Author: nikshep
Compiled by: Luffy, Foresight News
Bitcoin loses steam, just as Crypto transforms
AI has stripped Bitcoin of its risk-speculation characteristics; USD-pegged stablecoins have replaced Bitcoin as the universal circulating currency in the crypto market. The anchor that once quietly held together the fragmented crypto world is no longer Bitcoin. This is the most favorable structural shift in the crypto industry in years, yet very few understand the underlying logic.
This week, Bitcoin fell below $70,000, plunging approximately 45% from its October peak last year, leaving the market in despair. Spot ETFs have experienced historic sustained outflows, marking the longest redemption period since their launch; while Bitcoin, touted as "digital gold," has languished, physical gold has surged steadily upward.
But the market's regret is misdirected.
Amid Bitcoin’s prolonged decline, an on-chain exchange unknown to most surpassed Coinbase in trading volume last year; a prediction market platform soared to a $20 billion valuation with annualized fee income reaching $365 million; a privacy coin once bearish on by the market surged 70% in a single week, carving out an independent trend while Bitcoin stagnated; and a long-overlooked underlying network enabled cross-chain private transfers, allowing users to move assets without even purchasing its native token.
The crypto industry has not sunk with Bitcoin; crypto no longer needs Bitcoin.
This may appear bearish at first glance, but it’s actually the opposite. Cryptocurrency is maturing, moving beyond its early wild phase where all assets were tied to Bitcoin’s price swings and driven by speculative hype, and evolving into a real economy ecosystem denominated in U.S. dollars. Projects are now thriving or fading based on their fundamental strengths, and a new underlying interconnected infrastructure is emerging to replace Bitcoin as the connective thread across the entire crypto world.
This year, Bitcoin has lost two of its core functions, and two new phenomena have replaced them, creating vacant spaces in the existing ecosystem that are nurturing entirely new opportunities.
AI has drawn away speculative capital from Bitcoin.
Bitcoin itself generates no cash flow, has no profits, dividends, or interest, and its price fluctuations are almost entirely determined by the volume of speculative capital—it is a classic liquidity reservoir: prices surge when liquidity is abundant and experience sharp corrections when capital tightens. In 2026, the AI sector emerged strongly, continuously diverting speculative hot money that previously flowed into Bitcoin.
Global AI infrastructure investment this year is projected to range between $700 billion and $830 billion, roughly half the size of the entire U.S. investment-grade bond market, and is expected to reach $7 trillion by 2030; AI contributes approximately 5% to U.S. GDP and has surpassed consumer spending as the primary driver of U.S. economic growth. Just NVIDIA alone accounts for 8% of the S&P 500 index weight. AI is no longer just another sector—it has created a powerful capital magnet, reshaping the entire market’s capital pricing logic.
AI continuously drains Bitcoin across three key dimensions:
1) AI has captured the core narrative. Bitcoin’s former key selling point was “betting on asymmetric future opportunities,” but AI boasts real revenue, continuously exploding market demand, and policy support from governments worldwide—allowing investors to gain exposure through index funds. Today, institutions classify Bitcoin alongside speculative stocks with no earnings as the same category of risk assets. Within the same risk pool, one side generates tangible profits while the other relies purely on speculation; capital naturally continues to flow out of Bitcoin, which is the root cause of the consecutive ETF redemptions.
2) AI requires capital. AI expansion relies heavily on debt financing, with cloud giants issuing bonds at a scale exceeding last year’s total, and private credit directed at the AI industry surpassing $200 billion. The massive bond issuance of high-quality assets absorbs top-tier capital, leaving less funding available for high-risk assets like Bitcoin.
3) AI is forcing a high-interest-rate environment. The AI industry has increased production costs for electricity, water, and storage chips, with price hikes for related products generally ranging from 5% to double digits, pushing U.S. inflation to around 3.8%. The Federal Reserve is forced to maintain a high benchmark rate of 3.50%–3.75%, with little to no market expectation of rate cuts throughout the year. AI not only competes with Bitcoin for capital but also locks in tight liquidity conditions at the macro level.
