First, this cycle is indeed very difficult, don't let anyone fool you into thinking it's not. But the reality is that each cycle is more difficult than the last. The number of market participants is increasing, competition is becoming more intense, veteran players are more savvy, and ultimately more people are failing.
If you didn't heavily position in BTC or SOL during the bear market, you most likely didn't make any money, and may have even gone crazy. If I wasn't priced in SOL, I imagine I would have had a very difficult time as well.
Yes, this cycle has had some individual big winners, but I dare say that if you heavily gambled on those assets, you will most likely end up giving back a portion or even the majority of your gains. After all, most people won't stop after a big win, they always feel that "the cycle isn't over yet" and want to try again, resulting in them giving back what they earned.
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 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 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 yet to recover.
This "post-traumatic stress disorder (PTSD)" has deeply impacted crypto-native users. In this cycle, the trading patterns in the Altcoin market largely reflect 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 perception.
No one dares to hold any assets long-term, because they don't want to experience the pain of their assets being halved or even wiped out again. This has led to an extreme "mowing the lawn cycle" (Max Jeet Cycle) - everyone wants to get ahead and make others the bagholder.
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 approach. 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; but on the other hand, it also makes it more difficult for truly valuable projects to gain attention and development opportunities.
02. Innovation
Current innovation is more iterative, with infrastructure constantly being optimized, but without the disruptive 0-to-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 of "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.
Furthermore, we still lack a true "killer application" - breakthrough products that can push the on-chain user base 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 further grow. Furthermore, the SEC has forcibly prevented all governance Tokens from transferring value to holders, ultimately shaping the market narrative of "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 (e.g. 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, 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. As more and more projects appear in the form of public sales, the crypto industry is gradually breaking free of the shackles imposed by the SEC.
Excerpt of Cronje's account of his negotiations with the SEC: The letters kept coming, each with a new angle of attack. Initially, they launched an "investigation" against me on the grounds of fundraising and SEC violations, which left me very puzzled - after all, I was neither a US citizen nor a US resident, and had 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 huge amount of my time, energy, and resources. At this stage, I was almost forced to completely stop development and research, 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 the loss of faith in the market, but still having to play. Since everything is seen through, then speculate to the end, 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 structure caused by the SEC, has led many crypto-native users to completely abandon the dream of long-term holding, and turn to Memecoins in search of more "fair" opportunities.
Furthermore, in the real world, young people seeking social mobility can almost only rely on gambling-style investments. Asset prices have skyrocketed, while wages have been far outpaced by the endless devaluation of fiat currency, making Memecoins, the "crypto version of lottery tickets", particularly appealing. The core value of lottery tickets has never been the odds, but the hope they carry, which is why they have always been so irresistible.
Due to the natural market fit of gambling culture in the crypto market, and the increasingly mature related technologies (such as Solana and Pump.fun), the issuance of new Tokens has seen an explosive growth. At the core, the logic is simple - there is a large number of users in the market who crave extreme speculation, and demand determines the market.
The crypto market has always had the saying of "battling on the frontlines", 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 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 uptrend.
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 has new buyers, while Altcoins mostly do not
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 begun 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 sight, which is to challenge gold's market value, 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, new retail capital inflows remain limited, and the crypto industry's negative reputation issue still exists.
07. The Changing Role of ETH
The decline in BTC's market cap share is mainly due to the growth in ETH's market cap.
In past cycles, the rise of ETH was often 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 weighed 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, but rather has become a sign of the end of many mini alt-szns, 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 playing a role, many traders still believe that ETH needs to rise to trigger a true Altcoin season.
Of course, there are more reasons for the market changes, but these are some key points that first came to my mind while sipping coffee and letting my thoughts wander.
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 profitability 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 their Tokens, and these will be relatively more stable investment choices. And protocols that can generate stable income are now in a good growth cycle, in contrast to the Token models dominated by the "greater fool theory" 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 may have higher returns, but also greater volatility, not suitable for those with poor risk tolerance.
2) "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) Assess your available time and adjust your strategy
If you're just an ordinary person with a job and can't be 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 come 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 (e.g. airdrop mining, although the difficulty has increased, there are still opportunities).
Pre-position in new ecosystems, occupy positions in immature ecosystems like HyperLiquid, Movement, Berachain, etc.
Deeply cultivate a certain niche, become an expert in that track.
08. Altcoin market still has room for growth, but competition is more intense
I still believe the Altcoin market will have growth potential by 2025, with the overall market environment still influenced by the global liquidity cycle. But only a few tracks and projects may be able to significantly outperform BTC & SOL. And the pace of Altcoin rotation will be faster, meaning investors need to be more agile in adjusting their positions.
If the market really sees a crazy monetary easing, we may see a similar Altcoin bull market as in the past, but I think the likelihood of this happening is lower than it not happening. Even if it does happen, the gains of most Altcoins will only be at the market average level, not an across-the-board takeoff like in the past.
This year, a large number of Altcoin projects are still set to be launched, and market liquidity will continue to be diluted and dispersed, which needs to be paid special attention to.
09. In Summary: A Glimmer of Hope
I've never seen a person who seriously studied the crypto market for several years and ended up not making money.
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 anyone else, 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.
