Primitive Ventures Founder Dovey Wan: Who Is Footing the Bill for This Crypto Bull Market Cycle?
Original Title: "Who Will Pay for the Bull Market"
Original Author: Dovey Wan, Primitive Ventures
Editor's Note: The author of this article is Dovey Wan, the founder of Primitive Ventures. She is one of the few in the Chinese crypto community who can engage in discussions with mainstream Western institutions. Known for her sharp commentary and keen insight, she has invested in projects that have become the infrastructure of today's crypto world, including Cosmos, Celestia, Movement Labs, and more. However, she is often caught in the whirlwind of public opinion due to rumors of "conflicts of interest." Yesterday, Dovey Wan rarely published a long article discussing Bitcoin's cyclical nature and the current market's divergence, offering a deep retrospective of her article from six years ago titled "The Bull Market Forecast from the West." The original article is as follows:
"The Bull Market Forecast from the West" has been nearly 6 years since its publication. After two cycles, Crypto has finally fulfilled many items on the 'wish list' of the past decade. Things are rapidly evolving as written in the article: institutional investors are allocating to Bitcoin, various products linked to TradFi are fully integrated, Circle has a high-profile IPO, and the US president publicly endorsed and even created memes. According to the old script, this should be the standard opening of a 'high-beta bull market.' However, as this cycle unfolds, we see the collapse of volatility, market catalyst events being front-run, and an industry that should be full of 'surprises' becoming less excited as assets become fully financialized and mainstream."
Across asset classes, even in a policy-friendly and institutional dividend-releasing environment, BTC significantly underperformed gold, US stocks, Hong Kong stocks, A-shares, and other major TradFi assets in 2025. It is one of the few assets that did not hit a new high in sync with global risk assets.

The Significant Divergence of Offshore and Onshore Funds
To understand the funding structure of this cycle, we first need to break down three key high points for BTC in this cycle:
Phase A (November 2024 - January 2025): Trump's election and expectations of regulatory improvement triggered onshore + offshore market-wide FOMO, with BTC breaking $100,000 for the first time.
Phase B (April 2025 - Mid-August): After a deleveraging pullback, BTC surged again, breaking $120,000 for the first time.
Phase C (Early October 2025): BTC hits the local ATH for this cycle and soon experiences the 10·10 Flash Crash, entering a correction period.
From the perspective of spot and derivatives combination, the three phases share several common features:
Spot: Onshore as the Main Buyer, Offshore More Inclined to Sell Tops
The Coinbase Premium maintains a positive spread during Phases A/B/C, indicating that buyers at the top mainly come from onshore spot funds represented by Coinbase.

The Coinbase BTC Balance continues to decline throughout the period, reducing the available chips on the CEX side. In contrast, the Binance Balance significantly increases during Phases B and C as the price rebounds, corresponding to potential selling pressure from offshore spot.

Derivatives: Active Offshore Leverage, Onshore Institutions Continuously Deleveraging
The BTC-denominated offshore Open Interest (using Binance BTC OI as an example) continues to rise during Phases B and C, with leverage ratios increasing. Even after the 10·10 deleveraging event causes a short-term drop, it quickly returns to high levels, even reaching new highs. In comparison, the onshore futures OI represented by CME has been declining since early 2025 and did not recover synchronously with the price reaching new highs;
At the same time, there is a divergence between BTC volatility and price, especially when BTC first broke $120,000 in August 2025. Deribit DVOL was at a relatively low level, indicating that implied volatility did not receive a premium for the new high, showing that the options market's pricing of trend continuation tends to be cautious.


