“Why did the market’s euphoria vanish so fast?” Last month, we compared the crypto market to a child with a giant ice cream loaded with sprinkles, chocolate sauce, and whipped cream—yet still whining because it didn’t have a cherry on top. Fast forward to today, and it feels like we’ve traded that ice cream for a shaken snow globe, complete with a “shouting orange man” (Trump) at the center. The snowflakes—policy changes, new leadership, shifting liquidity flows—need time to settle.
One month later, that initial “sugar high” has faded, and the short-term picture looks cloudy. Yet from our vantage point, the snow is still falling into place, offering meaningful opportunities for those who know how to look. Put simply, we remain on track for a robust 2025, albeit with a few more twists than the immediate post-election hype suggested. Below, we’ll explore the macro drivers, crypto on-chain data, and the steps we’re taking to adapt our strategy in this evolving environment.
When we spoke last month, many expected swift actions from Washington. President Trump’s announcements on tariffs and “getting tough on trade” led to speculation of immediate rate cuts (or large liquidity injections) to cushion any economic impact. Instead, the Federal Reserve remains cautious; higher rates are still on the table, and the strong US dollar continues acting like extra gravity—making it harder for risk assets to rise.
It’s almost as if the Fed is also waiting for Trump’s snowflakes to settle before committing to a new direction. This dynamic dovetails with the “Dollar Milkshake Theory” (Watch here for a fun explainer using movie analogies), which demonstrates how a strong dollar can suck liquidity out of global markets. We ultimately anticipate a pivot to a more dovish approach by the Fed and Treasury Secretary Scott Bessent, but policy shifts rarely happen overnight. Historically, major turns in U.S. monetary policy can take 3–6 months to unfold. Until that pivot emerges, markets remain in a wait-and-see phase
Despite the headlines—tariffs here, Treasury debates there—we see no structural break in our broader thesis. In fact, these near-term uncertainties often create calmer “windows” where we can fine-tune our positions. We expect the real liquidity wave to arrive closer to mid-year, once policy frameworks are hammered out and global growth concerns push the Fed to take its foot off the brake more decisively.
Back in November, markets rallied by almost 42% amid optimism over potential pro-crypto policies. That excitement has cooled. Bitcoin slipped from around 110k down to the mid-80s, prompting the usual: “Is this the top?” Our short answer: probably not. Historically, every major bull cycle experiences 20–30% corrections. Such pullbacks flush out weaker hands, shift coins from short-term holders to long-term investors, and set the stage for healthier uptrends.
1. 55% of Dollars Invested Above $70k
A majority of BTC’s USD cost basis now sits above $70k. In other words, latecomers who bought high are now selling to more strategic, long-term participants—like us.
2. Only ~5.8% of the Market Is Currently in Loss
Historically, you’d need 15–22.5% of all BTC in loss to signal a genuine bear-market breakdown. With just ~5.8% in the red, the market’s cooled but not cracked. We see enough support (and profit cushion) to preserve an underlying bullish structure.
Together, these data points suggest the bull thesis remains intact. Yes, the market wobbled after the election frenzy subsided, but we see little evidence of a 2022-style extended bear phase on the horizon.
While we remain bullish for 2025, we aren’t naïve about potential traps. Here are the key items we’re watching before the market truly shifts into high gear:
At Recursive Systems, we ground our portfolio strategy in a four-year investment thesis. Despite the scary headlines (tariffs, interest rates, partial liquidity squeezes), our overarching stance hasn’t shifted. We still foresee a cycle peak near the end of 2025, aligning with historical crypto bull runs and the usual post-halving dynamics.
While many in the crypto space cry out for “bear-market goggles” whenever Bitcoin dips below specific levels, we see no such crisis looming. At present, we’re wearing more of a bear-market monocle—half-watchful for serious downside, half-geared up for the next wave higher. Why this balanced stance? On-chain data doesn’t indicate imminent doom. Corrections are part of the cycle—flushing out froth without destroying the uptrend.
The market’s slower momentum doesn’t mean we’re wasting time. In fact, these “quiet” intervals are ideal for in-depth research. Our focus currently includes sub-sectors like layer-2 scaling solutions, tokenized real-world assets, and more—seeking the next major wave of innovation.
In a raging bull or brutal bear, everything feels urgent, whether it’s FOMO-buying or panic-selling. Currently, we’re in that calmer space where fundamentals can be scrutinized, watchlists refined, and strategic moves planned. As we like to say, “When everyone’s screaming, nobody can think. When the market hushes, clarity emerges.”
We remain firmly bullish for 2025. Short-term corrections are normal speed bumps. Historically, each 20–30% dip during crypto bull cycles has often laid groundwork for higher peaks—especially under supportive macro conditions.
Returning to our snow globe analogy: the flakes from last month’s shake-up are still settling, but we can glimpse the outline of the final scene. Each swirl offers a chance for patient investors to anticipate where the snow will ultimately rest—and to invest accordingly.
