Speculative appetite is vanishing from the crypto markets, as investors are looking for safer digital asset investments following the recent wave of memecoin scams and macroeconomic uncertainty.

Bitcoin’s hot supply metric, which measures the Bitcoin (BTC) aged one week or less, is down over 50%, from 5.9% at the end of November to just 2.3% on March 20, Glassnode data shows.

The metric’s decline signals an investor shift to safer investment positioning amid the recent market volatility, according to Ryan Lee, chief analyst at Bitget Research.

Bitcoin hot supply metric. Source: Glassnode 

Global trade tensions and fluctuating market dynamics are making investors reconsider their strategies, the analyst told Cointelegraph, adding:

“During uncertain times, investors are not only seeking security but are also focused on rational decision-making. In many instances, that rational choice is represented by Bitcoin.”

“This trend isn’t solely rooted in fear, it also reflects a more pragmatic approach to investing,” explained Lee.

Related: Bitcoin experiencing ‘shakeout,’ not end of 4-year cycle: Analysts

The stablecoin supply ratio (SSR), which measures the ratio between Bitcoin and stablecoin supply, also suggests that investors are still hesitant to take on significant new positions.

BTC SSR ratio, 1-year chart. Source: Glassnode

The SSR ratio stood at an over four-month low of 8, last seen at the beginning of November 2024, when Bitcoin was trading at $67,000, just before the post-election rally took BTC to a new all-time high of $109,000.

Historically, SSR values below 10 are considered low, indicating that there is relatively low stablecoin buying power among investors, compared to Bitcoin’s market cap.

The cautious crypto investor positioning aligns with the sentiment among traditional market participants, according to Enmanuel Cardozo, market analyst at Brickken real-world asset (RWA) tokenization platform.

The market analyst told Cointelegraph:

“US stock market trends often set the tone for risk-on assets like crypto, and right now, although the macro picture is still uncertain, these corrections are normal and just highlight where the real value lies as the market continues to mature and educate itself.”

Asset performance post-Trump administration takeover. Source: Thomas Fahrer

Despite the growing investor caution, Bitcoin outperformed all major global assets since US President Donald Trump’s election, including the stock market, equities, US treasuries, real estate and precious metals.

Related: Whale closes $516M 40x Bitcoin short, pockets $9.4M profit in 8 days

Speculative appetite is “fading” among crypto investors

The cooldown in Bitcoin’s hot supply metric shows faltering speculative appetite, according to technical analyst Kyledoops, who wrote in a March 21 X post:

“Speculative appetite is fading, and the market is cooling off.”

“This means fewer fresh coins in circulation, reduced liquidity, and lower market participation,” added the analyst.

Despite the current lack of risk appetite, analysts remain optimistic on Bitcoin’s price trajectory for the rest of 2025, with price predictions ranging from $160,000 to above $180,000.

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Real-world asset (RWA) re-staking protocol Zoth suffered an exploit leading to over $8.4 million in losses, leading the platform to put its site on maintenance mode. 

On March 21, blockchain security firm Cyvers flagged a suspicious Zoth transaction. The security firm said that the protocol’s deployer wallet was compromised and that the attacker withdrew over $8.4 million in crypto assets. 

The blockchain security firm said that within minutes, the stolen assets were converted into the DAI stablecoin and were transferred to a different address. 

Cyvers added the protocol’s website had been maintained in response to the incident. In a security notice, the platform confirmed that it had a security breach. The protocol said it’s working to resolve the problem as soon as possible. 

The Zoth team said it worked with its partners to “mitigate the impact” and fully resolve the situation. The platform promised to publish a detailed report once its investigation is completed. 

Since the hack, the attackers have moved the funds and swapped the assets into Ether (ETH), according to PeckShield. 

Hacker moves stolen funds. Source: Peckshield

Related: SMS scammers posing as Binance have an even trickier way to fool victims

Hack likely caused by admin privilege leak

In a statement, the Cyvers team said the incident highlights vulnerabilities in smart contract protocols and the need for better security. 

Cyvers Alerts senior SOC lead Hakan Unal told Cointelegraph that a leak in admin privileges likely caused the hack. Unal said that about 30 minutes before the hack was detected, a Zoth contract was upgraded to a malicious version deployed by a suspicious address. 

“Unlike typical exploits, this method bypassed security mechanisms and gave full control over user funds instantly,” the security professional said. 

