CZ suggests buying into “FUD”. Can Bitcoin still support an investment strategy that goes against th

As the Christmas holiday market cooled down, Binance’s former CEO CZ posted on X that “true early buyers often appear during times of market panic.” This statement reignited discussions about contrarian investing in Bitcoin. But reality isn’t just about emotions: Data shows that some Bitcoin spot ETFs have recently experienced net outflows. For example, GBTC saw an outflow of approximately $24.6 million in a single day, while BITB also experienced an outflow of around $13.3 million. This contradicts the claims made by these funds. With expectations of increased liquidity fluctuating, stricter regulatory measures being implemented, and institutions quietly rebalancing their portfolios, “buying into conditions of FUD” is no longer just a motivational statement—it becomes a real choice that requires analysis based on data, trends, and risk tolerance.

CZ’s remarks during the Christmas season brought up an old topic: Should one enter the market during times of fear or mania?

During the Christmas period, CZ shared his holiday messages on X, emphasizing again that “true early buyers bought when markets were filled with FUD.” This statement was reported by several media outlets such as Golden Ten News and PANews, sparking widespread discussion within the community. Liquidity levels are already low during holidays, and markets are particularly sensitive to celebrity opinions. This statement, combined with record highs in U.S. stock trading before Christmas and divergent trends in blockchain-related stocks, made the choice between contrarian investing and following the broader trends of risky assets even more crucial. At a time when traditional stock markets are hitting new highs while crypto markets show signs of divergence, CZ’s contrarian investment theory is seen by the market as a public challenge to current risk preferences.

Net outflows from spot funds: Is it true panic or simply a move to higher positions at high prices?

From a financial perspective, Bitcoin-related spot funds have not shown signs of “consistent greed.” Instead, they have experienced a net outflow recently: According to public data, GBTC saw an outflow of approximately $24.6 million, while BITB saw an outflow of about $13.3 million. This indicates a phased reduction in holdings. On the surface, this seems inconsistent with the optimistic sentiment expressed on social media. It seems more likely that institutional investors and qualified investors are making structural adjustments during periods of relatively abundant liquidity. When leading spot fund assets experience marginal outflows, while market narratives remain optimistic, the market is likely to be in a state of “optimistic sentiment versus cautious financing.” There are two possible interpretations of these net outflows: one is that “smart money” is taking profits at high levels, preparing for potential fluctuations; the other is a broader risk mitigation strategy—reducing holdings in assets with high liquidity when overall risk assets become uncomfortable. In terms of behavior,

● For some long-term investors, spot funds are primarily used as tools for adjusting holdings. Net outflows are more likely to be related to rebalancing rather than a mass withdrawal.

● For short-term investors, reducing volatility exposure during times of increased macro uncertainty is a common practice of “preventive downsizing.”

Under such circumstances, the idea of “buying into FUD” mentioned by CZ needs to be considered in conjunction with what actually happens with funds. Otherwise, it could be misinterpreted as a simple encouragement to buy during any downtrend. If emotions can be instantly ignited by words, then the flow of funds tends to reflect more accurately the participants’ judgment regarding the risk-reward ratio in the medium to short term.

Comparing prices and volume: It’s far from reaching the critical point of “mass frenzy”.

From a market structure perspective, Bitcoin’s recent fluctuations are more characterized by intraday variability rather than a single-sided trend. Volume also doesn’t show the “systematic amplification” seen during historical extreme periods. In this situation, the net outflows from spot funds suggest that some funds are questioning the current value proposition. Looking at the chart, we can see:

● The relationship between volume and price is more akin to “high-volume turnover + short-term trading,” with no signs of widespread buying or indiscriminate inflows.

● The use of leverage in the derivatives market has become more restrained, with positions being held on a short-term basis rather than through extreme leverage.

Considering both the trading structure and the use of leverage, the current crypto market seems to be in a “zone of optimism and caution.” There’s still a significant distance from the level of complete frenzy seen in past times.

The discrepancy between CZ’s description of the “FUD phase” and actual data

CZ emphasizes the importance of buying into situations of FUD, focusing on timing that is opposite to mainstream sentiment, rather than simply following price lows. However, looking at fund flows and transaction patterns, it seems more like a period of “structural divergence” rather than a single direction of panic or greed: there is capital leaving positions, while at the same time, funds are allocating resources across various sectors. Emotionally, discussions on social platforms have not cooled down to the point of ignoring Bitcoin; instead, they have focused on topics related to macro-level uncertainties and regulatory issues. Before there is a large-scale panic-driven withdrawal of funds, and before emotions become completely extreme, it is not accurate to consider the current situation as a “typical FUD phase”. A more reasonable description is that this is a “uncomfortable zone” driven by multiple variables.

Multicoin’s WLD OTC: Another example of silent accumulation from the other side

In contrast to the marginal net outflows of Bitcoin spot funds, institutional investors have chosen more discreet ways of increasing their holdings in certain assets. Recently, Multicoin Capital completed an OTC transaction worth approximately $29 million, choosing to reallocate its positions outside of the public market. Such actions usually involve several considerations:

● To reduce the price impacts and slippage caused by direct purchases in the open market, thereby controlling the average cost of establishing positions.

