Author | Aylo
Share｜Blockchain in Vernacular
First of all, this cycle is indeed difficult. Don’t let anyone fool you into thinking it is not difficult. But the reality is that each cycle is more difficult than the last. The number of market participants is increasing, the competition is getting more intense, the old players are getting smarter, and naturally more people will fail in the end.
If you didn’t hold a large position in BTC or SOL during the bear market, you probably didn’t make any money at all, and you might even have gone crazy. If I didn’t use SOL for pricing, I would probably have had a hard time.
Yes, there are some individual big winners in this round, but I bet that if you bet heavily on these assets, you will probably end up giving back some or even most of your gains. After all, most people don’t stop after a big win, they always think that “the cycle is not over yet” and want to try again, but the result is that they will give back all the money they made.
“Play stupid games, get stupid prizes” This principle always applies, but for traders and gamblers, this process is sometimes prolonged.
So, why is this cycle so difficult?
01. Post-traumatic stress disorder (PTSD)
In the past two rounds of large-scale altcoin cycles, most currencies have experienced a 90-95% plunge. The collapse of Luna and FTX has exacerbated the chain reaction in the industry, and the market has fallen more sharply than expected. A large number of heavyweight players have been liquidated, and the crypto lending platform has not yet recovered.
This "post-traumatic stress disorder (PTSD)" has deeply affected crypto native users. In this cycle, the trading patterns of the altcoin market largely reflect a mainstream view - "all projects are scams". In the past two rounds of crypto market cycles, people generally believed that "this technology represents the future". But in the current cycle, this belief has been greatly weakened or even destroyed, and many people no longer believe in the long-term prospects of the crypto industry. Instead, the view that "everything is a scam" has become one of the mainstream perceptions.
No one dares to hold any assets for a long time, because they don’t want to experience the pain of having their assets cut in half or even wiped out again. This leads to an extreme “Max Jeet Cycle” - everyone wants to get ahead and treat others as the buyer.
Social media (crypto tweets on X) exacerbates this emotional trading, with market participants searching for cycle tops every day, causing market sentiment to fluctuate more violently.
This psychological impact is not only reflected in trading behavior, it also affects the construction and investment methods of the entire ecosystem. Today, projects face stricter scrutiny and the trust threshold has been greatly increased. This has a dual impact: on the one hand, it helps to screen out obvious scams; on the other hand, it makes it more difficult for truly valuable projects to gain attention and development opportunities.
02. Innovation
The current innovation is more iterative, and the infrastructure is constantly being optimized, but unlike the disruptive 0→1 breakthrough when DeFi was born, there is also a lack of major progress that makes people's eyes shine. This makes it easier for views such as "there is no substantial progress in the crypto industry" to resonate, and it also spawns more narratives such as "the crypto industry has achieved nothing."
The entire innovation landscape has shifted from revolutionary breakthroughs to incremental improvements. While this is the natural progression of any technology, it presents new challenges for a narrative-driven market.
In addition, we still lack true “killer applications” - breakthrough products that can push the scale of on-chain users to hundreds of millions have not yet appeared.
03. Supervision
The SEC’s previous overbearing behavior has caused great chaos in the industry and severely hindered development. In particular, DeFi, a track that could have attracted a wider range of users and found market fit (PMF), was strangled and failed to grow further. In addition, the SEC also forcibly prevented all governance tokens from delivering value to holders, ultimately shaping the market narrative that "these tokens are worthless", which to some extent has indeed become a reality.
The SEC not only forced a large number of developers to leave (for example, Andre Cronje publicly stated that the SEC's suppression made him completely withdraw from the industry), but also blocked the integration of traditional finance (TradFi) and the crypto industry, and ultimately forced the entire industry to rely on venture capital (VC) financing. This directly led to an imbalance in the supply and demand structure, a distorted price discovery mechanism, and market value being firmly controlled by a few institutions.