Spot is a behavior of asset rotation in the major asset classes, and the divergence of behaviors on both sides reflects a difference in long-term asset confidence. CME and options players are the smart money most sensitive to the scent of blood, with extremely sharp instincts. The trading setup on both sides and control of timing make it easy to judge the situation.
Are "Institutions" the Foolish Ones with Money to Burn?
At the beginning of 2025, two key policies laid the groundwork for structural onshore buying:
· Repeal of SAB 121: Banks no longer need to include BTC held in custody at face value in their liabilities, enabling large custody banks such as BNY Mellon and JPM to engage in BTC custody services.
· Effective Date of FASB Fair Value Accounting (January 2025): Companies holding BTC are no longer required to only impair its value without recognizing any gains, but can now measure it at fair value. For CFOs, this transformation changes BTC from a "highly volatile intangible asset" to a "reserve asset option" that can be accurately reflected in financial statements.
These two changes provided the accounting and compliance prerequisites for subsequent DAT, corporate treasury, and some institutional fund allocation behaviors. Therefore, in the first quarter of 2025, we also began receiving a large number of financing pitches from new entrants in the DAT space. The core competency of the founding team of DAT is only one: fundraising ability. The so-called institutions are not smarter than retail investors; they simply have lower capital costs and more financial instruments for continuous funding.
According to Glassnode statistics, the amount of BTC held by DAT companies increased from about 197,000 coins in early 2023 to about 1.08 million coins by the end of 2025, representing a net increase of about 890,000 coins over two years. DAT has become one of the most important structural buyers in this round. The operating logic of DAT can be summarized as NAV premium arbitrage:
· When the stock price has a premium relative to the net asset value of its held crypto assets, the company can issue new shares through ATM offerings or convertible bond issuances to obtain financing at a high valuation;
· The funds raised are used to purchase BTC and other crypto assets, increasing the per-share asset value, further supporting the stock price premium;
· During an uptrend, the larger the premium, the easier the financing, providing the company with more incentive to "buy more as the price goes up";
Taking MSTR as an example, its significant increase in BTC holdings and the issuance of the largest convertible bonds in 2024–2025 occurred during a period of BTC's strong upward movement, approaching or hitting historical highs:
· In November-December 2024, when BTC surged into the $100,000 range, MSTR completed its largest-ever $3 billion 0% convertible bond issuance;
· Subsequently, it acquired over 120,000 BTC at an average cost of over $90,000, establishing significant structural buying pressure around $98,000.
Therefore, for DAT, adding to positions at highs is not chasing the price but rather an inevitable outcome to maintain stock price premiums and balance sheet structures.
Another commonly misunderstood concept is ETF flow. The characteristics of ETF investors are as follows:
· Less than a quarter of the total holdings are held by institutions (narrowly defined 13F filers), so non-institutional funds still dominate the overall ETF AUM;
· Within institutions, the main types are Financial Advisors (Advisors, including wrap accounts and RIAs) and Hedge Funds: Advisors focus on medium-term asset allocation, with a smooth accumulation pace (passive funds);
· Hedge Funds, on the other hand, are more price-sensitive, leaning towards arbitrage and medium- to high-frequency trading. Overall, they reduced their positions after Q4 2024, which was highly consistent with the downward trend of CME OI (active funds).
A closer look at the ETF's fund structure reveals that institutions are not the dominant player. These institutions do not use their own balance sheet money, and client asset management and hedge funds are certainly not the traditional "diamond hands."
Regarding other types of institutions, they are not necessarily smarter than retail investors. Institutions' business models are nothing more than two types: earning management fees and earning carry. The top-tier VC in our industry, with a 2016 vintage, had a Digital Percent Increase of only 2.4x (meaning investing $100 in 2014 and getting $240 million in 2024). This significantly underperformed Bitcoin's price increase over the past 10 years. The advantage of retail investors is always trend-following, being able to quickly turn around after understanding changes in market structure, without needing path dependence. Most institutional investors die due to path dependence and the regression of their self-iterative ability, while most exchanges die due to misappropriation of user assets and security vulnerabilities.
Absent Retail Investors
Looking at the site traffic of several top CEXs such as Binance, Coinbase, etc., it can be seen that since the peak of the bull market in 2021, overall traffic has been continuously declining. Even when BTC hit a new high, the recovery was not significant, in stark contrast to the popularity of platforms like Robinhood next door. For more information, you can read our article from last year, "Where are the marginal buyers."

