Author: Joel John
Translated by: Yangz, Techub News
Translator's Note: Against the backdrop of Trump's fluctuating tariff policies and volatile global trade situations, the cryptocurrency market is experiencing a significant cooling. The author analyzes the structural changes in the current cryptocurrency market from 16 dimensions. During this special period of interplay between macroeconomic policies and market mechanisms, the cryptocurrency industry may be on the verge of a profound value reconstruction—a brutal reshuffling that is also an inevitable path to industry maturity.
These are my overall views on the current state of the cryptocurrency market, or how I believe cryptocurrencies will develop.
1. The core of cryptocurrency is the current monetary trajectory. Blockchain's role in currency/assets is like the internet's role in information, with the consequence that speculative activities remain the industry's primary application scenario.
Although the speed and scale of speculative activities may fluctuate, the most significant achievements (and largest income sources) in this field will still come from speculation and its derivative secondary scenarios, such as lending, derivatives, and brokerage trading.
2. With Circle submitting its IPO application, the stablecoin track may be reaching its phase peak. In my view, interest rate cuts will become another domino effect in this field. Considering the dual pressures of channel moats and regulatory challenges, the next major opportunity for stablecoins may not be as hot.
Especially for founders not from Silicon Valley, the real marginal opportunity lies in region-specific fintech applications that leverage crypto payment tracks, rather than "exporting" dollars. Of course, if you can raise over $10 million from the start and establish headquarters in the US, the situation would be different.
3. The DePIN track should theoretically be hot, but considering service level agreements (SLA) and the scale required by large AI projects, true investment opportunities will concentrate on networks that can create demand-side revenue of around $100 million or more. Such networks almost (always) collaborate with private equity or hedge funds to meet short-term capital liquidity needs. So far, I haven't seen any token-based network that can scale to this extent (while maintaining reliable operations).
The good news is that networks that can expand to such a scale do exist. The bad news is that most of the revenue generated by these networks won't touch the token system.
4. Our focus on the relationship between tokens and revenue stems from two fundamental changes. First, in the "post-pump.fun" world, the valuation premium enjoyed by tokens has vanished. When asset attribution occurs, maintaining a fully diluted valuation (FDV) of over $100 million becomes extremely difficult. Second, today's stock and forex markets are as volatile as cryptocurrencies, with clearer trends, leading to a complete drought of marginal buyers in the crypto market.
The fundamental reason project teams need to worry about revenue is that for liquidity funds (the last marginal buyers), only about 50 tokens that generate revenue are worth allocating, and possibly fewer than 30 have substantial growth potential.
5. Venture capital firms have a strong motivation to insist that "tokens as a business model are not dead" and tout that "Web3 is coming". If you choose to ignore industry trends, you can continue to turn a deaf ear for a while.
In my view, we are entering a phase where fewer founders will issue tokens, holding revenues in small teams. Crypto venture capital may struggle to adapt to this transformation, as their liquidity traditionally comes from exchange listings and retail buyers. Some might attribute the reduction in crypto VC deployment to the macro environment, but the real reason is that the ability to provide portfolio returns has been significantly weakened in the years following FTX.
6. In my opinion, there are no more than 10 cryptocurrency funds capable of writing checks and building Uber/Cisco-level achievements. Among these, probably fewer than 30 partners truly understand how to achieve such success. People often believe the lack of large consumer-level applications in cryptocurrency is due to poor user experience or ineffective marketing. In my view, part of the core challenge lies in the nature of current capital being bound by a 3-year return cycle and overly obsessed with token listing liquidity. This has become the "opium" of crypto venture capital. Perhaps in this environment, there are opportunities to build scalable consumer applications with a longer-term vision.
7. The combination of cryptocurrency and AI seems popular but struggles to keep pace with AI's own development. This might be the first field that completely exposes our industry's "emperor's new clothes". Concepts like data traceability and distributed computing resource allocation are theoretically attractive but have yet to prove their scalability potential. Most networks that have achieved scale rely on distributed data centers that still settle revenues in dollars.
