Farewell, Bitcoin: The Underlying Logic of the Crypto World Has Been Rewritten

Original Author: nikshep

Original Compilation: Luffy, Foresight News

AI has taken Bitcoin's speculative risk attributes, while USD stablecoins have replaced Bitcoin as the general circulating currency in the crypto market; the anchor that once silently held the fragmented crypto world together is no longer Bitcoin. This is the most positive structural change in the crypto industry in years, yet very few understand the logic behind it.

This week, Bitcoin fell below $70,000, a drop of about 45% from its high last October, sparking widespread market lament. Spot ETFs have experienced historic sustained large-scale capital outflows, marking the longest redemption cycle since the product's launch. Bitcoin, touted as "digital gold," is underperforming while physical gold continues its strong rally.

But the market's regret is misplaced.

While Bitcoin has been steadily declining, a little-known on-chain exchange surpassed Coinbase in trading volume last year. A certain prediction market platform has seen its valuation surge to $20 billion, generating annualized fee revenue of up to $365 million. A privacy coin, once viewed bearishly by the market, surged 70% in a single week, charting its own independent path while Bitcoin traded sideways. Another long-underestimated underlying network now enables cross-chain private transfers, allowing users to move assets without even needing to purchase its native token.

The crypto industry hasn't sunk with Bitcoin; crypto no longer needs Bitcoin.

This statement sounds bearish at first glance, but the reality is quite the opposite. Crypto is maturing, moving away from the primitive era where all coins were tied to Bitcoin's price fluctuations and speculation-driven trading, evolving into a real-world economy denominated in USD. Individual projects now thrive or fail based on their own fundamentals, and a new set of underlying interconnection infrastructure is replacing Bitcoin as the glue binding the entire crypto world together.

This year, Bitcoin has lost two core functions, replaced by two new classes of entities. The resulting gaps are fostering entirely new opportunities.

AI Takes Over Bitcoin's Speculative Risk Capital

Bitcoin itself generates no cash flow – no earnings, dividends, or interest. Its price movements are almost entirely determined by the ebb and flow of speculative capital. It is a classic capital reservoir: prices surge during loose liquidity and correct deeply when capital tightens. In 2026, the AI sector's strong emergence has continuously siphoned away speculative hot money that once flowed into Bitcoin.

Global AI infrastructure investment is projected to be between $700 billion and $830 billion this year, an amount roughly equivalent to half the size of the entire US investment-grade bond market. This figure could approach $7 trillion by 2030. The AI industry now contributes approximately 5% of US GDP, and its contribution to US economic growth has already surpassed that of household consumption. Nvidia alone accounts for 8% of the S&P 500 index weighting. AI is no longer just an ordinary sector; it has formed a powerful gravitational field for capital, reshaping the capital pricing logic across the entire market.

AI is draining capital from Bitcoin across three main dimensions:

1) AI dominates the narrative. Bitcoin's core selling point was always "betting on a future asymmetric opportunity." However, AI boasts real revenues, continuously exploding market demand, and policy support from various countries. Investors can easily gain exposure through index funds. Now, institutions classify Bitcoin as a risky asset similar to thematic penny stocks without earnings support. In the same risk pool, where one side offers realized profits and the other relies purely on expectations, capital naturally flows away from Bitcoin. This is the root cause of the consecutive ETF redemptions.

2) AI needs capital. AI's expansion relies heavily on debt financing. Cloud giants' bond issuance has already surpassed last year's total, and private credit directed towards the AI industry has exceeded $200 billion. High-quality assets issuing massive amounts of debt absorb top-tier capital, intercepting the funds that might otherwise flow into high-risk assets like Bitcoin.

3) AI forces a high-interest-rate environment. The AI industry drives up production costs for utilities, storage chips, and other components, leading to price increases generally ranging from 5% to double digits. This helps anchor US inflation around 3.8%. The Federal Reserve is forced to maintain a high benchmark interest rate of 3.50%–3.75%, leaving the market with almost no expectation of rate cuts for the year. AI not only competes with Bitcoin for capital but also locks down loose liquidity from a macroeconomic perspective.