However, the market is now experiencing some positive changes. As more and more projects emerge in the form of public sales, the crypto industry is gradually breaking the shackles imposed by the SEC.
Excerpt from Cronje on his experience with the SEC
The letters kept coming, each with a new angle. Initially, they were "investigating" me for financing and SEC violations, which was very confusing - after all, I was neither a US citizen nor a US resident, and I had not sold anything to US citizens or residents.
I spent weeks and even months trying to gather information and answer their questions (many of which were requests for data that I simply didn’t have). This ordeal was a huge drain on my time, energy, and resources. At this stage, I was almost forced to stop development and R&D entirely to focus all my attention on this legal and regulatory battle.
04. Financial nihilism
All of the above factors have jointly promoted the prevalence of "financial nihilism" in this cycle. The essence of financial nihilism is to lose faith in the market, but have to play. Since you have seen through everything, then speculate to the end, and make as much money as you can, even if it is betting on Memecoin, it is better than holding on foolishly.
The “useless governance token” narrative, coupled with the high FDV and low float pattern caused by the SEC, has caused many crypto-native users to completely abandon the fantasy of long-term holding and turn to Memecoin to find more “fair” opportunities.
In addition, in the real world, young people who want to achieve class transition can only rely on gambling-style investment. Asset prices are soaring, but wages are far behind the endless depreciation of legal currency, making Memecoin, a "crypto-version of lottery", particularly attractive. The core value of lottery has never been the odds, but the hope it carries, which is why it has always attracted people.
As gambling culture has a natural fit in the crypto market, and related technologies (such as Solana and Pump.fun) are becoming more and more mature, the number of new tokens issued has seen explosive growth. In essence, there is only one core logic behind all this - there are a large number of users in the market who are eager for extreme speculation, and demand determines the market.
There has always been a saying in the crypto market that people are “on the front lines,” but in this cycle, the concept has become more widely recognized.
This nihilistic investment mentality is reflected in many aspects:
The rise of the so-and-so speculative culture and its entry into the mainstream
Investment cycle further shortened
Trading behavior is more inclined towards short-term speculation rather than long-term investment
The prevalence of extreme leverage and high-risk operations
·Have an “indifferent” attitude towards fundamental analysis
05. Experience from past cycles has become an obstacle
The past few cycles have taught investors that as long as they buy some altcoins in a bear market, they will eventually get returns that exceed BTC.
Almost no one is a naturally good trader, so in past cycles, the safest strategy for most people is to hold on - even the most depressed altcoins will eventually see a wave of increases.
But this cycle is completely a trader's market, which is more favorable to sellers than long-term holders. Traders even got the biggest profit opportunity in this cycle through HYPE airdrop.
The market narratives in this cycle are generally short-lived and lack sufficiently convincing themes. Market participants are more mature than before and are good at extracting value more efficiently, so the local bubble of altcoins has not been blown to the extreme as in the past.
Take the initial hype around the AI Agent narrative for example – this may be the first time the market has really felt “this is the new narrative we’ve been waiting for.” However, it is still very early days and the long-term winners may not have really emerged yet.
06. BTC has new buyers, while most altcoins have not
The divide between Bitcoin and other crypto assets has never been more pronounced.
BTC has successfully attracted buying from traditional finance (TradFi), gaining a strong and sustained source of passive demand for the first time. Some central banks have even begun discussing including BTC in their balance sheets.
In contrast, altcoins are having a harder time than ever competing with BTC. This is understandable - BTC has a clear growth goal ahead of it, challenging the market value of gold, while altcoins do not have a similar grand narrative.
Altcoins are seeing few new buyers. Although some retail investors reentered the market after BTC hit a new all-time high (but they bought XRP), overall new retail capital inflows remain limited and the negative reputation problem of the crypto industry remains.
07. The changing role of ETH
The decline in BTC’s market capitalization share is mainly affected by the growth of ETH’s market capitalization.
