Bitcoin continues to crash, now below $107k as of writing this, despite the Nasdaq holding up comparably well. The divergence between the QQQ and Bitcoin is the widest in a long time, as I said would happen:
My hedge method could not be going better as Bitcoin continues to dramatically underperform the QQQ. Readers of the blog–all few of you–would have been prepared heeding this advice. My ‘net worth’–the sum of all my account balances across various cryptocurrency exchanges, Polymarket (technically on the blockchain), and stock brokers–is at another high this week, on top of last week’s large gains when Bitcoin fell from $125k to $110k. This negated the drawdown I saw late September and early October when Bitcoin surged from $109k to $125k.
Am I worried about Bitcoin recovering? Not really. Being that I am long tech, for me to lose money requires that Bitcoin outperform tech stocks. This is unlikely, for the following reasons as explained:
Just like I said would happen.
https://t.co/tIKTvLT6Wi-NO progress on BTC reserve
-$20 billion $btc this week recovered by feds which will eventually be dumped on market. #bitcoin will crash in anticipation of this selling.
The only hope is if Reserve is made into law. https://t.co/hxpbknK7sl
— Grey Enlightenment (@2025Blog) October 16, 2025
(Almost at 100 followers. Go ahead and follow.)
The explanations given by the media for Bitcoin’s huge decline (e.g. “risk off” trades, Zions Bank, and the stock market falling) are incomplete or wrong. The stock market hasn’t fallen that much, yet Bitcoin has gotten destroyed. Here are the actual but overlooked reasons:
Reason 1: If history is any guide, Trump will drop the ball on the promised ‘Bitcoin reserve’, leaving his crypto donors high and dry. Trump has a long track record–as we saw during his first term–of making big promises, such as a border wall, investigating Hillary Clinton, or ‘cracking down on left-wing social media censorship’, and either getting sidetracked or being stymied by Congress or courts.
Bitcoin surged from $55k in November to as high as $105k in January 2025, in large part, in anticipation of said Bitcoin reserve. When it becomes evident it will not happen, Bitcoin will likely continue falling, possibly back to $50k, especially if there is a mild recession, an unexpected spike in inflation, fed hawkishness, or a broader bear market in stocks. Shorting Bitcoin is such an effective hedge due to being so sensitive to the downside to negative macro or geopolitical developments, but also it has long stretches where it lags on the upside, as was seen last week when QQQ recovered but Bitcoin slid lower.
Reason 2: $15 billion Bitcoin, for a total of 127,271, has been recovered by the feds this week tied to criminal activity. This Bitcoin, in addition to the estimated 200,000-300,000 Bitcoin already in possession by the feds, will eventually be sold on exchanges, such as Coinbase. Bitcoin will crash in anticipation of this selling, which is happening now.
The only hope is if Congress passes the necessary legislation for a Bitcoin reserve, to permanently halt this selling, which as mentioned above, is exceedingly unlikely given Trump’s innaction. Such legislation would outlast Trump’s presidency, being codified into law instead of merely an executive order. The second option is if Vance wins, who is the favored 2028 GOP nominee. Otherwise, if Vance loses, Trump’s executive order for a Bitcoin stockpile and to halt the Treasury from selling said confiscated Bitcoin, will certainly be voided by the incoming Democratic administration.
Reason 3: Bitcoin is losing out to gold and AI. Crypto has no applicability to AI despite the large overlap between fans of AI and crypto, and how the two technologies are concurrent. One would assume that somehow it would be possible to bridge AI with crypto, but for all intents and purposes, they are entirely incompatible. Gold is a much better cryptocurrency. It genuinely possesses the qualities Bitcoin is often claimed to have but doesn’t, those being that it’s actually fungible (can be melted), untraceable, and stores value and hedges inflation much better.
So those are the main and overlooked reasons Bitcoin has done so poorly and will continue to fall. I don’t see much reason for optimism here. In forthcoming post at the request of a reader, I will explain how to set up the hedge, such as which options or ETFs to buy.