Author: Aylo; Compiled by: Bai Hua Blockchain
First of all, this round of the cycle is indeed very difficult, don't let anyone fool you into thinking it's not difficult. But the reality is that each round of the cycle is more difficult than the last. The number of market participants is increasing, the competition is becoming more and more fierce, the old players are more sophisticated, and naturally, more people will fail in the end.
If you didn't go all-in on BTC or SOL during the bear market, you most likely didn't make any money, and you may even be going crazy. If I wasn't priced in SOL, I imagine I would have had a very difficult time as well.
Yes, there are some individual big winners in this round, but I dare bet that if you went all-in and gambled on these assets, you will most likely end up giving back a portion or even a majority of your gains. After all, most people won't stop after a big win, they always feel that "the cycle hasn't ended yet" and want to try again, and end up giving back the money they made.
The principle of "playing stupid games, winning stupid prizes" always applies, it's just that for traders and gamblers, the process is sometimes prolonged.
So why is this round of the cycle so difficult?
01 Post-Traumatic Stress Disorder (PTSD)
In the past two major Altcoin cycles, most cryptocurrencies experienced 90-95% crashes. The collapse of Luna and FTX has further exacerbated the chain reaction in the industry, causing the market to plummet even more than expected. A large number of heavyweight players were liquidated, and crypto lending platforms have not yet recovered.
This "post-traumatic stress disorder (PTSD)" has deeply affected crypto-native users. In this cycle, the trading pattern of the Altcoin market largely reflects a mainstream view - "all projects are scams". In the past two 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 no longer believe in the long-term prospects of the crypto industry. Instead, the view that "everything is a scam" has become a mainstream cognition.
No one dares to hold any assets for the long term, because they don't want to experience the pain of another asset halving or even zeroing out. This has led to an extreme "mowing the lawn cycle" (Max Jeet Cycle) - everyone wants to get ahead and use others as the bag holders.
Social media (crypto tweets on X) has also exacerbated this emotional trading, with market participants searching for the cycle top every day, leading to more volatile market sentiment. 
This psychological impact is not only reflected in trading behavior, but also affects the construction of the entire ecosystem and investment methods. Nowadays, projects face stricter scrutiny, and the trust threshold has risen significantly. This has a dual impact: on the one hand, it helps to filter out obvious scams; on the other hand, it makes it more difficult for truly valuable projects to gain attention and development opportunities.
02 Innovation
Current innovation is more iterative, with the infrastructure constantly being optimized, but without the disruptive 0→1 breakthroughs like the birth of DeFi, and there is also a lack of major breakthroughs that make people sit up and take notice. This makes the narrative that "the crypto industry has made no substantial progress" more resonant, and also gives rise to more narratives like "the crypto industry has achieved nothing".
The entire innovation landscape has shifted from revolutionary breakthroughs to gradual improvements. Although this is in line with the natural laws of technological development, for a market that relies on narrative-driven, this change poses new challenges.
In addition, we still lack a truly "killer application" - breakthrough products that can push the on-chain user scale to hundreds of millions have not yet emerged.
03 Regulation
The previously overbearing SEC has caused huge chaos in the industry, seriously hindering development. Especially for DeFi, which could have attracted a wider user base and found product-market fit (PMF), it was directly strangled and unable to grow further. In addition, the SEC also forcibly prevented all governance Tokens from transferring value to holders, ultimately shaping the market narrative that "these Tokens are worthless", and to some extent, this has indeed become a reality.
The SEC not only drove away a large number of developers (such as Andre Cronje publicly stating that the SEC's suppression has made him completely withdraw from the industry), but also blocked the integration of traditional finance (TradFi) and the crypto industry, ultimately forcing the entire industry to rely on venture capital (VC) financing. This directly led to an imbalance in the supply and demand structure, distortion of the price discovery mechanism, and the market value being firmly controlled by a few institutions.
