Author: Nancy, PANews

Last night, US stocks witnessed a historic moment. Tech giant Nvidia's market capitalization surpassed $5 trillion, writing a new chapter in capital history. But this same moment completely devastated the cryptocurrency market.

Looking at global capital markets, gold and stocks are performing well together, while the crypto market is mired in pessimism, making it increasingly difficult to profit and underperforming traditional assets. Although Bitcoin briefly touched a high of $120,000, it was more like a one-man show by capital lacking retail investors; altcoins are even more plagued by liquidity shortages, lack of innovation, and fleeting hype.

The crypto market has entered "hell mode," while the strengthening of the stock market and gold has accelerated the siphoning of funds.

The current crypto bull market is showing signs of fatigue, failing to deliver the expected broad-based rally following the halving. While Bitcoin has repeatedly hit new highs, the pace of increase has slowed and is primarily driven by Wall Street institutions; altcoins have repeatedly hit new lows, with retail investors suffering significant losses or leaving the market in anger after the "1011" event, leading to a tightening of market liquidity. The crypto market has been pushed into a period of extreme difficulty.

In contrast, as stocks and gold take turns strengthening, capital is flowing towards more visible and certain profit opportunities.

Who could have imagined that Nvidia would stage another "AI miracle" in the capital market in just 113 days, becoming the world's first listed company to surpass a market capitalization of $5 trillion. This figure exceeds the annual GDP of almost all countries except the United States and China, and far exceeds the total market capitalization of the entire cryptocurrency market (approximately $3.8 trillion).

 Source: Internet

In fact, the "Big Seven," led by Nvidia, fueled a collective rally in the US stock market. The S&P 500 has remained above its 50-day moving average for 125 consecutive trading days, and its year-to-date return has surpassed that of Bitcoin. Market sentiment is high, with bulls even calling for the US stock market to reach 7,000 points.

Data confirms this surge in activity. Nasdaq data shows that in the first half of 2025 alone, US retail investors bought approximately $3.4 trillion worth of stocks and sold approximately $3.2 trillion, for a total trading volume exceeding $6.6 trillion. According to analysis by Citadel Securities, a globally renowned market maker, retail investors now account for 22% of total US stock trading volume, the highest level since the "meme stock frenzy" of 2021. Currently, retail investors trade an average of 1.2 billion shares per day.

This investment enthusiasm isn't limited to US stocks. Take South Korea as an example: the KOSPI index has broken through the 4000-point mark, accumulating a nearly 70.9% increase year-to-date, making it one of the best-performing major stock indices globally. This market sentiment has also led to a significant decline in trading activity in South Korea, where cryptocurrency trading was previously very active. On October 29th, the local virtual asset trading volume was approximately $3.61 billion, only 23.2% of the KOSPI's trading volume, whereas previously this proportion had exceeded 80%.

Meanwhile, some funds are also flowing into crypto-related stocks. According to Bloomberg, while the total market capitalization of Bitcoin and altcoins has largely moved in tandem for years, this time is different. Bitcoin's growing popularity among institutional investors, coupled with speculative funds shifting towards cryptocurrency-related stocks, has created a nearly trillion-dollar gap between Bitcoin and altcoins. Markus Thielen, CEO of 10x Research, stated that if retail investors (especially in South Korea) hadn't turned their attention to related stocks, the total market capitalization of altcoins would have been approximately $800 billion higher. However, in the current cycle, altcoins lack new capital inflows, and this gap is unlikely to be filled in the short term. Historically, South Korean crypto traders have favored altcoins, with local exchanges accounting for over 80% of trading volume, while global platforms primarily focus on Bitcoin and Ethereum.

Faced with surging demand for stocks, trading platforms such as Robinhood, Coinbase, and Kraken have launched stock tokenization services to meet the needs of existing crypto users and explore new growth. This move has also diverted some trading activity from the crypto market.

In addition, amid rising risk appetite and macroeconomic uncertainty, gold has become the preferred safe-haven asset and is expected to be one of the best-performing assets in 2025. According to Goldman Sachs analysis, while Bitcoin offers higher returns than gold, it also exhibits significantly higher volatility. When risk appetite is high, Bitcoin often performs similarly to stocks, but when the stock market declines, Bitcoin's hedging effect is less effective than gold. Therefore, gold is currently a more reliable safe-haven asset, while Bitcoin is still in the transitional phase from a risk asset to a safe-haven asset.

Recently, the A-shares market has returned to 4000 points. "My dad is a stock trader, my mom is a gold trader, and I'm holding ETH. We've all gathered at 4000." "I'm hiding from the bull market in the crypto market," people joked in the community.

The crypto market is facing internal and external difficulties; remain patient and wait for innovation and funding.

