Why are Bitcoin and Ethereum lagging behind the market? Insider whale Garrett Jin analyzes three major factors and remains optimistic about the fundamentals of the crypto market.

As global assets generally rise, Bitcoin and Ethereum are clearly lagging behind. Cryptocurrency analyst Garrett Jin approaches this from the perspectives of market structure and cycles, attempting to offer an interpretation different from mainstream narratives for this downturn in the crypto market.
(Previous summary: “Insider Whale” Garrett Jin bullish on Ethereum: $3000 is a key level for institutional accumulation; not buying now means losing at the starting line)
(Additional background: Will Bitcoin repeat the 2022 bear market? “Insider Whale” Garrett Jin refutes: the current market structure is completely different)

Table of Contents

• Underperformance is not accidental; three major structural factors emerge
• FOMO capital outflows, AI stocks and precious metals divert retail firepower
• Short-term weakness, but longer timeframes show winners
• History does not repeat, but it often resembles: analogy to 2015 A-shares
• Ethereum’s trend resembles Tesla; AI and RWA growth narratives remain unchanged
• Not just risk assets; the problem lies within the market itself
• Long-term logic remains unchanged; avoid short-sighted narrative traps

While global stocks, precious metals, and some commodity markets continue to rise, Bitcoin (BTC) and Ethereum (ETH) have significantly underperformed, sparking widespread market skepticism. In response, Garrett Jin, a well-known early Bitcoin participant (BTC OG) and market proxy for the “Insider Whale,” published an in-depth article today (29th). From the perspectives of market structure, capital flows, and cycles, he presents a view different from mainstream narratives, believing that the current downturn is not due to fundamental failure but a necessary correction phase within a long-term upward trend.

Underperformance is not accidental; three major structural factors emerge

Garrett Jin points out that BTC and ETH have recently underperformed compared to US stocks, A-shares, precious metals, and base metals, which is not due to a single cause but the result of intertwined structural issues.

First, the crypto market’s trading cycle has not yet fully played out. Since October last year, the market experienced a “deleveraged decline,” forcing many highly leveraged retail investors to liquidate, causing rapid capital outflows and making the overall market fragile, with risk aversion significantly increasing.

Second, the microstructure of the market is unbalanced. Currently, retail investors still dominate the crypto space, with a low proportion of professional institutional investors, making prices more susceptible to sentiment and short-term narratives.

Third, some exchanges, market makers, or speculative funds may profit by creating downward volatility and triggering chain liquidations, further amplifying price declines.

FOMO capital outflows, AI stocks and precious metals divert retail firepower

Garrett Jin also notes that recent panic buying (FOMO) in AI concept stocks and precious metals has become a black hole for capital absorption. Most of this capital comes from retail investors in Asia and the US, who are also the core participants in the crypto market.

In contrast, crypto funds find it difficult to seamlessly flow into traditional finance (TradFi), due to regulatory restrictions, operational procedures, and investor psychology, creating obvious barriers. Once capital flows out, it is difficult to re-enter in the short term.

Short-term weakness, but longer timeframes show winners

Addressing the market’s tendency to dismiss BTC and ETH based on short-term performance, Garrett Jin emphasizes the importance of “timeframes.” He states that over a three-year horizon, Bitcoin and Ethereum indeed lag behind other assets; but over a six-year period, starting from the global market bottom in March 2020, the cumulative returns of BTC and ETH have significantly surpassed most assets, with ETH being one of the top performers.

He believes that the current downturn resembles a “mean reversion” within a long-term upward trend, rather than a failure of narratives or fundamentals.

History does not repeat, but it often resembles: analogy to 2015 A-shares

Garrett Jin compares the current crypto market to the 2015 correction phase of Chinese A-shares: high leverage inflated a bubble, prices peaked and then repeatedly deleveraged, volatility gradually declined, and only then did a new bull market begin.

In his view, BTC and ETH are in the tail end of deleveraging, with several indicators showing market bottoming signals, including futures contango structures, discounts in digital asset-related stocks (DAT), and the potential macro environment improvements such as rate cut expectations, clearer regulatory directions, and the end of quantitative tightening (QT).

Ethereum’s trend resembles Tesla; AI and RWA growth narratives remain unchanged

On the technical side, Garrett Jin compares ETH’s recent trend to Tesla in 2024: after a head-and-shoulders bottom, topping, sharp decline, and a long sideways consolidation, it eventually breaks upward.

Fundamentally, he believes Ethereum remains the core infrastructure for AI applications and real-world asset tokenization (RWA). As long as these two narratives are not overturned, ETH’s long-term potential remains intact.

Not just risk assets; the problem lies within the market itself

Regarding the view that “BTC and ETH are risk assets and thus cannot outperform other markets,” Garrett Jin bluntly states this is a form of selective bias.

He points out that besides their high volatility as risk assets, Bitcoin and Ethereum also possess hedging qualities similar to precious metals, especially evident during geopolitical tensions. The real pressure comes from internal market factors, including the tail end of deleveraging sensitivity, retail-dominated structure, ETF and related stock passive accumulation patterns, and concentrated sell-offs and liquidations during Asian and US sleep hours.

Long-term logic remains unchanged; avoid short-sighted narrative traps

In summary, Garrett Jin believes that as long as the core narratives of “Bitcoin as digital gold” and “Ethereum as the key infrastructure for AI and RWA” remain valid, there is no reason for them to continue lagging behind other assets in the long term.

He urges investors to break free from short-term narrative traps like “four-year cycles” and “seasonal magic,” return to a long-term perspective, and focus on macro environment, structural changes, and genuine risks.