Beyond capital, the computing power landscape is also undergoing a disruption. Both Bitcoin mining and AI computing involve converting electricity into computational power, competing for the same energy resources. Nvidia's servers generate significantly higher economic output per unit of electricity compared to mining rigs. Last quarter, the all-in cost for top publicly-listed mining companies to mine one Bitcoin was approximately $80,000, but Bitcoin's market price was only $70,000, resulting in a loss of $19,000 per coin. A large number of mining companies are transitioning to AI computing: the industry has signed cumulative AI supercomputing cooperation orders exceeding $70 billion. Top mining firms could see AI business revenue accounting for up to 70% of their total by year-end. Core Scientific spent $10.2 billion converting a 300-megawatt Bitcoin mine into an AI data center; Riot has been selling its Bitcoin holdings and subleasing its land to AMD. These entities, which once safeguarded Bitcoin's network security, are now collectively exiting.

Compared to the widely feared quantum computing risk, AI represents a permanent structural change. Even if a future quantum computer could crack Bitcoin's encryption algorithm, the industry could patch the protocol through post-quantum cryptography standards and soft forks. However, AI's capture of narrative, capital, and power resources is irreversible – no protocol upgrade can reverse that. Bitcoin's first core value proposition has completely evaporated.

USD Stablecoins Replace Bitcoin as the Base Currency of the Crypto Market

This is the most easily overlooked key change. In crypto's development history, Bitcoin has long served as the industry's reserve asset and the intermediate step for capital entering and exiting the market: fiat currency is first converted to Bitcoin, then exchanged for various altcoins. All coins were priced against BTC, and off-chain capital entering the market had to buy Bitcoin first. This was the root cause of the synchronized price movements across the entire market.

Stablecoins have severed this link. USDC's transaction volume has surpassed USDT for the first time since 2019, with global stablecoin annual transaction volume exceeding $30 trillion. The user on-ramp has now become: Fiat → USDC → Various Assets, completely cutting Bitcoin out of the circulation chain. Polymarket revamped and launched its platform-native USD stablecoin (pegged 1:1 to USDC reserves) this year, and Hyperliquid settles entirely in USD across its platform. As the industry summarizes: stablecoins have become the universal reserve currency underlying applications, with various platforms simply putting their own label on top.

Consequently, when market risk aversion increases, dominance charts show Bitcoin's share declining while stablecoins' share rises. Capital isn't leaving the crypto market; it's simply switching to USD-denominated assets within the industry. Investors looking to allocate to the crypto sector no longer need to hold Bitcoin; USD stablecoins have taken over this function. All on-chain transactions rely on USD, and on-chain capital flows no longer generate buying pressure for Bitcoin. Bitcoin's second core function has officially come to an end.

Decoupled from Bitcoin, the Crypto Economy Thrives

Looking beyond Bitcoin, the products being deployed today are no longer speculative tokens tied to coin prices, but commercial projects with real cash flow.

The existence of Hyperliquid alone is enough to debunk the "crypto is dying" narrative. This on-chain spot and derivatives exchange boasts order book depth and execution speed comparable to top CEXs, while users maintain self-custody of their assets. Its total trading volume last year reached $2.6 trillion, higher than Coinbase's $1.4 trillion, with an annualized revenue of $800 million to $1.3 billion. The platform uses 97% of its fees for secondary market buybacks and burns of the native HYPE token, with an annual buyback volume of approximately $1.3 billion, representing 7% of the token's total market cap. Its burn rate is 4-5 times that of Ethereum and 14 times that of Solana. The project raised no venture capital, relying on community airdrops and fee-based buybacks to create a closed-loop value system. Its trading volume depends entirely on trader demand, unrelated to Bitcoin's price action. The platform's scale grew counter-cyclically during Bitcoin's bearish phase.

Another key player is prediction market leader Polymarket. Valued at $20 billion, it sees an annual transaction volume of $250-$300 billion and generates $365 million in annualized fees. Its daily active users have grown 2.5 times in five months. It launched its own platform dollar stablecoin, and its native token launch is imminent. Polymarket's products revolve around betting on elections, sports, and global events, with demand completely independent of Bitcoin's price.

These projects are now valued using traditional corporate logic: revenue, user base, valuation multiples – a clear sign of industry maturation.