Besides the capital siphon effect created by the stock market and gold, which draws away a large amount of investor and retail funds and marginalizes crypto assets in capital allocation, the internal and external difficulties of the crypto market also stem from a variety of factors.

On the one hand, innovation in the current crypto market lacks explosive growth. Compared to the narratives of DeFi, NFTs, and the metaverse that once broke through the established perceptions of both insiders and outsiders, the market today is more focused on technological iteration, while the narratives are constantly being repeated. Even if some narratives can attract funds in the short term, they often cool down quickly, making it difficult to maintain market activity and investor confidence. Meanwhile, emerging narratives such as RWA, DAT, and stablecoins are mainly dominated by institutions, with limited returns, low retail participation, and difficulty in generating widespread market resonance.

A deeper problem is that most altcoins lack clear scenario value and practical applications, making it difficult to attract sustainable investment. For example, MEME is a double-edged sword. On the one hand, it lowers the entry barrier, allowing more retail investors to participate; but on the other hand, such projects rely too much on stories and emotional drivers, accelerating the PvP nature of funds in the market, ultimately evolving into a pure money game without real value creation.

“The current problem in the crypto market isn’t a lack of derivatives, but rather an overabundance of ‘virtual’ on-chain assets. What we need now is to bring more real-world assets and services onto the blockchain. Finance must ultimately integrate with the real world, and the Web3 industry must quickly align itself with mainstream narratives , such as AI and the Agent Economy. In the first half of next year, there could be a massive bull market in AI, as well as in the stock and cryptocurrency markets. But this bull market must be built on a foundation of real-world integration. The industry should strive to create tangible results in putting everything on-chain and in Agent Finance, so as to attract more capital and talent and move towards sustainable development, rather than getting bogged down in the internal friction of speculating on MEMEs, ” Zheng Di, a cutting-edge technology investor, pointed out in the podcast “Zhi Wu Bu Yan”.

According to crypto KOL @Sea , the crypto industry requires patience and a long-term perspective. "AI and US stocks are hot, but if you shift most of your funds and attention there, whether for investment or startups, will you have a stronger relative advantage than in the crypto world? The crypto world is a good market/good industry. Although it's like trying to find gold in a pile of garbage every day, the rapid clearing and self-iteration capabilities of the free market, along with the gathering of global developers, make it more likely that miracles will emerge. "

“Crypto products have found a product-market fit, or at least paved the way for crypto verticals that have achieved Product-Market Fit (PMF). While such products are still few and far between, with each development cycle, the infrastructure continues to improve, and knowledge accumulates, we are creating more products with real-world value. These products are not only reshaping the market structure but also pioneering entirely new asset classes such as prediction markets and perpetual contracts. Now, as Wall Street elites and high-ranking U.S. government officials finally begin to pay attention to and recognize cryptocurrency as a formal industry, early participants should strengthen their resolve,” crypto researcher Monk wrote.

On the other hand, as a typical high-risk asset, the growth of the crypto market often relies on the spillover effect of upstream funds. As interest rates gradually decline, the returns on low-risk assets (such as deposits and bonds) decrease, and funds gradually flow to high-risk areas, such as tech stocks, growth enterprises, and cryptocurrencies. However, this transmission of funds is not instantaneous but has a certain time lag. As mentioned earlier, with stocks and gold already providing relatively stable returns, investors tend to prioritize these assets with visible profits and relatively controllable risks, making it difficult for the crypto market to become the first choice immediately. In other words, only after the interest rate cut cycle gradually releases liquidity and transmits it step by step through risky assets such as stocks can the crypto market obtain incremental funds.

Furthermore, the lack of regulation is one of the core issues currently facing the crypto market. Take the 10/11 attacks as an example. This event not only exposed the industry's shortcomings in infrastructure and risk management, severely impacting market liquidity, but also affected traditional investors' confidence in crypto assets. It's important to understand that, unlike traditional finance, the crypto market operates 24/7, resulting in faster development, more immediate responses to news, and a more diverse participant structure. This means that the impact of risk events is often more concentrated and severe, with a more direct effect on retail investor funds and overall market confidence.

“ Establishing a liquidity buffer fund and introducing a circuit breaker mechanism similar to that of the US stock market are absolutely necessary. Traditional financial markets have learned these risk control lessons through painful experiences, and the cryptocurrency market should learn from them. In events like 10/11, if a liquidity buffer fund could enter the market to buy time and allow arbitrageurs to re-enter, many problems could be avoided,” Zheng Di pointed out. This view also highlights the urgent need for risk management and institutional development in the crypto market.

In summary, the crypto market is undergoing a baptism of fire. However, it still possesses unique advantages such as rapid iteration, global participation, and technological innovation. Focusing on practical applications and value creation, and adhering to patience and long-termism, may be the key strategies for survival and breakthrough in the current market.