Binance Traffic

Coinbase traffic
The 2025 "wealth effect" is more concentrated outside of crypto. S&P 500 (+18%), Nasdaq (+22%), Nikkei (+27%), Hang Seng (+30%), KOSPI (+75%), and even A-shares have all risen by nearly 20%, not to mention Gold (+70%) and silver (+144%). In addition, Crypto has encountered a 'kill' in this cycle: AI stocks have provided a stronger wealth effect narrative, while the U.S. stock market's 0DTE Zero-Day Options have provided an even more gambling-like experience than perp. Furthermore, new retail investors are gambling on Polymarket and Kalshi, betting on various macro political events.
Additionally, even the high-frequency trading-oriented Korean retail investors have retreated from Upbit in this round, turning to go all-in on KOSPI and U.S. stocks. In 2025, Upbit's average daily trading volume dropped by ~80% compared to the same period in 2024. Meanwhile, the Korean stock market KOSPI index surged more than 70%–75% for the whole year. Korean retail investors' net purchases of U.S. stocks reached a record $31 billion.
Emerging Sellers
In the current scenario where BTC is increasingly in sync with U.S. tech stocks, a significant gap appeared in August 2025: after following ARKK and NVDA to reach the August Top, BTC then fell behind and experienced a 10/11 crash, which has not recovered since. Coincidentally, at the end of July 2025, Galaxy disclosed in its financial report and press release that it had facilitated the phased sale of over 80,000 BTC on behalf of an early BTC holder within 7–9 days. These signs all indicate that Crypto native funds are undergoing massive turnover with institutions.

In the current maturation of BTC wrapper products (such as IBIT), a robust financial infrastructure has provided the best channel for BTC OG whales to exit with liquidity. OG behavior has evolved from "direct market sell-off on exchanges" to using BTC structured products to exit or engage in asset rotation, entering the broader Tradfi asset world. Galaxy's and 2025's most significant business growth has come from assisting BTC whales in transitioning from BTC to iBit. iBit's collateral mobility far exceeds that of native BTC and is securely stored. As assets become more mainstream, the high capital efficiency of paper bitcoins will far surpass real bitcoins, making the financialization of precious metals an inevitable path.
Miner: From "Covering Electricity Costs" to "Raising AI CAPEX"
From the pre- and post-2024 halving to the end of 2025, it marks the most sustained and significant downturn in miner holdings since 2021: by the end of 2025, miner reserves are approximately 1.806 million BTC, with a roughly 15% year-on-year decline in hash rate, indicating signs of industry consolidation and structural transformation.
More importantly, the motivation behind this round of miner selling has surpassed the traditional "electricity cost coverage" scope:
· Under the framework of the so-called "AI escape plan," some mining companies have transferred around $5.6 billion equivalent BTC to exchanges to raise capital expenditure for building AI data centers
· Companies like Bitfarms, Hut 8, Cipher, Iren are transforming existing mining facilities into AI/HPC data centers, signing 10–15 year long-term hash rate leases, viewing electricity and land as "golden resources in the AI era"
· Riot, which has always adhered to a "long-term hodl" strategy, also announced in April 2025 a shift in strategy to start selling BTC produced monthly
· It is estimated that by the end of 2027, about 20% of Bitcoin mining power capacity will be diverted to running AI
Financialized Paper Bitcoin
Bitcoin and the encrypted digital assets it represents are undergoing a slow migration from value discovery-centric active trading dominated by crypto-native funds to passive allocation and balance sheet management represented by ETFs, DATs, sovereign, and long-term funds, with positions often being financialized paper Bitcoin. The underlying asset Bitcoin has gradually become a risk asset accessory bought on weightings in various portfolios. The mainstreaming of Bitcoin is complete, but what follows is a leveraged cycle and systemic fragility similar to traditional finance.
1. Capital Structure: Incremental buying pressure comes more from passive funds, long-term asset allocation, and corporate/sovereign balance sheet management. Crypto-native funds play a reduced marginal role in price formation and are net sellers on most occasions during peaks.
2. Asset Characteristics: The correlation with U.S. stocks (especially high-beta tech and AI themes) has significantly increased, but due to the lack of a valuation system, it becomes an amplifier of macro liquidity.
3. Credit Risk: Leveraging proxies such as DAT stocks, spot ETFs, structured products, etc., cryptocurrencies are further highly financialized, significantly improving asset turnover efficiency, but also exposing more to DAT unwind, collateral markdowns, and cross-market credit squeeze risks.
The Path Forward
Under the new liquidity structure, the traditional narrative of "Four-Year Halving = One Full Cycle" is no longer sufficient to explain BTC's price behavior. The dominant variables in the coming years will be more influenced by two axes:
· Vertical Axis: Macro liquidity and credit environment (interest rates, fiscal policy, AI investment cycle);
· Horizontal Axis: DAT, ETF, and the related BTC proxy's premium and valuation levels;
Within these four quadrants:
· Loose + High Premium: High FOMO phase, similar to the environment around late 2024 to early 2025;
· Loose + Discount: Macro relatively friendly, but DAT/ETF premiums are squeezed out, suitable for structural rebuilding by crypto-native capital;
· Tight + High Premium: Highest risk, where DAT and related leverage structures are most prone to dramatic unwinding;
· Tight + Discount: True cycle reset in essence;

