Reading · The Blockchain Sector With James Bachini

The Blockchain Sector With James Bachini · The Blockchain Sector With James Bachini

Has the bleeding stopped in crypto, or are we just changing bandages and pretending we feel fine?

Bitcoin is drifting lower, but there’s a clear psychological and technical line in the sand around $70k. That level marks the 2021 cycle high and a zone where price spent a meaningful amount of time in 2024. It’s reasonable to expect buyers step in around these levels assuming there is still someone out there who hasn’t been liquidated, traumatised, or converted to gold bugs.

A clean break below $70k, however, would likely turn an orderly drawdown into something uglier, with leverage unwinding, funds blowing up, and the market quickly shifting from healthy correction to systemic risk narratives.

Polymarket, which is more accurate than your average substack newsletter, predicts the odds of a drop below $70k in February at 37%.

What makes the current price action so frustrating is that the fundamentals have arguably never looked better. The dollar is weakening (dollar index is down ~10% YoY), commodities especially precious metals have been ripping, rate cuts are widely expected under a new Fed chair, and the US political backdrop has become materially more crypto friendly.

In theory, this is exactly the environment where Bitcoin as digital gold should thrive. Instead, crypto is behaving like a high-beta risk asset with a caffeine addiction and unresolved childhood trauma.

Part of the answer lies in positioning and structure rather than fundamentals. Leverage remains a dominant force, and crypto markets are still prone to aggressive liquidation hunger games. This is not a Bitcoin bug but a feature of unregulated markets.

Looking ahead, the best case scenario is a rotation as profits eventually flow into crypto once macro volatility settles. The worst case is the four year cycle asserting itself, with the halving in 2028 becoming the next real catalyst.

The most likely outcome sits somewhere between those extremes: choppy, frustrating markets that feel wrong until suddenly they don’t.