The security professional told Cointelegraph that this type of attack could be prevented by implementing multisig contract upgrades to prevent single-point failures, adding timelocks on upgrades to allow monitoring and placing real-time alerts for admin role changes. Unal added that better key management is also advised to prevent unauthorized access. 

While the attack could be prevented, Unal believes that this type of attack may continue to be a problem in decentralized finance (DeFi). The security professional told Cointelegraph that admin key compromises remain a “major risk” in the DeFi ecosystem. 

“Without decentralized upgrade mechanisms, attackers will continue targeting privileged roles to take over protocols,” Unal added. 

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A Bitcoin layer-2 executive explained how Bitcoin narratives that were “overhyped” have now wholly vanished while the ecosystem develops. 

In a Cointelegraph interview, Bitlayer co-founder Charlie Hu laid out three Bitcoin narratives that he believed were overhyped. This included narratives that surrounded Ordinals, layer-2s and re-staking. 

According to Hu, one of the overhyped narratives in Bitcoin was non-fungible tokens (NFTs). The executive told Cointelegraph that while inscriptions may have gone “to the moon,” Hu said the era is “completely gone.” 

CryptoSlam data shows that in the first quarter of 2024, Bitcoin NFTs had a volume of $1.4 billion. In 2025 Q1, the volume is only at $280 million, showing an 80% drop. The executive believes that the 1,000x days of Bitcoin NFTs may be over and that people can’t expect similar “crazy” price performances anymore.

Are Bitcoin layer-2s running out of steam? 

Apart from Bitcoin NFTs, Hu told Cointelegraph that the hype around Bitcoin layer-2 and Bitcoin re-staking has also declined among venture capitalists. 

Hu told Cointelegraph that at least 80 layer-2 networks aimed to get funded at the beginning of 2024 when the layer-2 narrative was strong. The executive said many projects pitched their ideas to investors, the media and different communities. Hu said that while there was some hype, this was “definitely over.” 

Many other crypto executives and entrepreneurs resonate with Hu’s point of view about the dying hype around layer-2 ecosystems. On Feb. 20, Stacks co-founder Muneeb Ali said the “honeymoon phase” for Bitcoin layer-2s is over. The executive said that most projects will cease to exist as their initial excitement fades.

Meanwhile, Hu also told Cointelegraph that a third “overhyped” narrative was Bitcoin re-staking. Hu told Cointelegraph that at the moment, there are only 2 to 3 projects still surviving after the peak of the narrative’s hype phase in 2024. 

While some hyped narratives started to fade, Hu believes there are many things to look forward to in the growing Bitcoin ecosystem. The executive said that while layer-2s are a great narrative, they see it more as an engine that powers Bitcoin’s decentralized finance (DeFi) ecosystem, which could allow holders to explore yield opportunities. Hu told Cointelegraph: 

“Bitcoin layer-2s are providing architecture as a programmable, trust-minimized kind of infrastructure that could provide yield for the Bitcoin whale holders or institutions. That’s a very important narrative. I think we’ll expand more and more with the use cases with adoption.”

Related: Bitcoin volatility hits 3.6% amid heightened market uncertainty

Bitcoin DeFi is yet to take off

Meanwhile, Dominik Harz, the co-founder of hybrid layer-2 Build on Bitcoin (BOB), told Cointelegraph that Bitcoin layer-2s should be seen as a long-term play. 

“Looking at Bitcoin Layer-2s through a short-term lens misses the point. Hype cycles come and go, but lasting developments in crypto, like Bitcoin itself, are inherently long-term plays,” Harz said. 

The executive also believes that Bitcoin DeFi has not yet reached its full potential. “Bitcoin DeFi hasn’t even really taken off yet. We’re very early. Only 0.3% of Bitcoin’s market cap is active in DeFi right now compared to 30% for Ethereum,” Harz told Cointelegraph. 

Harz pointed out this was a 100x discrepancy, saying it would decrease rapidly as Bitcoin DeFi explodes. The executive also said layer-2s are necessary technological advancements for Bitcoin DeFi to hit the market. 

Max Sanchez, the chief technology officer of layer-2 protocol Hemi Labs, also believes that Bitcoin layer-2s are not losing steam. 

The executive told Cointelegraph that the space is entering a maturation phase where fundamentals matter. Sanchez said that many early projects in the Bitcoin layer-2 space brought technology from Ethereum without adapting it to Bitcoin’s unique architecture “in a way that truly extends Bitcoin.”

Sanchez, who works on a hybrid project connecting to Ethereum, also said that building a layer-2 in just one silo and forgoing interoperability with Ethereum-based protocols is a “false notion.” 

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