In past cycles, the rise of ETH was often seen as a signal for the start of the "altcoin season", but this rule of thumb did not work in this cycle. The fundamental reason is that ETH has been performing poorly and has been dragged down by fundamental factors.
Many traders and investors are confused because ETH is no longer a trigger that drives the market to take more risk. Instead, it has become a sign of the end of many mini alt-seasons, which is completely different from the market rhythm in the past.
While there are already a number of narratives and tracks that have been launched and run independently without ETH doing anything, many traders still firmly believe that ETH needs to rise in order to start a true Alt season.
Of course, there are many more reasons for market changes, but these are some of the key points that come to mind when I drink coffee and let my mind wander.
So what's next? Either work harder or work smarter.
I still believe that fundamentals will ultimately determine everything in the long run. But the premise is that you must truly understand the projects you support and how they can actually surpass BTC. There are indeed some potential candidates on the market, but the number is still small. You can look for projects with the following characteristics:
· Clear profit model
True Market Fit (PMF)
Sustainable Token Economic Model
Fundamentals supported by a strong narrative (currently, AI and RWA are two sectors that meet this criterion)
I think that as the regulatory environment in the United States changes, projects with strong fundamentals and PMF can eventually deliver value to tokens, which will be relatively more stable investment options. And those protocols that can generate stable income are now in a good development cycle. This is in sharp contrast to the token model dominated by the "greater fool theory" in the past.
If your strategy is to “wait for retail investors to come in and then dump the market”, you may be in trouble. The market has evolved and is no longer solely dependent on retail investors to drive cycles, and smarter money often plans ahead and preempts these obvious strategies.
Possible strategic directions:
1) Become a better trader
Try to build a trading edge and focus on short-term trading, as there are still many stable short-term opportunities in the current market.
Onchain trading has a higher return multiple, but it also has greater volatility and is not suitable for people with poor stress tolerance.
2) The “barbell portfolio” still applies (for most people who don’t have a clear trading edge)
70-80% of funds are allocated to BTC & SOL, leaving a small portion for more speculative investments.
Rebalance regularly to maintain a reasonable asset allocation.
3) Evaluate your available time and adjust your strategy
If you are just an ordinary person with a job and cannot be in the market all day, then you can't compete with the young traders who sit in the trenches and watch the market for 16 hours a day.
But passively holding underperforming altcoins and waiting for the market to take its turn will not be an effective strategy either.
4) Explore diversified strategies (combine different fields to improve the winning rate)
Core portfolio (BTC & SOL) + low-risk arbitrage strategies (such as airdrop mining, although the difficulty has increased now, there are still opportunities).
Plan out new ecosystems in advance and occupy a position in immature ecosystems, such as HyperLiquid, Movement, Berachain, etc.
Focus on a specific niche and become an expert in that field.
08. The altcoin market still has room for growth, but competition is more intense
I still believe that the altcoin market still has room for growth in 2025, and the overall market environment is still affected by the global liquidity cycle. However, only a few tracks and projects may be able to significantly outperform BTC & SOL. Moreover, the pace of altcoin rotation will be faster, which means that investors need to adjust their positions more sensitively.
If the market really ushers in crazy monetary easing, we may see a similar altcoin bull market as in the past, but I think the possibility of this happening is lower than the possibility of not happening. Even if it does happen, the increase in most altcoins is only the market average, and it will not take off as comprehensively as in the past.
There are still a large number of altcoin projects to be launched this year, and market liquidity will still be diluted and dispersed, which requires special attention.
09. Summary: A little hope
I have never met anyone who has studied the crypto market seriously for several years and failed to make money in the end.
There are still many opportunities in the market, and the growth of this field is still worth looking forward to. In the final analysis, I don’t know anything better than others, I just keep adjusting myself according to the actual situation during this cycle.
One thing is clear - we are no longer in the early stages of a bull market. Whether you have made money or not, the bull market has lasted for a long time and this fact will not change.
"Control the downside risk and the upside will follow naturally." This sentence always applies.
