Bitcoiners have long viewed Bitcoin as the solution to currency decline. Better gold. Ultimate money.
Instead, the broader market has treated it like a software stock.
Painful, but this dip may be how Bitcoin stops trading like tech and starts trading like a hard asset.
Bitcoin has confused everyone recently.
It hasn’t tracked gold. It hasn’t tracked QQQ. It has tracked... software?
Bitcoin and the Software ETF have moved identically at times, including during this recent selloff.
This explains a lot, including the recent violent selloff.
Software, SaaS, cloud, high-multiple growth, and Mag 7 are all taking a beating.
Why? Two reasons.
First, AI is changing the economic profile of software itself. Software is moving from a cash machine to a capital-intensive business.
Look at big tech capex growth recently...
Second, the US is structurally redirecting capital away from tech buybacks + high multiples and toward reshoring + domestic infrastructure.
Big tech is no longer returning excess cash to shareholders. It’s deploying existing and future cash into data centers, power, etc.
When an asset class goes from a cash machine to a capital sink, the multiple has to change.
That’s why even the best software companies can trade at their lowest valuations ever. The category premium is gone.
Amazon is trading at its lowest valuation EVER...
Regime shift.
Because of the above, capital is responding rationally.
Liquidity is rotating out of:
– Software
– Buyback-dependent equities
– Momentum & leverage
And into:
– Capex
– Energy
– Industrials
– Infrastructure
– The real economy
We are living through a regime shift.
Now, back to Bitcoin.
Bitcoin has been pulled into this rotation because it shares the same investor base... for now.
Same holders. Same liquidity. Same forced-selling dynamics.
It's trading like software because, over the last decade, the market has classified it as software.
Bitcoin fundamentally doesn't need what software needs.
It doesn’t need:
- Margins
- Earnings
- Buybacks
- Capex
- Refinancing
Software needs that. Companies need that. The hardest neutral money in human history does not.
The market sized Bitcoin up wrong. We're early 🙂
As painful as this drawdown has been, it may be necessary, and even constructive, for Bitcoin.
If this cycle washes out highly levered, short-term, risk-on software capital, what remains is a base of long-term hard money HODLers.
That’s how we move on from this chapter. BTFD 🫡
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