After reaching a historical high of US$123,000 in July 2025, the price of Bitcoin has recently fallen back to around US$66,500, a period of nearly half of the decline, once again triggering heated discussions in the market about its true investment value and asset attributes. It is worth noting that this round of adjustment is not an "isolated attack" by Bitcoin: the Nasdaq Composite Index weakened during the same period, and the price of gold also fell from its high level, showing that investors are re-evaluating risky assets as a whole, rather than simply responding to individual cryptocurrencies.
Daniel Sotiroff, associate director of ETF and passive investment strategy research at Morningstar, said in an interview with CNBC that he does not believe that this drop means that Bitcoin has fundamentally changed at a structural level, but more like "the usual volatility of crypto assets is happening again." This point of view points to the core of the problem: violent fluctuations have almost become an "inherent characteristic" of this asset class, and the obvious correction after each round of surges will force holders to answer the same question again - "Why should I hold Bitcoin?"
Some investors have made huge profits from the previous rise and have chosen to settle for safety at the current price; other investors are worried that the high interest rate environment may last longer, thus putting greater pressure on high-risk, highly speculative assets including Bitcoin. At the same time, funds are also shifting from traditional crypto assets such as Bitcoin to artificial intelligence and other high-growth topics that have received the most attention in recent years. This is not only the result of the "rotation" of funds, but also reflects the market's reordering of future technology trends.
The positioning of Bitcoin in investment portfolios has therefore once again been brought to the table for repeated review. Supporters have long emphasized that Bitcoin has a low correlation with traditional assets such as stocks and bonds and can theoretically play a "risk diversification" role. Sotiroff also said that the most convincing argument he heard was that Bitcoin is regarded as a "diversification tool." This argument is not difficult to understand intuitively: if its price movement is significantly different from traditional assets, it can theoretically be somewhat hedged against drawdowns when other assets come under pressure.
However, judging from historical data, Bitcoin does not always function as a "cushion cushion" during market fluctuations. During multiple periods of sharp contraction in global risk appetite, Bitcoin has tended to fall in tandem with risk assets such as tech stocks rather than in the opposite direction, making the "stable diversifier" argument less tenable. As for the argument that Bitcoin is regarded as a "reliable store of value" or an "inflation hedging tool", it is more controversial in the eyes of professional institutions. Sotiroff pointed out that compared with Bitcoin, which has large and frequent price fluctuations, mature instruments such as Treasury Inflation-Protected Securities (TIPS) are more interpretable and operable in hedging inflation.
The recent violent fluctuations have also forced investors to re-examine their expectations and assumptions. Sotiroff admitted that it is difficult to make a responsible judgment on the price direction of Bitcoin. This uncertainty itself is a direct reflection of its risk attributes. This "unpredictability" has also become an important basis for financial advisors to generally recommend lowering the allocation ratio.
In the practice of asset allocation, most financial planners tend to classify Bitcoin as a "limited allocation" rather than a "core position." Andrew Herzog, a certified financial planner at financial advisory firm The Watchman Group, recommends controlling Bitcoin allocation to 1% to 5% of the overall investment portfolio to retain potential upside while avoiding excessive impact on overall net asset value due to its fluctuations. This recommended range is basically consistent with the general view in the industry: Even though the launch of spot Bitcoin ETFs from 2024 has lowered the entry threshold for individual investors, the high volatility of Bitcoin itself has not converged. Instead, it has emphasized the importance of maintaining discipline and restraint in asset allocation.
Sotiroff further pointed out that when the allocation ratio exceeds the low single-digit range, the overall volatility of the portfolio will increase significantly. For some investors, this kind of ups and downs is precisely the attraction - they value long-term potential gains more and have a higher tolerance for short-term losses. But this also draws a dividing line between two types of holders: one type is long-term holders who have a clear strategy in advance and are willing to endure cyclical retracements; the other type is momentum investors who enter the market "chasing the rise" during price increases.
Matt Chancey, a certified financial planner at Tax Alpha Companies, bluntly said that a sharp correction can often clearly expose who are the real planned investors and who are just speculators who follow the trend. If the only reason to buy Bitcoin is "because it's going up," once the rise stops, the investment logic is no longer valid, and the original argument is never solid.
Doubts have never gone away about Bitcoin’s suitability as an investment asset. Unlike stocks, bonds or real estate, Bitcoin itself does not generate cash flows or dividends, which makes traditional valuation methods difficult to apply and makes many academics and professionals prefer to regard it as a purely speculative target. Creighton University finance professor Robert Johnson said that strictly speaking, people cannot "invest" in Bitcoin and can only "speculate" on its price.
Even analysts who are open to cryptoassets generally acknowledge that Bitcoin has natural limitations in terms of valuation. A metaphor Sotiroff cited is quite vivid: Bitcoin is more like a "collectible" whose value is largely determined by what the next buyer is willing to pay. This analogy highlights the difference between Bitcoin and traditional productive assets, and also explains why its price can rise sharply or have a deep correction in a relatively short period of time when emotions are strongly driven.
At the current stage, Bitcoin is still trapped between multiple narratives: some holders see it as a "digital asset" that can be allocated for the long term, while other participants see it as a highly volatile short-term trading tool, in which market sentiment plays a huge role. As emerging technology topics such as artificial intelligence continue to attract funding and attention, how capital is reordered among these different tracks is bound to continue to affect Bitcoin's marginal role. But what is certain is that even if Bitcoin’s positioning and uses are still evolving, its high volatility characteristics are unlikely to disappear in the foreseeable future, which also means that the debate surrounding its value will continue to heat up in the future.