By 2026, we will gradually move from the right interval to the left interval, getting closer to the "Loose + Discount" or "Slightly Loose + Discount" as outlined in our framework. In addition, 2026 will see several key institutional and market variables:
· SFT Clearing Service and DTCC 24/7 Tokenization Implementation: Bitcoin will further financialize, becoming part of Wall Street's core collateral; the liquidity gap caused by time difference will be smoothed out, depth will increase, but leverage limits and systemic risks will also rise.
· AI Trading Entering the "High Expectation Consumption Period": In the latter half of 2025, signs of AI leaders showing "continuously outstanding performance but muted stock price response" have emerged, whereby simply beating expectations no longer corresponds to linear growth. Whether BTC, as a high beta tech factor, can continue to ride the tailwind of AI capital expenditure and profit upgrades will be tested in 2026.
· Further Decoupling of BTC from the Altcoin Market: BTC is connected to ETF flows, DAT balance sheets, sovereign, and long-term funds; while alts attract more niche, higher risk appetite fund pools; for many institutions, reducing BTC exposure is more likely to mean a return to better-performing traditional assets rather than a "shift from BTC to alt."
Is Price Important? Of course it is. Bitcoin crossing $100,000 has already elevated this 17-year-old young asset to a national-level strategic reserve based on price alone. Besides price, the next journey for crypto assets is still long. As I wrote in 2018 when Primitive was founded in "Hello, Primitive Ventures",
“In our exploration of the crypto industry over the past few years, we have seen the powerful distributed consensus among individuals and the characteristic of information continuously dissipating, giving crypto assets a strong vitality. It is precisely the desire of individuals for freedom and equality, as well as for the fundamental certainty of assets and data, that has shown us the ever-increasing entropy and the possibility of crypto immortality.”
When the capital market and cultural trends intertwine, there will be an economic and productive relationship revolution more powerful than the cultural trend itself. The populist finance represented by crypto is a typical product of the intertwining of “capital markets + cultural trends”
If, in the coming years, we can see the crypto rail as the sole super-sovereign and global liquidity infrastructure, generating a large amount of stable cash flow, users, and asset balance sheet applications, allowing some of the ETF / DAT's victory fruits to flow back to the chain, transforming passive allocation into active use, then what we are talking about today will not be the end of a cycle, but more like the starting point of the next truly adoption phase. From Code is the law, to Code is eating the bank. We have gone through the toughest 15 years so far.
The beginning of a revolution signifies the decline of old-age beliefs. The worship of Rome, which once made Roman civilization dominate the world, has become a “self-fulfilling prophecy”. The birth of a new god may be random, but the twilight of the old god is already destined.
Sidebar: This article is a deep retrospective of the article “The Bull Market from the West” six years ago. Thanks to those who have been with me since 2017, or even earlier. Together, we have witnessed Bitcoin's journey from narrative to sovereignty, from the edge to the mainstream, and experienced those beliefs that can only be understood by being there in person.
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