New Sector Opportunity: Privacy as a Scarce Resource

If Bitcoin's transparent and monitored ledger was the default option of the past, then privacy is the new upgrade option. This is the only form of sovereign, untraceable money available on-chain. But the ways to acquire this form of money are vastly different, and this distinction is key.

Self-custodial Privacy. Zcash (ZEC) surged 70% in a single week, pushing its market cap close to $10 billion, a gain of over 45x from its 2024 lows, charting its own independent path while Bitcoin traded sideways. Its fundamentals are solid: the volume of private transactions has risen from 11% to 30% since last year. Most privacy assets are never moved back to the public chain, creating a constantly shrinking circulating supply coupled with rising demand. Ironically, the regulatory pressure that originally targeted privacy coins has instead driven value realization: Robinhood listed ZEC spot, and Grayscale filed the industry's first privacy coin spot ETF. Privacy has upgraded from a niche application to a long-term investment thesis. However, ZEC requires purchasing the token separately and using a specific chain.

Cross-chain Universal Privacy. NEAR allows users to avoid buying a specific privacy coin or bridging assets. Utilizing on-chain signature technology, a single NEAR account can directly control native assets on Bitcoin, Ethereum, and Solana – no wrapped tokens, no bridge risk, relying on a decentralized multi-party computation network for key custody. Combined with confidential intent protocols, users can privately transfer assets across any public chain, obfuscating counterparty and routing information, executed via privacy shards. Users' assets remain on their original chains, making privacy an additive, universal base-layer service.

Compared to single privacy coins, this model is far more disruptive. Users don't need to hold ZEC or leave the native ecosystems of Ethereum or Bitcoin. Privacy transforms from an attribute of a specific asset into a built-in feature for all transactions.

The Multi-Chain Era's Underlying Coordination Layer Replaces Bitcoin's Hub Role

Looking at the broader crypto landscape: the industry isn't unifying but rather seeing multiple parallel chains and continuous ecosystem expansion. USD stablecoins are the universal underlying currency, and AI agents – autonomously holding credentials, calling interfaces, and transferring funds – are becoming new participants.

This vast multi-chain + agent ecosystem urgently requires an interconnected infrastructure. For the past decade, Bitcoin played this role. Now, the void is being filled by a new coordination and privacy layer: cross-chain signatures, USD settlement, private transactions, and automated agent execution.

NEAR is targeting this track. It supports AI agents settling privately in USDC, utilizing secure enclaves for confidential computation, positioning its signature network as the key management hub for the agent economy, providing cross-chain and privacy services unbounded from any single public chain for both users and bots.

Another product in the same space is Venice. It offers a privacy-focused AI application, attracting a large base of native Web2 users. Staking its platform token VVV allows holders to share in AI inference revenue. The project has burned over 40% of its token circulation through buybacks driven by product usage. Demand is driven by AI usage, decoupling the token's price action from Bitcoin.

The new industry center of gravity is now clear: it's no longer a single coin, but underlying infrastructure, with diverse real-world projects attached to it, creating tangible value.

Summary

Putting it all together: The USD is the industry's universal cash. Tokens like HYPE, POLY, ZEC, NEAR, and VVV correspond to corporate equity. The privacy cross-chain layer is the infrastructure connecting the entire industry. Bitcoin is just one sector within this ecosystem. AI absorbs macro speculative capital, physical gold captures避险 demand, and stablecoins monopolize the reserve currency function. Under this triple squeeze, Bitcoin's former glory fades.

For the past decade, the entire industry fixated on Bitcoin's price, with all altcoins following its lead. That era is definitively over. Today, judging a project's merit uses the same criteria as traditional companies: Does it have real revenue? Active users? Does the token capture the project's growth value?

Stop judging the health of the crypto industry by Bitcoin's price fluctuations. Focus on project revenue, user growth, and the underlying infrastructure connecting all chains: cross-chain private transfers, USD settlement, and infrastructure usable by both humans and machines.

AI has taken away macro speculative capital. The USD has taken away the reserve currency status. A new underlying protocol layer has assumed the critical responsibility of connecting the entire industry. Bitcoin falling below $70,000 is not the end of the crypto industry, but a historic turning point where crypto can finally fully break free from Bitcoin's constraints.