bitcoin is suffering an identity crisis that has nothing to do with fundamentals and everything to do with a reduced attention span.
While gold is up more than 12% and the S&P 500 is up over the past 30 days, bitcoin is down more than 10% in a market that seemed to present no reason to surprise the largest cryptocurrency. The real story, according to NYDIG global head of research Greg Cipolaro, is what he calls speculative cannibalization.
That is, the rumor of short-term speculation is creating a capital deficit. The kind of high-risk, instant-gratification investing that once fueled bitcoin rallies is now shifting to flashier alternatives like online sports betting, prediction markets and zero-day stock options that settle before the sun sets, Cipolaro said in NYDIG’s latest weekly bitcoin update.
As Cipolaro points out, three long-standing trends—expanding access to speculative markets, growing demand for fast, lottery-style payments, and the increasing speed of financial feedback—are converging to create an environment in which slower, longer-duration assets like bitcoin are at a disadvantage.
Capital does not abandon risk completely; It’s simply about reassigning them to platforms that provide immediate stimulation.
Over the past decade, markets have grown to include a wide variety of high-frequency, high-volatility venues, from sports betting and gambling apps to ultra-leveraged exchange-traded funds (ETFs) and overnight stock options.
These scenarios offer the kind of instant gratification that attracts speculators seeking asymmetric gains without the burden of patience, Cipolaro noted. Within cryptocurrencies themselves, that trend saw increased activity in high-beta or fast-moving segments, such as memecoin trading and leveraged perpetual swaps.
But even these forms of crypto-native speculation are losing out to markets that offer even faster feedback loops. This drains liquidity and reflexivity from the broader crypto ecosystem, softening price discovery and diminishing the impact of speculative flows that once fueled assets like bitcoin, Cipolaro wrote.
The problem is not unique to cryptocurrencies, it is indicative of a growing social preference for winner-take-most environments.
Bitcoin, on the other hand, increasingly looks like a slow asset in a fast market. While its long-term performance remains strong (historically, five-year holders have never suffered a loss), its short-term appeal has faded for many who prefer the emotional cycle of quick bets and instant results.
Cipolaro argued that this does not undermine the investment case for bitcoin, but creates obstacles to attracting marginal capital during periods of relative apathy or distraction.
“These dynamics put at a disadvantage assets like bitcoin that, while they can be traded at high frequency, are better suited to being held for long periods of time,” he wrote. “As attention and capital increasingly gravitate toward faster, more reactive markets, slower-moving investment theses struggle to compete for share, even as their long-term return characteristics remain intact.”
The rise of spot crypto ETFs was expected to help revive retail interest, but that thesis now appears complicated by this simple behavioral restriction.
“Markets that offer continuous commitment and immediate feedback attract speculative participation, even when expected returns are unfavorable,” Cipolaro wrote. “As a result, marginal risk-seeking capital is increasingly absorbed by faster, more reactive venues, reducing participation in long-term investments like bitcoin.”
