one has demanded it to "prove its function"; its existence itself is value. Because humanity's obsession with "scarcity, permanence, and counterfeiting" is more stubborn than any functional argument.

What Bitcoin is doing is the same thing, except it only has a sixteen-year history and hasn’t reached the point of being taken for granted.

There is a sharp line in the Bloomberg article: "Bitcoin's biggest threat is not competitors, but dislocation; when there is no single narrative to support it, attention, capital, and belief will slowly dissipate."

In the short term, this makes sense, but it treats "dislocation" and "sedimentation" as two opposing matters.

When Bitcoin is no longer the protagonist of a hot narrative, those who remain to continue holding it are precisely those who do not need a narrative. Their reasons for holding are network effects, liquidity depth, regulatory certainty, and the increasing buying records of sovereign-level institutions.

Significant matters overlooked

There is a line in the article that carries more weight than the rest of the content, yet easily passes unnoticed:

"Bitcoin spot ETFs have made Bitcoin a permanent fixture in investment portfolios."

This matter has fundamentally changed the holder structure.

Before ETFs, Bitcoin's primary holders were retail investors, exchanges, miners, along with a few high-risk preference institutions. The characteristics of these individuals include highly emotional behavior—buying when it rises and fleeing when it falls. Thus, Bitcoin fell 84% in the 2018 bear market and 77% in 2022.

Post-ETF, a new class of money has entered: pension funds, sovereign wealth funds, family offices, insurance capital. The buying motivation of this type of money is singular: asset allocation; they buy in proportion to their positions and hold them without movement, even needing to rebalance and go against the trend when the market falls.

Currently, Bitcoin has fallen over 40% from its peak; to some extent, this is also due to the ETF funds forming a new floor at the bottom, with chips still being exchanged, as a large amount of Bitcoin flows from early miners, early hoarders, and industry practitioners into institutions, with this process inevitably accompanied by teething pains.

Bloomberg observed this phenomenon, but did not push it further. It only saw the narrative dissipating without recognizing that at the same time, the holder structure is transitioning from "frequent gamblers" to "asset allocators."

Where is the bottom?

No one knows where Bitcoin's bottom is this time; it can only be guessed.

But there are a few things worth observing beyond the price itself.

The sustainability of ETF capital flows. The current net outflows are short-term data; if it becomes a sustained outflow at the quarterly level, that means institutional allocation demand is shrinking; there really is a problem. If it stabilizes, that would be a true signal.

The Bitcoin-to-gold ratio. It is currently at a historically low range; the last time it was this low was during the pandemic crash in March 2020. This ratio itself does not predict a rebound, but it describes the degree of relative undervaluation.

The progress of Kevin Warsh's nomination. One of the catalysts for the current decline was the strong dollar expectation brought about by his nomination. How this macro variable moves directly impacts Bitcoin’s pricing as a risk asset.

There is also a matter that Bloomberg completely did not mention: discussions at the federal level regarding Bitcoin as a strategic reserve are still ongoing. If this matter really comes to fruition, the list of sovereign holders of Bitcoin will expand from El Salvador to the world's largest economy.

Bloomberg's article is well-written, but its issue lies in perspective; it is from the viewpoint of a market researcher, not that of an allocator.

Researchers see narrative failure and call it a crisis.

Allocators see narrative failure and call it a valuation return.

Both perspectives are incomplete.

It is still too early to conclude. But one thing is likely true: Bitcoin is not dead; it is shedding its skin.

Shedding skin is truly painful.