Many people focus on the ups and downs of Bitcoin, only paying attention to short-term fluctuations. The drop of 22.8% in Q4 and the rebound after the holiday may seem like random market movements, but in fact, there are deeper underlying reasons at play.

Let's start with the first core logic: supply and demand. This is the fundamental factor for any commodity price. Bitcoin is no exception—when demand exceeds supply, the price rises; when demand falls, the price drops. The supply of Bitcoin is fixed, halving every 4 years, so the real variable is demand. The previous rally was driven by a large influx of capital and strong demand. Now, the decline is ultimately due to a slowdown in demand growth and a relatively oversupplied market. There may be a short-term rebound after the holiday, but this does not change the overall trend of supply and demand reversal.

The second logic is called capital pursuit of profits. Money always flows toward higher yields. This year, gold has increased by 69%, while Bitcoin has actually lost 5%. Such a large gap in returns will definitely cause capital to shift from Bitcoin to gold. Plus, with the current global economic situation being somewhat unstable, investors are more willing to bet on traditional safe-haven assets. Gold, as a centuries-old safe-haven tool, naturally becomes the first choice.

Combining these two logics explains why such market performance occurs.