The Eastern Eight Time Zone enters the second half of 2025, with Bitcoin’s decline from its year-to-date high exceeding 50%, falling from a "new high carnival" into a "midway abyss." Market sentiment has sharply turned downward, with discussions in the community about going to zero and a bear market restart echoing one after another. Beyond the price charts, however, another picture is presented on-chain: the chips of long-term holders continue to age, while some institutions and mining enterprises adjust their positions at low levels and continuously increase their holdings, forming a glaring contrast with the collective panic of short-term funds. This article will explore the misalignment between price and sentiment, on-chain behavior and off-chain narratives, attempting to restore a stage of polarization: on one side is crashing and liquidation, and on the other, quiet accumulation and patient layout.
Reality of Price Halving and Emotional Ice Point
● Looking back at 2025, Bitcoin was initially seen as the starting point of a "new chapter" at its high point during the year, but it continued to decline over the following months, with a cumulative drop of over 50%, and key support levels being breached layer by layer. Every instance of a daily-level crash has been accompanied by repeated debates in the community about "the last bull market ended" and "this round is a bear market," with confidence from both technical analysts and narrative proponents declining in tandem, as the price curve appears to completely invert the optimistic sentiment of the year.
● In the short cycle dimension, leveraged traders and high-frequency short-term funds are hit hardest, with screenshots of forced liquidations, stop losses, and "cutting losses to exit" widely shared in the community. On social media, the tone of commentary has rapidly shifted to a bearish stance, with increasingly frequent statements of "withdrawing from the market" and "no longer discussing coins," while market channels have gradually been dominated by negative topics like macro pessimism, project exits, and regulatory pressures, forming an echo chamber effect that amplifies panic.
● Although there is a lack of specific fear and greed index data, qualitative descriptions from several institutions regarding sentiment indicators indicate that the current sentiment has approached a historical ice point. Some research teams have pointed out that the short-term readings of sentiment indicators remain in negative territory, and the experience mentioned by Matrixport that "the 21-day moving average of the sentiment indicator crossing below the zero line often corresponds to a stage bottom" has been repeatedly cited as a footnote for "extreme pessimism," providing a reference frame for this atmosphere of coldness.
● Against this backdrop, voices suggesting "the price has already dropped deep enough" and "this is the bottom" intertwine with cautious remarks of "the macro hasn't repaired, liquidity hasn't returned." Whether a bottom has been reached or if it is merely a resting point in the midst of a downward trend remains a question hanging over the market. The feeling brought by the price halving is real, but whether this implies that there is no deeper testing space below remains to be verified through participant behaviors and structural changes.
Long-term Chips Steady as a Mountain: Who Is Quietly Accumulating
● Unlike the significant fluctuations in short-term chips, on-chain data shows that the chips of long-term holders exhibit a trend of "aging" and "locking up," with the proportion of Bitcoins dormant for months or even years increasing, indicating that a group of participants is choosing to ignore short-term price fluctuations. Concurrently, long-term wallet address balances are steadily rising, indicating that during the price decline phase, there is still capital slowly accumulating, choosing to hedge risks through time rather than price battles.
● In the sentiment reference system, Matrixport suggests, "More sustainable stage bottoms typically occur when the daily sentiment indicator's 21-day moving average crosses below the zero line," providing a framework for understanding the current environment. When sentiment remains on the pessimistic side for an extended period while long-term holders are expanding their chips, this divergence often signifies that chips are transitioning from sentiment-sensitive short-term traders to subjects with greater patience and financial strength.
● Taking the mining firm Bitdeer as an example, its Bitcoin holding has decreased to 943.1 coins. While this figure may not seem large in absolute terms, it reveals typical institutional behavior logic: under pressure from price and mining returns, some mining firms choose to reduce holdings to alleviate cash flow pressures while reallocating assets to optimize their balance sheets. For the buyer, such chips supported by fundamental costs represent an important source of low-level "redistribution," showcasing different cycle preferences on the industry and financial sides regarding the same asset.
● In the same price range, "smart money" and retail investors often make opposite choices: the former absorbs panic selling in batches, while the latter is forced to relinquish chips under liquidation pressures and emotional collapse. Institutions and long-term capital are more concerned with the risk-return ratio several quarters or even years down the line, while retail investors are more focused on whether the price will drop another 10% in the coming days. This mismatch in time dimensions renders the price halving phase a critical window for chip restructuring and one of the most intense moments for bottom-building strategies.
On-chain Fund Migration: From Bitcoin to...
● As on-chain transactions and speculative enthusiasm for Bitcoin significantly cool off, the flow of funds on the other end, however, accelerates quietly. Analyst Peter mentioned that the weekly transaction volume of USDC on the Polygon network has reached a record high of 28 million transactions. This extreme data indicates that as mainstream asset prices face pressure, some funds have shifted towards high-frequency settlements and more diverse application scenarios on chain networks, seeking new profit and efficiency space.
● During the phase of Bitcoin's price stagnation, funds have favored moving towards public chain environments with lower transaction costs, faster confirmation speeds, and more active DeFi and application ecosystems. USDC, as a core vehicle for settlement and liquidity, has been extensively used for DEX trading, in-game payments, cross-border settlements, and on-chain incentive distributions on Polygon, ensuring that even with an overall market cap pullback, on-chain real usage demand remains high-frequency.
● Market voices generally agree that Polygon is becoming one of the most active public chains for USDC trading; this is not only a localized glory for a specific chain but also a reflection of the migration of fund preferences. When the price imagination space for mainstream assets becomes compressed, some participants begin chasing profits from transaction fees, market-making, and various on-chain strategy returns, leading to a rise in "application chain enthusiasm" independent of the price shadow.