In addition, the hashpower sector is undergoing a disruption. Bitcoin mining and AI compute both convert electricity into computational power, competing for the same energy resources, yet NVIDIA servers deliver far greater economic efficiency per unit of electricity than mining rigs. Last quarter, the combined cost for top publicly traded mining companies to mine one bitcoin was approximately $80,000, while the market price of bitcoin stood at just $70,000, resulting in a loss of $19,000 per coin. As a result, numerous mining companies are transitioning to AI compute: the industry has collectively signed over $70 billion in AI supercomputing contracts, with leading miners projecting AI revenue to account for up to 70% of total income by year-end. Core Scientific invested $10.2 billion to convert a 300-megawatt Bitcoin mining facility into an AI data center; Riot sold its Bitcoin holdings and leased its land to AMD. These entities, once the guardians of Bitcoin’s network security, are now collectively exiting the space.
Compared to the quantum computing risks that many fear, AI brings a permanent structural shift. Even if quantum computers in the future can break Bitcoin’s cryptographic algorithms, the industry can patch the protocol through post-quantum cryptographic standards and soft fork upgrades; but AI’s takeover of narratives, capital, and electricity resources is irreversible, and no protocol upgrade can undo it. Bitcoin’s first core value has been completely undermined.
Dollar-stablecoins replace Bitcoin as the base currency of the crypto market
This is the most easily overlooked key change. Throughout the history of cryptocurrency development, Bitcoin has long served as the industry’s reserve asset and the primary intermediary for fiat on-ramps and off-ramps: fiat currency is first converted into Bitcoin, then exchanged for various altcoins, with all assets priced in BTC, and off-chain capital entering the market must first purchase Bitcoin—this is the root cause of the historical price correlation across all market assets.
Stablecoins have severed this link. USDC trading volume has surpassed USDT for the first time since 2019, with global stablecoin annual trading volume exceeding $30 trillion. Today, users’ deposit pathways have shifted to: fiat → USDC → various assets, with Bitcoin entirely excluded from the circulation chain. This year, Polymarket relaunched with a native USD stablecoin pegged 1:1 to USDC reserves, and Hyperliquid now settles all transactions in USD. As the industry summarizes: stablecoins have become the underlying universal reserve currency for applications, with platforms simply adding their own labels on top.
Therefore, as market risk-off sentiment intensifies, the dominance chart shows Bitcoin’s share declining while stablecoins’ share rises. Funds are not leaving the crypto market; they are simply shifting within the industry toward dollar-denominated assets. Investors seeking exposure to the crypto sector no longer need to hold Bitcoin—dollar-backed stablecoins have taken over this role. All on-chain transactions now operate in dollars, and on-chain capital flows can no longer generate buying pressure for Bitcoin. Bitcoin’s second core function has officially come to an end.
After breaking away from Bitcoin, the crypto economy has thrived.
Setting aside Bitcoin, today's real-world products are no longer speculative assets tied to coin prices, but commercial projects with actual cash flow.
The existence of Hyperliquid is enough to debunk the claim that "cryptocurrency is dying." This on-chain spot perpetual exchange matches the depth and speed of top-tier CEXs while allowing users to self-custody their assets. In the past year, its total trading volume reached $2.6 trillion—surpassing Coinbase’s $1.4 trillion—with annualized revenues of $800 million to $1.3 billion. The platform allocates 97% of its fees to buy back and burn the native HYPE token, resulting in approximately $1.3 billion in annual buybacks, equivalent to 7% of the token’s total market cap. The burn rate is 4–5 times that of Ethereum and 14 times that of Solana. The project received no venture funding; instead, it achieves a value loop through community airdrops and fee-based buybacks. Trading volume fluctuates solely based on trader demand, with no correlation to Bitcoin’s price movements—yet Hyperliquid’s scale grew even during Bitcoin’s bear market.
Another key player is Polymarket, the leading prediction market, valued at $20 billion, with annual trading volume of $250–300 billion, annualized fees of $365 million, and daily active users that have grown 2.5 times over five months; it issues a USD stablecoin, and its native token is set to launch soon. Polymarket’s product focuses on betting on elections, sports events, and global occurrences, with demand independent of Bitcoin’s price movements.
Projects like these now use traditional corporate valuation logic—revenue, user base, and valuation multiples—marking the industry’s maturation.
New赛道红利：Privacy becomes a scarce resource
If Bitcoin’s transparent and monitored ledger was the default option of the past, then privacy is the new upgrade. This is money with self-sovereignty and untraceability that can only be achieved on-chain. But the way to acquire this currency is fundamentally different—and it’s precisely this difference that matters.
