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One of uh the biggest surprises has been the proliferation of stable coins. Now, we started seeing stable coins gain traction in 23 and 24, but it just took off this year. And as I've said, stable coins are usurping one of the roles we expected Bitcoin to play. But on the other hand, uh digital gold, Bitcoin, uh had uh a lot of company from gold this year in terms of showing us the way.
Gold uh has more than doubled over the past year. So, Bitcoin's role as digital gold should also be uh much more valuable. One of the most significant developments Kathy Wood highlights is the explosive growth of stable coins. While early crypto narratives positioned Bitcoin as a medium of exchange, Wood observes that stable coins have increasingly taken over that role, stable coins now function as the transactional layer of the digital asset ecosystem.
They enable fast, lowcost settlement, crossber payments, and onchain liquidity without the volatility inherent in Bitcoin. This was not entirely unexpected, but the speed and scale of adoption has been surprising. However, Wood is clear that this does not diminish Bitcoin's importance. Instead, it clarifies Bitcoin's role.
; One of uh the biggest surprises has been the proliferation of stable coins. Now, we started seeing stable coins gain traction in 23 and 24, but it just took off this year. And as I've said, stable coins are usurping one of the roles we expected Bitcoin to play. But on the other hand, uh digital gold, Bitcoin, uh had uh a lot of company from gold this year in terms of showing us the way.
Gold uh has more than doubled over the past year. So, Bitcoin's role as digital gold should also be uh much more valuable. My guess is that we're going to have more or less a continuation of the same until monetary policy sufficiently changes. That is my guess as to how this is ultimately going to play out.
You know, could there be a rally back up to the 50WE moving average in 2026? I told you guys back in October when the bare market started not to expect a counter trend rally until 2026. Back in 2022, we had the counter trend rally to the 50we moving average in March. And in 2018, the counter trend rally to the 50we moving average did not occur until July.
So the reason I said not to expect it for the last month or so is just kind of looking back at history and saying, look, historically it takes until the midterm year to get that counter trend rally. There is no such thing as a guarantee though in 2014 we never actually quite made it back up to the 50we SMA until the bare market was actually over.
So don't look at that as a sure thing. The other thing is that there is still the potential here of sweeping this low here. It seems to me like it's likely going to come into play at some point in 2026. I I couldn't tell you exactly when, but I think that will be an important level. The other important level is the yearly open.
So, Bitcoin, you know, where it opened the year right around these prices, I think that's going to be an important pivot level for a while. And the reason I say that is if you look at where Bitcoin opened in 2022, it essentially opened at around um you know between 40 and 50K right here and then Bitcoin dumped when the year started and then it rallied back up to that level that it was at when it opened the year.
Right? So the yearly open ended up being resistance in the midterm year at the 50we moving average. The other thing in 2018 in 2017 sorry in the 2018 yearly open Bitcoin opened the year um I I believe at around like 14K give or take and then that level ended up being resistance in the 2019 rally. So the yearly open where we are right now I have a feeling will come into play in the future right it's going to act as some important level that's going to be respected for a while in this coming market cycle that is my best guess if you look at the current year-to-ate ROI of Bitcoin in 2026 and if you compare it to say I mean we haven't had a day yet right but if you look at 2022 2 and 2018 and 2014 and you average out all the prior midterm years.
You know, it it would suggest we could see further downside. But I will remind you that I don't know if it's as simple as this. And I'm not trying to say this time is different. I I I do think Bitcoin has been in a bare market. But what I'm saying is that because we topped on apathy rather than euphoria, right?
Again, if you look at the social interest, we topped on apathy this cycle. That's why there was no rotation into altcoins rather than euphoria like 2017 and 2021 where there was a rotation into altcoins. Because we topped on apathy, the decline has been a lot more muted. And so I continue to say, hey, while it might make sense to compare to 2014, 2018, and 2022, we need to be open-minded and say, what if it's more like the 2019 bare market?
That is my base case right now that we're in something like that. And so currently I'm deferring to this chart as sort of the the the thing that provides the best example of what like what what might come in the months ahead. You'll likely have some rallies back up. I'm not yet sure that they'll have enough momentum to be sustained.
as we get further out, um perhaps we can muster up a stronger rally. But I just want people to know that like this one, I know it's not perfect and analogs are a dime a dozen, but this one, we've been talking about it since this whole bare market began and it's tracking the closest out of all the other bare markets, right?
It tracks the closest. And so if it's not broke, don't fix it. We'll see if this continues to play out. My base case is that it will. midterm years historically have ended up being great times to buy, especially sort of mid to late year if history is any indication. So, in order to make money in the bull markets, the people that made the most money in these bull markets were the people that stuck around in the bear and got those good opportunities.