● To maintain a more controlled pace in terms of information disclosure and compliance requirements, avoiding premature exposure that could lead to follow-through investing.

When a portion of funds is used to amplify positions in certain assets through OTC markets, while simultaneously reducing positions in Bitcoin spot funds through the open market, the financial structure is gradually shifting from a “single narrative” to a “multi-narrative approach”. On one end, there is a reduction in Bitcoin holdings; on the other end, there is an emphasis on investing in new assets. If we plot the net outflows from GBTC and BITB against this $29 million in WLD OTC transactions, we can see a interesting contrast: In mature assets, funds tend to prefer “structured exits” – reducing positions and creating more flexibility. In contrast, for new asset classes, investors opt for “silent amplification” – quietly increasing their holdings through OTC methods. This means that “contrarian investing” isn’t just about buying assets at low prices, but also about reallocating investments across assets with different risk profiles. At the institutional level, contrarian actions are more like reorganizing portfolios during periods of volatility, rather than simply buying Bitcoin at certain price points. Institutional investors have a tendency to amplify their positions during volatile periods, while steering away from assets that attract excessive attention, thereby transferring risks to more manageable structures. Currently, most crypto assets are still in a period of high volatility, and macroeconomic and regulatory conditions remain unclear. Therefore, institutions generally prefer to adopt a contrarian approach.● Accessing new investment targets through OTC markets, private placements, etc., to seize potential upside opportunities.

● Reducing the net risk associated with well-known assets in the public market, thereby minimizing portfolio volatility.

When consumers ask whether this is a low point for FUD, institutions are more concerned about the ratio of risk-to-reward across the entire curve, rather than the short-term fluctuations of individual assets.

Expectations for an interest rate inflection point: Potential re-pricing of US dollar liquidity

At the macro level, markets generally expect the Fed to be likely to cut rates in the first quarter of 2025. This means that expectations regarding interest rate trends will become the “invisible anchor” for the pricing of all risky assets in the coming months. Comparing past macroeconomic cycles (without specifying years or events), Bitcoin often experiences periods of volatility that are closely linked to stock markets.

● When expectations for an interest rate inflection point begin to materialize, there is usually a period of instability that is highly correlated with stock markets.

● Once liquidity improves, Bitcoin gradually shifts from being a “high-beta alternative to technology stocks” to becoming an independent risk factor.

If interest rate expectations are confirmed by the market, the current hesitancy among investors to invest or reduce their holdings is more about creating room for future investments, rather than a rejection of the long-term logic of crypto assets.

EU DAC8 comes into effect: Changes in asset preferences due to increased compliance costs

At the regulatory level, the implementation of the new EU DAC8 tax regulations has created a clearer framework for trading platforms, custodians, and users regarding their reporting obligations. This, in turn, increases the compliance costs associated with using encrypted assets for cross-border transactions. In such a regulatory environment, long-term investors tend to:

● Hold positions using tools that are well-documented and easy to report, thereby reducing future compliance uncertainties.

● Prioritize assets with larger market caps, better liquidity, and more mature regulatory recognition, to minimize concerns about potential regulatory scrutiny.

When regulatory requirements shift from “gray areas” to “mandatory reporting,” the real FUD isn’t just about price fluctuations, but rather systemic concerns over whether an asset will be labeled as high-risk.

The controversy surrounding the transfer of dark web activities to platforms like Telegram has drawn renewed attention and debate from regulators and compliance experts. Although these activities don’t directly correspond to mainstream compliant platforms and assets, from a regulatory perspective, blockchain technology is often categorized as a “potential risk factor.” This leads to the following consequences:

● Compliant funds and traditional institutions prefer to hold leading assets and blockchain-based tools that are recognized by regulators, so they can explain their funding sources when necessary.

● In terms of narrative, any news related to “crime” or “money laundering” can suppress the valuation premium of the entire sector on an emotional level. Under such discussion contexts, the so-called “FUD” stems more from uncertainties related to compliance and public opinion, rather than simply the decline in asset prices.

Venture capital firms are betting on USDC and prediction markets: the structural winners in the crypto industry by 2025.

Top venture capital firms have recently mentioned that assets like USDC, which are tied to fiat currencies, along with prediction markets, will become the major winners in the crypto industry in 2025. The reasons lie in two aspects: first, clear profit models and cost structures; second, a stronger connection to real economic activities. Take USDC as an example; its revenue comes mainly from interest earned on custody assets and related service fees. Prediction markets, on the other hand, create a closed loop by rewarding participants through transaction fees and liquidity provision. In an environment where macro-interest rates remain high and compliance pressures increase, businesses that generate cash flows and are understandable to regulators are naturally more attractive to long-term investors. Such businesses are more resilient than those that rely solely on price increases to make money.

The role of USDC and prediction markets: liquidity hubs and emotional pricing markets.

