【One sentence: The issue with Bitcoin is not whether it will rise, but what it relies on to exist long-term.】

Will cryptocurrencies inevitably collapse? An internal industry insider’s final scenario analysis

The original author is an industry insider with long-term experience in mining and exchange operations. In April 2026, they published a lengthy article, starting from capital flows and system structure, providing a systematic projection of the long-term sustainability of cryptocurrencies. The article argues that the collapse of cryptocurrencies from a trillion-dollar market cap to their true value bottom is inevitable. The overall conclusion is somewhat pessimistic, and the timing judgment is relatively aggressive.

Since the original text has been deleted, this article no longer cites the author’s name, only structurally organizes and analyzes their core logic.

It’s important to emphasize that this is not an emotional “bearish” view, but an analytical framework attempting to answer more fundamental questions:

In the absence of external cash flows, can a high-consumption system sustain a trillion-dollar scale long-term?

1. The Bitcoin positioning problem: Asset or consensus carrier?

The article first defines Bitcoin as a “de-narrativized” concept:

Bitcoin does not have productive capacity, nor has it become a mainstream payment tool; fundamentally, it is closer to a “pure consensus asset.”

Based on this judgment, the author mainly refutes the analogy of “digital gold.”

Gold’s ability to serve as a long-term value carrier depends on three basic factors:

Real demand (jewelry, industrial uses)
Monetary history (long-term sovereign credit backing)
Low maintenance costs (hardly relying on continuous input)

In contrast, Bitcoin operates on a complete external system:

Electricity network
Communication network
Miner incentive mechanisms
This introduces a key difference:

Bitcoin is not a “low-maintenance asset,” but a continuously resource-consuming operating system.

At the same time, the author points out a structural contradiction:

System security depends on transaction fees
Mainstream narrative, however, is “long-term HODLing”
There is an inherent conflict between these:

No trading → insufficient fees → security budget declines

It should also be added that:

Assets without cash flows are not necessarily problematic. In reality, many assets also do not generate cash flows, such as gold or art.

But they usually rely on the following value sources:

Use value
Monetary attributes
Scarcity consensus
The author’s core judgment is:

Bitcoin currently mainly relies on “scarcity consensus,” and this consensus is highly sensitive to capital inflows.

2. Core model: A “capital-conservation” system
The entire analysis can be summarized into a simple model:

Net capital inflow = historical consumption + current system deposits

This model’s validity presupposes:

The system does not generate endogenous cash flows similar to corporate profits or interest.

Under this premise, funds entering the system only flow to two places:

(1) Irreversible consumption
Mining electricity costs
Hardware depreciation
Exchange operation costs
Project and marketing expenses
(2) System deposits
Stablecoins
Fiat collateral
Book market value
The key point is:

There is no “third output,” i.e., self-sustaining capacity of the system.

Based on this model, the author makes two judgments:

High consumption characteristics
Industry’s annual rigid costs are about $35–50 billion

Lack of external cash flows
Unlike stock markets (which generate profits), crypto systems do not produce distributable income

From this, a core conclusion is derived:

This is a system that requires continuous capital inflows to maintain its scale.

The author compares it to a “participation cost-driven closed structure,” and points out:

Those who profit stably are often external participants (energy, chips, service providers).

3. ETFs and DAT: External “blood transfusion” mechanisms for prices
For the recent two years’ rally, the author offers a non-mainstream explanation:

The core variable driving the market isn’t technological progress, but changes in capital structure.

Mainly from two types of capital:

ETFs (Exchange-Traded Funds)
DAT (Digital Asset Treasury Companies), represented by MicroStrategy
The key judgment is:

These funds are not “sanguineous” (self-sustaining), but “transfusions.”

The reason is:

The system itself does not generate cash flow
Price increases depend on new capital
ETF/DAT are essentially external capital injection channels
More importantly, their “disconnection”:

Funds enter the price system but do not enter the usage system.

Specifically:

They do not participate in on-chain trading
They do not enter DeFi or ecological applications
They do not generate fees or real demand
This can be more directly understood as:

ETFs convert off-chain funds into price support but do not translate into on-chain economic activity.

From data (based on public market estimates):

ETF + DAT inflows are about $200 billion
Industry consumption during the same period is about $120 billion
The author’s conclusion is:

The new capital largely covers historical costs and maintains the current valuation structure.

4. Leverage structure and liquidity mismatch

Beyond capital structure, the author further analyzes system stability:

Scale mismatch
Apparent market cap: about $1.6 trillion
Underlying collateral: about $200 billion
This implies:

The system is in a high-multiplier implied leverage state.

A more precise description is:

Similar to “partial reserve + liquidity mismatch” financial structure.

Market cap is “pricing”
Liquidity is “capacity to absorb”
This introduces a key risk:

Price is extremely sensitive to liquidity

The author provides a stress-test-like projection:

If about 5% of holders try to cash out, liquidity could rapidly dry up, triggering a chain reaction.

This mechanism is essentially close to:

Traditional financial bank runs or stampedes models.

5. The endgame question: Who is the next buyer?

The core judgment can be summarized in one sentence:

Past growth depended on the continuous emergence of “the next buyers.”

The historical path roughly is:

Retail → driven by bull markets
Institutions → ETF entry
Enterprises → asset allocation
The current phase’s change is:

Marginal new buyers are decreasing

Reasons include:

Retail participation declines after multiple cycles
Institutions have completed initial allocations via ETFs
The system lacks new demand growth points
Meanwhile:

Block rewards are continuously decreasing
Cost expenditures remain rigid
From this, two possible paths are inferred:

Path one: Scale contraction
Market cap declines
Returns to real usage needs
Becomes a niche value transfer tool
Path two: Financialization maintenance
Depends on continuous capital inflows
Maintains valuation through structural tools
Continues the “asset narrative”
The dividing line between the two is:

Whether new marginal buyers can still be continuously found

6. Possible objections and unresolved issues
It should be noted that there are also alternative viewpoints in the market:

Bitcoin is evolving into a “digital reserve asset”
ETFs themselves are a new demand form
Fee issues can be alleviated by Layer 2 or structural upgrades
However, the author’s perspective compiled here does not agree with these paths, believing:

These mechanisms have not yet formed a “self-enclosed” economic system.

Conclusion: The problem is not price, but structure
The most valuable aspect of this article is not whether it is “bearish,” but that it raises a more fundamental question:

Can a system that does not generate cash flow but continuously consumes resources maintain long-term stability?

Prices can fluctuate, cycles can repeat.

But once the structural problem is established, it cannot be long-term masked by narratives.

If the entire article were compressed into one sentence, it would be:

The problem with Bitcoin is not whether it will rise, but what it relies on to exist long-term.