Self-custodial privacy. Zcash (ZEC) surged 70% in a single week, with its total market cap nearing $10 billion—a more than 45-fold increase from its 2024 low—outperforming the market during Bitcoin’s consolidation phase. Strong fundamentals underpin this rally: the volume of private transactions has risen from 11% last November to 30%, and most privacy assets are not returned to the public chain, leading to a continuously shrinking circulating supply amid rising demand. Regulatory pressures once seen as a hindrance to privacy coins have instead validated their value: Robinhood has launched ZEC spot trading, and Grayscale has filed the industry’s first privacy coin spot ETF. Privacy has evolved from a niche use case into a long-term investment thesis. However, acquiring ZEC requires purchasing the token separately and switching to its native chain.
Universal cross-chain privacy. With NEAR, users don’t need to purchase privacy coins or migrate assets across chains. Leveraging on-chain signature technology, a single NEAR account can directly control native assets on Bitcoin, Ethereum, and Solana—without wrapped tokens or cross-chain bridge risks—powered by a decentralized multi-party secure computation network for key custody. Combined with the Confidential Intent Protocol, users can privately transfer assets on any public chain, with full concealment of counterparties and routing information, executed via privacy sharding. User assets remain on their original public chains, while privacy becomes a modular, universal foundational service.
This model is more disruptive than a single privacy coin. Users don’t need to hold ZEC or leave the native ecosystems of Ethereum and Bitcoin—privacy becomes an inherent feature of all transactions, not just a property of specific assets.
The underlying coordination layer of the multi-chain era, replacing Bitcoin's hub function
Looking across the entire crypto landscape: the industry is no longer converging, but rather embracing multi-chain parallelism with continuously expanding ecosystems; USD stablecoins have become the foundational universal currency, and AI agents are emerging as new participants that autonomously hold assets, invoke APIs, and transfer funds.
The vast multi-chain + agent ecosystem urgently requires interconnected infrastructure; for the past decade, this role was filled by Bitcoin; today, it is being replaced by a new coordination and privacy layer: cross-chain signing, USD settlement, private transactions, and autonomous agent execution.
NEAR is targeting this space. It enables AI agents to settle transactions in USDC with privacy, leveraging hardware security zones for confidential computation, and transforms its signature network into the key management hub for the agent economy, providing users and bots with chain-agnostic, privacy-preserving services.
Another product in the same space is Venice, which focuses on privacy-centric AI applications and has attracted a large base of native Web2 users. Staking the platform token, VVV, allows users to share in AI inference rewards. The project has burned over 40% of the token’s circulating supply through product buybacks, with demand driven by AI usage, making its price movement uncorrelated with Bitcoin.
The new industry focus has taken shape: it is no longer about individual cryptocurrencies, but about underlying infrastructure, with various real-world projects building on this infrastructure to create tangible value.
Summary
Put them together: The dollar is the industry-wide circulating cash, project tokens like HYPE, POLY, ZEC, NEAR, and VVV represent equity stakes in corresponding companies, and the privacy-focused cross-chain layer serves as the foundational infrastructure connecting the entire industry, while Bitcoin is merely one segment within the ecosystem. AI is capturing macro speculative capital, physical gold is absorbing safe-haven demand, and stablecoins dominate the reserve currency function—under this triple pressure, Bitcoin no longer holds its former prominence.
Over the past decade, the entire industry focused solely on Bitcoin’s price movements, with all altcoins following its trends—this era has come to an end. Today, evaluating projects follows the same standards as traditional companies: whether they generate real revenue, have active users, and whether their tokens can capture the project’s growth upside.
Stop using Bitcoin’s price fluctuations to judge the crypto industry’s health. Focus instead on project revenues, user growth, and foundational infrastructure that connects entire chains: cross-chain infrastructure enabling private transfers across chains, USD settlement, and human-machine interoperability.
AI has drawn away macro speculative capital, the dollar has taken over the reserve currency status, and a brand-new foundational protocol has taken on the responsibility of industry-wide interoperability. Bitcoin falling below $70,000 is not the end of the crypto industry, but a historic turning point where crypto fully breaks free from Bitcoin’s constraints.
Twitter: https://twitter.com/BitpushNewsCN
BitPush Telegram community: https://t.me/BitPushCommunity
BitPush TG subscription: https://t.me/bitpush