In this current cycle, USDC has evolved from just a medium of exchange to a central point for funds to flow between different exchanges and chains. Prediction markets, meanwhile, have become places where market participants can express their opinions about “probability of events” and “policy directions.” The roles of these two entities in the ecosystem can be summarized as follows:

● USDC provides a low-friction mechanism for transferring funds and allowing them to be temporarily stored. It serves as a “buffer pool” for transferring funds between various risky assets.

● Prediction markets use price signals to aggregate various expectations into a clear “emotional and informational index”. When funds can be more efficiently allocated between USDC, prediction markets, Bitcoin, Ethereum, and other assets, “buying into FUD” no longer means making large single investments. Instead, it involves using tools to reasonably weight different risk exposures.

In the new structure, Bitcoin’s role needs to be redefined: Is it still seen as a “digital gold” asset for managing macro-level uncertainties? Or does it play a key role as collateral in lending, derivatives, and cross-institutional settlements? This means that:

● When macro risks increase, Bitcoin becomes an effective tool for hedging against traditional asset risks over the long term.

● When blockchain-based credit activities expand, Bitcoin becomes one of the most acceptable underlying collateral assets. In today’s highly differentiated market, “counter-trend investments” can involve a variety of assets and infrastructure, with Bitcoin serving as the core element.

Emotional extremes and long-term returns from a historical perspective

如果站在更长周期的统计视角观察，可以发现加密市场中有一个反复出现的规律：情绪的极端点往往与长期收益的最好区间高度重叠。无论是极端恐惧还是过度乐观，在多年尺度上回看，都更像是对未来几年收益被“集中预支”或“集中打折”。不过，问题在于：

● 情绪极端点在当下难以被精准识别，往往只有事后才显而易见。

● 投资者的资金周期和心理承受力，未必能支撑“统计上最优”的买入点。统计规律告诉我们逆向可能有效，但没有任何数据可以保证个人在某次“FUD买入”中必然获得理想回报。

如何用数据刻画“FUD”而不是只看K线

要把“在FUD中买入”从口号变成可执行的框架，第一步是用可观测数据来定义“FUD”：

● 资金流向层面，可观察ETF/基金/交易所的净流入流出、链上大额转账行为是否出现加速出逃特征。

● 杠杆与衍生品层面，可关注全网杠杆率、强平规模、期货与期权的风险偏好指标是否出现极端读数。

当资金、杠杆和期权定价同时指向“参与者在用真金白银表达恐惧”时，才更接近一个可被量化识别的FUD区间，而非单一维度的价格回撤。

当下所处的位置：恐惧、观望还是过度乐观?

Considering the net outflows of spot funds, institutional OTC activities, as well as macroeconomic and regulatory trends mentioned earlier, we can tentatively categorize the current market as follows:

● There is no widespread panic on the funding side; rather, there are more instances of structural position reductions and sectoral shifts, indicating that systemic fears have not yet materialized.

● On the emotional front, there is neither a situation of “no one paying attention” nor a state of “mass enthusiasm”. Social discussions focus more on policies and macroeconomic trends. At this stage, which is closer to a “neutral wait-and-see attitude with structural differences”, CZ’s statements serve to remind the market to be aware of the “future window of emotional calm”, rather than suggesting that we are currently at the bottom of FUD.

A three-tier data framework for contrarian entry strategies can be constructed.

If we abstract CZ’s views into a methodology, it can be simplified into a top-down three-tier framework:

● The first layer focuses on macroeconomics and regulation: Does the interest rate expectation shift from increases/high rates to a point of easing? Are regulations becoming clearer and more enforceable, or are they becoming even more uncertain?

● The second layer deals with funding and structure: Do ETFs and funds experience extreme net flows? Are institutions adding positions through OTC markets, or reducing positions in the open market? Which assets are being actively bought or sold? Finally, the third layer involves price and volatility: Only under the conditions of the previous two layers, significant drawdowns and high volatility can provide statistical advantages for contrarian trading strategies.

When the reverse framework is based on three types of data: macro-level factors, capital-related aspects, and structural details, the concept of “buying during FUD” truly becomes a verifiable, actionable, and measurable investment discipline.

Is CZ’s statement a call to action, or a reminder?

If we look back at this Christmas message itself, its main effect is to help investors step away from short-term price fluctuations and focus instead on emotional and cyclical factors. Currently, there are multiple uncertainties involved: high stock market prices in the US, divergent trends in crypto capital allocation, expectations of interest rate changes, and tightening regulatory measures. In such circumstances, CZ’s advice to “buy during FUD” seems more like a reminder of when to act rather than a direct invitation to make trades.

Between fanaticism and fear, it’s important to leave room for multi-cycle asset allocation.

The real market is far more complex than mere slogans: a few people can confidently invest despite intense FUD, while many others hesitate within an uncomfortable wait-and-see period. For most investors, a better approach is to adjust long-term and short-term positions in different emotional states, rather than making impulsive decisions at one supposed “perfect low point.”

● Use medium-to-long-term capital to invest in assets that remain viable under the constraints of compliance, macro-level factors, and capital dynamics.

● Manage short-term capital to minimize risks and avoid being caught in a situation where one wrong judgment leads to losses.

All data and opinions are merely tools used to help participants understand their current position, and they cannot be used as instructions for any specific buying or selling actions.