Written by: Joel John
Translated by: Yangz, Techub News
Translator's Note: Against the backdrop of Trump's fluctuating tariff policies and global trade instability, 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 reshuffle 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 trajectory of currency. 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) will still come from speculation and its derivative secondary application 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 so hot.
Especially for founders not from Silicon Valley, the real marginal opportunity lies in geographically-specific fintech applications that utilize 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, real investment opportunities will concentrate on networks that can create over $100 million in demand-side revenue. 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 scale to such a size 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) 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 buying in the crypto market.
The fundamental reason project parties 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 some time.
In my view, we are entering a phase where fewer founders will issue tokens, holding revenues in small teams. Crypto venture capital firms may struggle to adapt to this change, 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 significantly weakened with market changes in the years following FTX.
6. In my view, 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 think 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 is an opportunity to build scalable consumer applications with a longer-term perspective.
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 exposes our industry's "emperor's new clothes". Concepts like data traceability and distributed computing resource allocation are theoretically attractive but their scalability potential remains unverified. Most networks that have achieved scale rely on distributed data centers still settled in dollars.
AI models haven't shown a premium advantage just because of compensated data sources. What truly has potential, or is similar to the P2E model, is the crowdsourced IP address domain, which I believe is a very worthwhile sub-market to watch.
8. There's an opportunity in the cryptocurrency field to build a native digital bank for middle and high-income groups. Imagine providing everything for crypto-native users: wage management + fund transfers + portfolio construction (stocks/treasury bonds) to loans. This user group consists of those with monthly incomes between $5,000 and $200,000 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 declined 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 or 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 embryo of the next-generation internet.
10. Current chain games feel lifeless, but from an investment return perspective, it's the sub-market with the highest ROI among consumer applications. Teams still working in this field need a certain "crazy trait", and those truly capable builders might create a sustainable game market with millions of users. People often think this track died after 2022 (post-Axie), but considering a 1-year cooling period after the frenzy and a 2+ year product development cycle, 2025/2026 might become the breakthrough year for crypto games.
11. Long-tail Altcoins will find it hard to make a comeback. This is different 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", now it has become "is this token important". These are two completely different questions, and few can find the answer.
12. Talent loss in the cryptocurrency industry will be more rapid than liquidity depletion. Specifically, witnessing practitioners shifting to the AI track or seeking better opportunities due to slow progress in the cryptocurrency field will deal a more severe blow to morale than cryptocurrency price drops. Unlike in 2018 and 2023, the current macroeconomic 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, founders who can perceive this transformation are few and far between.
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 reap abundant rewards. However, teams with such genes are extremely rare.
14. If the number of founders launching tokens decreases while those achieving million-user growth increases, the next capital pool to be released in the cryptocurrency field will be private equity. Although not yet at scale, private equity institutions are likely to become the dominant force within the next 18 months for enterprises with annual revenues exceeding $10 million. The total number of enterprises meeting these conditions is around 50, with perhaps 20 being privately held. Therefore, at present, this remains a tiny market.
15. I believe a fund of approximately $10 million could be established, specifically investing in projects that combine creative content (music/art/writing) with cryptocurrency 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 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, learning to block out academic discourse and focus on data signals has become an art, even a survival skill. Remember: you are both shaping the world you inhabit and being shaped by it. Subjective initiative itself is a moat.