However, the market is now seeing some positive changes. With more and more projects appearing in the form of public sales, the crypto industry is gradually breaking free of the shackles imposed by the SEC.
Excerpt from Cronje's account of his negotiations with the SEC
Translation: The letters kept coming, each with a new angle of attack. Initially, they launched an "investigation" against me in the name of fundraising and SEC violations, which left me very puzzled - after all, I am neither a US citizen nor a US resident, and I have not sold anything to US citizens or residents.
I spent weeks, even months, trying to gather information and answer their questions (many of which were data they demanded that I could not possibly have). This torment consumed a great deal of my time, energy, and resources. At this stage, I was almost forced to completely stop development and R&D, and focus all my attention on this legal and regulatory battle.
04 Financial Nihilism
The above factors have collectively driven the prevalence of "financial nihilism" in this cycle. The essence of financial nihilism is losing faith in the market, but having to play anyway. Since everything is seen through, then speculate to the end, earn whatever can be earned, even if it's gambling on Memecoins, it's better than holding foolishly.
The narrative of "useless governance Tokens", combined with the high FDV and low float pattern caused by the SEC, has led many crypto-native users to completely abandon the illusion of long-term holding, and turn to Memecoins in search of more "fair" opportunities.
Furthermore, in the real world, young people who want to achieve social mobility can almost only rely on gambling-style investments. Asset prices are soaring, while wages are being far outpaced by the endless devaluation of fiat currency, making Memecoins, the "crypto version of lottery tickets", particularly attractive. The core value of the lottery has never been the odds, but the hope it carries, which is why it has always been so alluring.
Due to the natural market fit of gambling culture in the crypto market, and the related technologies (such as Solana and Pump.fun) are becoming more and more mature, the issuance of new Tokens is experiencing an explosive growth. Essentially, the core logic of all this is only one - there are a large number of users in the market who are eager for extreme speculation, and demand determines the market.
The crypto market has always had the saying of "fighting on the front lines", but in this cycle, this concept has been widely recognized.
This nihilistic investment mentality is reflected in multiple aspects:
· The rise and mainstreaming of the "All In" speculative culture
· Further shortening of investment cycles
· Trading behavior is more inclined towards short-term speculation rather than long-term investment
· The prevalence of extreme leverage and high-risk operations
· An "I don't care" attitude towards fundamental analysis
05 Past cycle experience has become an obstacle
The past few cycles have taught investors that as long as they buy some Altcoins during the bear market, they can ultimately achieve returns that outperform BTC.
Almost no one is a born excellent trader, so in the past cycles, the safest strategy for most people was to hold - even the most dilapidated Altcoins would eventually have a wave of rise.
But this cycle is completely a trader's market, more favorable to the sellers rather than the long-term holders. Traders even got the biggest windfall opportunity of this cycle through HYPE airdrops.
The market narratives in this cycle are generally short-lived and lack sufficiently compelling themes. Market participants are more mature than before, adept at extracting value more efficiently, so the local bubbles of Altcoins have not been blown to extremes as in the past.
Taking the first round of hype around AI agents as an example - this may be the first time the market truly felt "this is the new narrative we've been waiting for". However, it is still in the very early stage, and the long-term winners may not have truly emerged yet.
06 BTC Welcomes New Buyers, While Altcoins Mostly Don't
The divergence between Bitcoin and other crypto assets has never been as pronounced as it is now.
BTC has successfully attracted traditional finance (TradFi) buyers, gaining a strong, sustained source of passive demand for the first time. Even some central banks have started discussing including BTC on their balance sheets.
In comparison, Altcoins are more difficult to compete with BTC than ever before. This is understandable - BTC has a clear growth target in front of it, which is to challenge the market value of gold, while Altcoins do not have a similar grand narrative.
Altcoins have almost no new buyers. Although some retail investors re-entered the market after BTC hit a new high (but they bought XRP), overall, the inflow of new retail capital is still limited, and the crypto industry's reputation problem still exists.