So my encouragement to you would be stick around in the midterm year, look for opportunities, and hopefully you can reap the rewards as we get out into the next market cycle. Another major theme in Wood's commentary is the persistent underperformance of altcoins relative to Bitcoin. Over multiple consecutive years, altcoins have lost value against Bitcoin, reinforcing a hard truth for crypto investors.
Complexity does not necessarily produce better returns. Bitcoin remains the benchmark, the monetary base layer of the crypto ecosystem. While innovation continues elsewhere, the data suggests that holding Bitcoin has been a far more effective long-term strategy than chasing speculative rotations. This reinforces Wood's broader investment philosophy.
Own the platforms, not the noise. Wood is not pessimistic. Historically, periods of maximum doubt have often coincided with the best long-term entry points. Midterm years, when sentiment is low, narratives are broken, and price action is uninspiring, have repeatedly offered asymmetric opportunities for disciplined investors.
2026 is here, and I want to talk about 2025. What happened? Um, a lot of people have said the 4-year cycle is broken because this is the first red candle here that was technically red in the posth having year. You can't really include this one over here because Bitcoin launched back then. There wasn't really a lot of data.
Uh, 2010, I guess, was an example of Bitcoin going up in the midterm year. It went up a modest 43,000% that year. So, I guess not all midterm years have been bad, but one of the things to consider is that the future is never guaranteed, right? There were plenty of price predictions for where Bitcoin would be by the end of 2025, and most of them, more or less, just fell flat on their face.
So, it's just a reminder that at the end of the day, no one knows what is going to happen in the markets, and we're all just simply doing the best we can. Now, one of the things that I think we should discuss is the fact that while this was a red year, Bitcoin still technically topped in the fourth quarter of the posth having year.
Right? So, this top occurred when all the other prior tops occurred in post having years. So, in a sense, while there's a narrative going around that the four-year cycle was broken, it's not really that different. In fact, last cycle, Bitcoin dropped from November into the end of the year as well, but it ended up being a green year even though we dropped going into the end of the year just like um just like we had did this year.
So the other thing that I want to show is if you look at quarterly returns, what you'll notice is that in Q4 of 2013, Bitcoin went up 421%. In Q4 of 2017, it went up 220%. And in Q4 of 2021, it went up 5%. And then in Q4 of 2025, it dropped 23%. So every Q4 has actually gotten progressively worse from one cycle to another.
Q4 of the of the post having year. There are some other trends that I think we should also look at. Um one of those trends is of course as it relates to the altcoin market. We talked about that a lot and you know we talked about why it made sense to sort of fade the alt season calls and if you're going to stick with anything in crypto just stick with Bitcoin.
And it's this chart right here. Here you can see that alts have actually dropped to Bitcoin now 4 years in a row. So they dropped 22% in 2022, 30% in 2023. Altcoins then dropped 13% against Bitcoin in 2024 and 14% against Bitcoin in 2025. So yes, it is true that Bitcoin did not go up durably in the posth having year, but it's also true that had you just stuck with Bitcoin for the last few years, even if you didn't sell, you're doing incredibly better than you would have been doing if you were buying random altcoins, right?
And that's kind of the reality that or that was kind of the the the message I was trying to say is that you know whenever Bitcoin does find a top assuming that the business cycle plays out like last business cycle around the time that QT ends there might not be that final rotation. Now we know definitively that there wasn't in the post hopping year.
Um and I think you could argue it was just because of higher for longer monetary policy which then of course led to really low social interest in the cryptoverse. Um, so this year was red. Now, if you go over to the year-toate ROI of Bitcoin in 2025, this is what it looked like, right? So, you can see we started off the year with a little bit of a rally.
And then after the inauguration, we had the post inauguration dump. We even called January 20th as being a local top. I think seven or eight months ahead of time, um, that that January 20th would likely be a local top for the crypto markets. We were able to hold above the 2024 high in the dump back in February, March and April of 2025.
And therefore, we suggested we should then get a right translated cycle into a market cycle top in the fourth quarter of the post having year. So technically speaking, Bitcoin had its top this cycle in the fourth quarter of the post having year. She emphasizes that the investors who benefit most in bull markets are not those who chase momentum at the top, but those who remain engaged, curious, and patient during the bear.
The absence of guarantees is precisely what creates opportunity. Kathy Wood's message is ultimately one of context and conviction. Bitcoin is not failing because it did not meet speculative price targets. It is evolving, clarifying its role within a rapidly changing financial system. Stable coins are redefining payments.
Gold is reaffirming the store of value thesis. Bitcoin sits at the intersection, increasingly positioned as a foundational monetary asset for the digital age. Short-term uncertainty remains. Monetary policy is still a headwind. Volatility is unavoidable. But for investors willing to think in years instead of months, the structural case remains intact.
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