Isn't the Bitcoin market feeling a bit strange these days? The policy environment is favorable, and spot ETFs have been launched, yet it has dropped about 23% over the past year. Meanwhile, gold has hit an all-time high, and silver has reached multi-year highs. If you feel something is off, that's normal.

At a conference in Miami Beach, Adam Back offered an interesting perspective. As one of the early cypherpunks mentioned in the Bitcoin white paper, he said that this kind of volatility is actually nothing new. Bitcoin was always known for its high volatility. And based on the past four-year cycle, he analyzes that this current point aligns with a downward price cycle.

What’s interesting is that some market participants may be trading more based on historical patterns than on fundamentals. Despite the positive news, investors tend to follow the historical pattern that "prices usually fall during this period." It’s a kind of self-fulfilling prophecy.

Adam Back emphasized that institutional investor participation is still in its early stages. This means that large-scale institutional capital has not fully entered the market yet. ETF holders are more "sticky" investors compared to retail traders. Retail investors tend to invest all their capital during a bull run but lack the capacity to do so during a downturn, whereas institutional investors can rebalance their entire portfolios.

His core argument is this: volatility is not a contradiction to Bitcoin’s white paper but a characteristic of its early adoption phase. Just as early Amazon stocks experienced significant price fluctuations due to market uncertainty, rapid adoption curves inherently involve volatility. As more institutions, companies, and countries get exposed over time and adoption matures, volatility is expected to decrease.

Interestingly, Adam Back compares Bitcoin’s long-term potential to the market capitalization of gold. Currently, Bitcoin is about 10 to 15 times smaller than gold. If it continues to establish itself as a store of value, there is room for further growth. Despite short-term volatility, Bitcoin has recorded the highest average annual returns among all traditional asset classes over the past decade.

Ultimately, the current market turmoil may be a transitional phase before institutional capital fully enters. As policies become more favorable and regulations clearer, more institutions will come in, gradually reducing volatility. From Adam Back’s perspective, the current decline is a natural movement along the long-term adoption curve.