After experiencing a round of intense market volatility, the crypto market is falling into a downturn. Market funds continue to flow out, on-chain activities are sluggish, and internal trading is severe. After facing a narrative bottleneck, the industry is now experiencing a project elimination and structural reconstruction period. Behind this deep-seated change, it may also be a turning point for traditional financial order to quietly reconstruct Web3.
Liquidity Depletion and Narrative Fog
The current crypto market presents a contrasting landscape. On one hand, BTC, as the market's cornerstone, continues to attract funds, with institutional holdings steadily rising under the push of spot ETFs, gradually aligning with traditional finance and showing certain resilience. On the other hand, overall on-chain activity has not kept pace with this market trend, and the bubble is accelerating its burst.
This round of rise looks more like a structural market movement, where the market is rising, but liquidity has not spread, with funds repeatedly gaming between local assets, causing severe internal "trading" phenomena. After many VC star project airdrops are cashed out, the real retention rate is extremely low, with users mostly engaged in Airdrop Hunting, and altcoins almost completely collapsing, with a desolate secondary market.
As a narrative-driven market, Web3 has gone through stories from DeFi to Non-Fungible Token gamefi, and then to ZK, reStaking, modularization, AI, and other concepts. However, now the lifecycle of new concepts is becoming increasingly short-lived, with increasingly weak landing logic, and users are beginning to doubt everything.
When most projects lose users, funds, and product closed loops, the market begins to move towards liquidation and elimination. Funds are increasingly concentrating on top projects like Bitcoin, and the market is no longer paying for narratives, increasingly valuing actual value.
Structural Transformation from Freedom to Order
The early days of Web3 were a carnival for retail investors, with various hotspots constantly emerging under grand narratives, and FOMO emotions driving numerous projects' dramatic rises and falls. Now, market discourse is shifting towards institutions. Financial giants are accelerating their layout, with compliance becoming a hot pursuit for mainstream funds. Circle and Visa are testing USDC settlement in global payment networks, Coinbase is promoting stock on-chain through Base, and asset management giants like BlackRock and Franklin are launching RWA products, attempting to map real-world assets onto the chain.
These actions indicate that institutional funds value predictable returns, compliance frameworks, and low volatility more than decentralization and high-risk gambling. The retail investor-dominated gambling market is being replaced by an institutionalized asset allocation market, evolving from projects blooming everywhere to narratives converging with regulatory oversight.
Dual Tracks, Coexistence of Ideals and Reality
In this transformation, the crypto industry is showing a clear trend of dualization. On one side is the familiar "wild stream" - the Web3 native faction pursuing decentralization, technological freedom, and privacy protection; on the other side is the increasingly formed "regulated stream" pursuing compliance, credibility, and a regulated institutional system.
Web3 is no longer a single utopia, and the split into two parallel worlds does not represent traditional finance "devouring" Web3, but rather Web3's proactive embrace of reality, the beginning of large-scale application. The two complement each other, coexisting long-term and gradually differentiating in clearly defined spaces: the former is a technical experimental field for the decentralized world, continuing to fight for privacy and freedom; the latter is the compliant version of on-chain financial infrastructure, fighting for Web3's mainstream seats and resources. They will realize their respective values in different scenarios.
Asset On-Chain, RWA Narrative Rises
The crypto industry stands at a critical turning point. Liquidity depletion and narrative vacuum expose the limitations of speculative models, while the collapse of altcoins highlights the necessity of sustainable models. The only widely applied digital dollar in the industry, namely USDT and USDC that map and tokenize dollars onto the chain, has become a compliant and highly profitable business, driving the tokenization of real-world assets (RWA) to become the most promising narrative.
Current crypto assets are generally poor, but traditional markets are unimaginable. Tokenized stocks, bonds, commodities, and other high-quality assets can form a complementary relationship with the crypto market. Through blockchain networks, reaching the world, trading spot and derivatives without permission, and seamlessly integrating with DeFi plays, it possesses enormous imagination and practical needs.
On-chain finance is no longer limited to virtual asset circulation but extends to the issuance, settlement, and trading of broad assets. The scenario of "stablecoin payment + on-chain RWA + large-scale user onboarding" is a familiar logic and structure for compliant funds; for Web3 on-chain protocols, it is a path choice to connect with the real world. Such demand-driven structural narratives can bring more lasting and deeper market evolution, potentially carrying assets worth tens of trillions of dollars and injecting vitality beyond bull and bear cycles.
However, currently bridging traditional and crypto finance still faces many obstacles, with small market size and certain barriers to user participation. According to rwa.xyz data, the current total on-chain RWA asset value is about $21 billion (excluding stablecoins), mainly containing private credit, US Treasury bonds, commodities, stocks, etc., with Ethereum chain assets accounting for over half, followed by Zksync, Stellar, with less than 100,000 total holding addresses for RWA assets.
Despite RWA's broad prospects, truly achieving deep integration between crypto and traditional finance will take time. In this context, 4E exchange's one-stop financial asset trading service can bridge the current gap between traditional finance and Web3.
As a pioneer in global financial markets and global partner of the Argentine national team, 4E not only supports mainstream crypto asset trading but also is the first to introduce traditional high-quality assets like stocks, indices, gold, and foreign exchange to the platform. Users can manage both cryptocurrencies and traditional high-quality assets through one account, enjoying a seamless investment experience enabled by blockchain characteristics.