AI models do not show premium advantages just because they are "compensated" for data sources. What truly has potential—or is somewhat similar to the P2E model—is the crowdsourced IP address domain, which I believe is a very worthwhile sub-sector to watch.
8. There's an opportunity in the cryptocurrency field to create a native digital bank for middle to high-income groups. Imagine a platform that handles everything from wage management + fund transfers + portfolio construction (stocks/treasury bonds) to loans, all for crypto-native users. This user group consists of those earning between $5,000 and $200,000 monthly in the crypto field who want a bank to handle all these services. Although the potential market size (TAM) is between 5,000 to 10,000 people, I believe building such a platform has unique value.
9. Farcaster might revive DAOs. Many DAOs failed because people simply didn't want to participate in governance of lending or derivatives platforms. If communities on Farcaster can grow to thousands of people and these communities can coordinate resources on-chain (like community assets), DAOs will gain attention again.
I hope this becomes a way for Memecoins to return. If executed properly, such assets might be more sustainable than dog/cat coins. Farcaster's core challenge is balancing content creators' needs with platform financialization. Without financialization, it might become just another ordinary protocol; with successful financialization, it could become the prototype of the next-generation internet.
10. Current blockchain games feel lifeless, but from an investment return perspective, it's the sub-sector with the highest ROI in consumer applications. Teams still working in this field need a certain "crazy trait", and those truly capable builders will likely create a sustainable game market with millions of users. People thought this track died after 2022 (post-Axie), but if you factor in a 1-year cooling period after the frenzy and a product development cycle of over 2 years, 2025/2026 might become the breakthrough year for crypto games.
11. Long-tail Altcoins will find it hard to make a comeback. This differs from 2018 and 2023, when retail investors were scarce; now they're active but no longer chasing the 50th homogeneous token.
In my view, this will change the investment logic of the crypto industry. Past bets were "can this token get listed on an exchange", now it's become "is this token important". These are two entirely different questions, and few can find the answer.
12. Talent loss in the cryptocurrency industry will be faster than liquidity drought. Specifically, witnessing practitioners shift to the AI track or seek opportunities elsewhere due to slow crypto progress will impact morale more severely than token price drops. Unlike 2018 and 2023, the current macro environment suggests more prolonged pain, while the AI field continues to achieve exponential progress.
In such a market, specific companies will evolve into beacons of hope. Corporate culture will ultimately become a moat. However, few founders can perceive this transformation.
13. Research and media institutions in the cryptocurrency field are experiencing an integration period. Ordinary creators have become disillusioned with the industry—because the primary sponsors have traditionally been L2 project teams, and collaborating with them has now become a torment. In the next 18 months, creators can only survive through hyper-financialization. In other words, they must obtain sufficient profit margins to luxuriously invest time in crafting high-quality content.
Companies that can combine creation (writing/research), financialization (asset/transaction structure design), and moat (distribution channels/processes) will be immensely profitable. However, teams with such genes are extremely rare.
14. If the number of founders issuing tokens decreases while those who can achieve millions of user growth increases, the next capital pool to be released in the cryptocurrency field will be private equity. Although not yet at scale, as long as enterprise annual revenue exceeds $10 million, private equity institutions are likely to become the dominant force in the next 18 months. The total number of enterprises meeting these conditions is around 50, of which perhaps 20 are privately held. Therefore, at present, this remains a tiny market.
15. I believe a fund of around $10 million could be established, specifically investing in projects that combine creative content (music/art/writing) with crypto primitives and achieve scaled distribution. However, this requires partners with aesthetic taste, understanding of consumer distribution, and the ability to resonate with creators. This is one of the things that particularly interests me.
16. In terms of shaping the world, the cryptocurrency industry has both a morally degraded side and an idealistic side. Compared to 2018, the industry has achieved a hundredfold product-market fit (PMF), but can only obtain a small fraction of its previous premium. In such a market, knowing how to filter out academic discourse and focus on data signals has become an art, even a survival skill. Be sure to remember: you are both shaping the world you inhabit and being shaped by it. Subjective initiative itself is a moat.
