Seeing friends complain in the group, "Bitcoin has been a waste all year, and returns are even worse than Yu'e Bao," I understand that kind of disappointment. To be honest, Bitcoin's performance this year has indeed been a bit tough—dropping from a high of $126,000 in early October to below $94,000, with the annual increase basically flat. Compared to Yu'e Bao's stable yield of less than 1.3%, it feels even more painful.

But complaints aside, the underlying logic deserves a calm analysis.

**Liquidity is the real culprit**

This year's most awkward aspect of Bitcoin is that it has fallen along with gold. According to traditional understanding, the two should move inversely, but in 2025 they are both trending downward. This is no coincidence; it signals tightening dollar liquidity. The Federal Reserve's rate cut expectations keep changing, institutions are continuously withdrawing funds from Bitcoin ETFs, and even the market response to Trump's policy benefits is gradually stabilizing, with insufficient new positive catalysts.

Essentially, Bitcoin now resembles a "risk asset" rather than a "hedging tool." The data shows: the correlation between the S&P 500 index and Bitcoin has risen from 0.29 in 2024 to 0.52. What does this mean? It indicates that when liquidity is tight, institutions sell off various assets to raise cash, and Bitcoin is no exception.

**Why even the most conservative options can't outperform**

Yu'e Bao's returns are pitifully low, but at least they are positive. Bitcoin? At the beginning of the year, it was $95,000; by year's end, it’s still hovering there. The huge fluctuations in between haven't translated into actual gains. The core issue isn't the currency itself but the overall market environment. Leverage liquidations have increased volatility—on just one day in October, over $19 billion in positions were liquidated. Funds flow in and out, and retail investors caught in the middle are only getting harvested.