Is Anyone Still Buying in the Crypto Market? Breaking Down 3 Common Wait-and-See Mindsets Today

Author: Back of the Envelope

Compiled by: TechFlow

TechFlow Editor's Note: While AI stocks are rising every day, why buy cryptocurrency? This is the question the author hears most often when chatting with friends recently. Even the most steadfast crypto believers are quietly reducing positions, waiting for BTC to drop to $50,000 before making a move. This article breaks down three of the most common wait-and-see mindsets, and under what circumstances they might change—for investors and practitioners, this is a rare honest sample for understanding current market sentiment.

I spend a lot of time talking with friends about what each of us is investing in. Investing is a way of expressing beliefs about the future, so conversations about investment are essentially about where we think the world is heading. What could be more interesting than predicting the future?

One topic that comes up frequently recently is crypto assets. More specifically, whether everyone is putting money into digital assets, and what the future holds for most tokens. The opinions I hear most often are:

"There are only 5-10 tokens truly worth investing in."

"I hold some BTC and HYPE, but sold most of my positions in other major coins. For the rest, I have a 'buy and forget' mindset."

"I'm just waiting for BTC to drop to $50,000 before buying."

A concern repeatedly mentioned is: If you can invest in assets across the universe, why choose to buy digital assets instead of AI-related stocks (those whose revenues might be compounding rapidly)? What belief does holding crypto assets allow you to express, and is this belief stronger than "inference demand will grow 10x in the future"?

The result is that many of my friends' personal portfolios—including the most fervent crypto enthusiasts—are moving away from digital assets. People are satisfied with their existing positions, waiting for lower prices, and/or simply feel the opportunity cost of putting money elsewhere is too high.

I think it's worth breaking down the beliefs implied behind these viewpoints. If these beliefs hold true for individual investors—their investable scope is unrestricted, every asset must win portfolio share by absolute merit—they likely hold true for institutions and funds with broad investment mandates as well. So the question behind this sentiment is: Where will the marginal capital flowing into crypto assets come from (and can we expect when this might happen)?

Below is how and why these beliefs might change in the coming year. (Of course, all three points are related).

Belief 1: Satisfied with Existing Positions

My understanding is that many people still believe in a future where digital assets (including digital stores of value) will be more important than today, but it's hard to find near-term catalysts. Market participants don't want to miss out on crypto price surges, so they maintain some positions (even if they have little confidence in prices recovering soon).

In short: The belief in the long-term growth of this category remains, but this is not where they are spending marginal time or capital. What could change this is either an observable catalyst reigniting excitement, or rotation from other parts of the portfolio.

Belief 2: Waiting for Lower Prices

One way to look at this is regarding short-term timing—people think there will be more selling, so they try to find better entry points. But timing is hard. If you believe BTC will rise to $200,000, entering at $60,000 versus $50,000 won't make a dramatic difference. So more precisely, I think the logic of "waiting for lower prices" reflects beliefs about the crypto asset market size and upside potential.

There are many factors that could change this. First is market timing. Many people believe in the 4-year cycle, which would place the BTC bottom around the end of Q3/beginning of Q4. If we pass that point without a major crash, we might see more people start reallocating capital to crypto (i.e., fear of missing any rebound). Similarly, if prices plummet, there might be a rebound because people feel the bottom has been reached. Second, perhaps some event will occur that changes people's estimates of upside potential. For example, if we see sovereign nations start allocating capital to digital assets, that would be exciting! Perhaps monetary policy changes reignite interest in digital assets. Etc. Finally, reflexivity may play a big role. Even a small price increase could cause people to capitulate (buy back in) to avoid the risk of being left on the sidelines.

Belief 3: Opportunity Cost of Allocation

The question isn't just "Will this asset rise?" but "Compared to the growth I can expect from other assets in my opportunity set, will this rise more?" When everything betting on AI—memory stocks, photonics, new cloud, chips... whatever you can think of—seems to be on a "only goes up" trajectory, it's harder to justify putting marginal capital into anything without the potential to show hyper-growth (assuming growth is your optimization goal). The challenge is, if the AI productivity train slows down, the possibility that other parts of the market also sell off is not zero. But then again, perhaps that marks a bottom (and the start of capital reallocation).

Conclusion

The ideas above reflect sentiment I repeatedly hear in private discussions with deeply respected smart people, so this article is intended to be a snapshot of current market thinking.

Overall, I guess we are closer to the market bottom for digital assets than the market top. But most importantly, I simply enjoy hypothesizing about market participant psychology and thinking about what beliefs might be expressed through asset prices.

Thanks to Jay Drain Jr, Jesse Walden, Hootie Rashidifard, Julian Fernandez and many others for conversations and feedback that inspired this article.

All information contained herein is for general informational purposes only. This does not constitute investment advice or a recommendation or offer to buy or sell any investment, nor should it be used to evaluate the merits of any investment decision. It should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own legal, business, tax and other relevant advisors regarding any investment. Opinions or positions provided herein are not intended to be viewed as legal advice or to establish an attorney-client relationship.