● In contrast to the busyness on networks like Polygon, Bitcoin's main chain has seen relatively quiet on-chain activity during this period, bearing more of the roles of value storage and large-scale settlement. Some funds choose to wait on Bitcoin for the cycle to return, while others navigate towards more tool-like properties and denser application spaces on-chain, reallocating their risk exposure. This migration trajectory clearly outlines that risk preferences are dispersing from singular price speculation to structural opportunities across multiple chains and scenarios.
Narrative Noise: Short Sellers Profit and Compliance
● During the periods of extreme volatility in mainstream asset prices, the short-term win-lose dynamics between bulls and bears have been magnified into emotional barometers. On-chain data shows that a large short position against Ethereum currently has an unrealized profit of approximately $8.27 million. This visibly profitable case has been widely quoted and screenshot, becoming evidence for "shorting is safer" and "the trend has reversed," further solidifying the market’s recognition of the downward trend.
● This short seller profit has an obvious positive feedback mechanism with the pessimistic sentiment. Price declines increase short profits, and the narrative of short profits is circulated as "evidence of trend confirmation," guiding more cautious funds to defensive positions or even to follow suit in shorting. The result is that even when prices are temporarily oversold, the market finds it difficult to form a cohesive rebound expectation, with the collective psychology of "not yet at the bottom" being continuously deepened by this narrative.
● In stark contrast to this short-term game is the medium-to-long-term narrative represented by compliance and institutionalization processes. For instance, Nexo plans to re-enter the US market in 2026 (still pending regulatory approval). This timeline far exceeds the current few-month price volatility cycle, pointing towards the reconstruction of compliance frameworks, product forms, and institutional participation depth over the next several years, providing the market with another "slow variable" imaginative pathway.
● While short-term bears gain several million dollars in unrealized profits on paper, traditional financial institutions, compliant platforms, and infrastructure providers are making strategic deployments on an annual or even multi-annual basis. Within the same cycle, speculative funds amplify volatility through leverage and derivatives, while compliant institutions await the next round of incremental capital inflow through licenses, risk control, and product planning. This strategy layering means that even if prices are still fluctuating downward, some participants are already laying the groundwork for the next upward cycle.
Local Revelry and Overall Winter: Microcosm
● Even against a backdrop of sustained pressure on the macro market, there are still numerous localized "momentum-creation" and "activity-promoting" attempts within the industry. For example, PANews launched a 1000U Red Envelope Spring Festival Activity, stimulating community discussions and short-term participation enthusiasm through airdrops and lucky draws. Such activities can create brief traffic peaks on social platforms, becoming one of the few "fireworks moments" during the winter, and reflecting the intense competition for attention between project parties and media in a stagnant environment.
● Compared to high-frequency trading and DeFi strategy operations on-chain, these off-chain marketing activities lean more towards emotional and topical dimensions; while they can temporarily elevate activity levels, they are difficult to fundamentally change funding conditions and macro cycle directions. Whether it's high-frequency settlements of USDC on Polygon or spikes in participation from red envelope activities, they are more about "accelerating circulation" within existing pools of funds rather than truly attracting large-scale new capital inflows.
● The current market resembles a game of "existing stock": participants shuttle back and forth between different assets, chains, and strategies, gaining relative returns through information and rhythm differences, while the overall scale of funds has not significantly expanded. Liquidity repeatedly circulates within the circle, from spot to contracts, from main chains to side chains, from trading to lending, constituting a highly inwardly-rolled ecology rather than a loosely expanded growth story.
● This contradiction between localized excitement and overall coldness presents a complex appearance at this stage: on one hand, dual pressures of price and sentiment lead many to feel that "the industry is about to stall"; on the other hand, on-chain applications, DeFi tools, and compliant infrastructure are still iterating, and developers and long-term capital have not completely exited. The co-existence of extreme cold sentiment and ecological continuity may well be a prerequisite for the next stage of evolution.
Under Pessimistic Consensus: The Bottom is Created Through Pressure
Based on the multiple signals of price halving, emotional ice point, and increased long-term chip holdings, it can be judged that the current stage is closer to the process of "building a stage bottom" rather than a momentary reversal of a singular time point. Bottoms are often "ground out" through continuous sell-offs, liquidations, and chip redistribution, where the drastic entries and exits of short-term traders and the slow accumulation of long-term holders constitute the key forces reshaping market structure. Even so, any attempt to specify precise bottom levels and timing carries a high degree of uncertainty and can only be assigned approximate probabilities to various pathways by observing the behavioral patterns of different participants, chip distribution, and on-chain fund flows, rather than providing absolute answers.
Looking ahead to the next few quarters, Bitcoin's price, on-chain activity, and compliance processes may gradually realign the narrative: if prices stabilize after sustained liquidation, it may drive on-chain settlements and new projects to test the waters for recovery; compliant platforms like Nexo returning to key markets could provide clearer pathways for institutional funds, combined with the maturation of infrastructure such as high-frequency settlements of USDC on Polygon, together forming the underlying support for the next round of upward stories. For ordinary investors, a more realistic insight lies not in predicting the "lowest point" but in recognizing the mismatch of sentiment and behavior: when pessimism becomes consensus and the short story prevails while long-term funds quietly accumulate, blindly following panic often means relinquishing chips in a structural handover. Learning to discern who is passively exiting and who is actively accumulating amidst the noise may be more important than chasing any so-called "perfect bottom."
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