07 The Changing Role of ETH
The decline in BTC's market share is mainly due to the growth in ETH's market capitalization.
In past cycles, the rise of ETH was usually seen as a signal for the start of the "Altcoin season", but this empirical rule did not work in this cycle. The fundamental reason is that ETH's performance has been poor and has been dragged down by fundamental factors.
Many traders and investors are puzzled because ETH is no longer the trigger point for the market to take on more risk, instead, it has become the sign of the end of many mini alt-seasons, which is completely different from the past market rhythm.
Although there have been many narratives and tracks that have launched and operated independently without ETH, many traders still believe that ETH needs to rise to trigger a true Alt season.
Of course, there are more reasons for the market changes, but these are the key points I first thought of while sipping coffee and clearing my mind.
So, what to do next? Either work harder or smarter.
I still believe that in the long run, fundamentals will ultimately determine everything. But the premise is that you must truly understand the projects you support and how they can actually outperform BTC. There are indeed some potential candidates in the current market, but the number is still small. You can look for projects with the following characteristics:
· Clear profit model
· True product-market fit (PMF)
· Sustainable Token economic model
· Strong fundamental support with compelling narratives (AI and RWA seem to be two areas that currently meet this standard)
I believe that as the US regulatory environment changes, projects with strong fundamentals and PMF can ultimately transmit value to Tokens, and these will be relatively more stable investment choices. And protocols that can generate stable income are now in a good development cycle, in contrast to the "greater fool theory" dominated Token model in the past.
If your strategy is to "wait for retail to enter and then dump", you may get stuck. The market has evolved, no longer solely relying on retail to drive the cycle, and more sophisticated capital often pre-positions and rushes ahead of these obvious strategies.
Possible strategic directions:
1) Become a better trader
Try to establish trading advantages, focus on short-term trading, as the current market still has many stable short-term opportunities.
On-chain trading has higher returns, but also greater volatility, not suitable for those with poor risk tolerance.
2) The "barbell portfolio" still applies (for most people without clear trading advantages)
Allocate 70-80% of capital to BTC & SOL, and set aside 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're just an ordinary person with a job and can't sit in the market 16 hours a day like young traders, you can't compete with them.
But passively holding poorly performing Altcoins and waiting for the market to turn to you won't be an effective strategy either.
4) Explore diversified strategies (combining different fields to improve win rate)
Core investment portfolio (BTC & SOL) + low-risk arbitrage strategies (such as airdrop mining, although the difficulty has increased, there are still opportunities).
Pre-position in new ecosystems, occupy positions in immature ecosystems, such as HyperLiquid, Movement, Berachain, etc.
Deeply cultivate a certain niche, become an expert in that track.
08 The Altcoin Market Still Has Room for Growth, But Competition Is More Intense
I still believe that the Altcoin market will have growth space by 2025, and the overall market environment will still be affected by the global liquidity cycle. But the ones that can significantly outperform BTC & SOL may only be a few tracks and a few projects. And the rhythm of Altcoin rotation will be faster, meaning investors need to be more agile in adjusting their positions.
If the market really welcomes a 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 it not happening. Even if it does happen, the gains of most Altcoins will only be at the market average level, not across the board as in the past.
There will still be a large number of Altcoin projects launching this year, and market liquidity will continue to be diluted and dispersed, which needs to be paid special attention to.
09 Summary: A Glimmer of Hope
I've never seen a person who has seriously studied the crypto market for several years and not made money in the end.
There are still many opportunities in the market, and the growth of this field is still worth looking forward to. After all, I don't know any more than others, I'm just constantly adjusting myself based on the reality of this cycle.
One thing is clear - we're long past the early stages of the bull market. Whether you've made money or not, the bull market has been going on for a long time, and this fact won't change.
"Control the downside risk, and the upside will naturally come." This saying is always applicable.
