New Challenges in the Crypto Assets Market Cycle

The current Crypto Assets market cycle is more difficult than ever before. With the increase in the number of participants and the accumulation of experience, competition has become more intense. If one does not hold mainstream Crypto Assets during the bear market, they are likely to face losses and difficulties.

Reasons for the Difficult Cycle

1. Psychological Factors

In the past two rounds of large-scale altcoin cycles, most tokens plummeted by 90-95%, coupled with the negative impact of some major events, causing profound psychological trauma to market participants. This has led to the following phenomenon:

• Investors are reluctant to hold long-term, fearing another significant loss.
• Emotional fluctuations become more intense, frequently seeking market tops.
• Projects face stricter scrutiny, with higher trust thresholds.
• Legitimate projects are harder to gain attention.

2. Innovation slows down

Although the infrastructure continues to improve, there is a lack of disruptive innovation like in the early days. This has led to:

• People question the progress of Crypto Assets
• The increase in negative statements such as "Crypto Assets are useless theory"
• Lack of killer applications that can attract hundreds of millions of users

3. Regulatory Pressure

Some actions by regulatory authorities have hindered the development of the industry:

• Restricted the development of certain high-potential areas (such as DeFi)
• Preventing tokens from conveying value to holders exacerbates the notion of "useless tokens".
• Forcing some builders to leave the industry
• Hindered the interaction between traditional finance and the Crypto Assets industry.
• Promote the industry's over-reliance on venture capital, leading to adverse supply and pricing dynamics.

4. The Rise of Financial Nihilism

Multiple factors have led to financial nihilism becoming an important feature of this cycle:

• Investors turn to meme coins in search of "fairer" opportunities
• Young people seek quick wealth through high-risk speculation
• Gambling applications have a strong product-market fit in the Crypto Assets field.
• "Fallen" culture has become mainstream.
• The investment period is shortened, with more focus on short-term trading.
• Extreme leverage and risky behavior have become the norm.
• Have an indifferent attitude towards fundamental analysis

5. Experience Pitfalls

The experiences of past cycles may become obstacles in this cycle:

• Many people still expect to profit in the bear market by buying altcoins.
• This round cycle is more suitable for traders rather than holders.
• The hype cycles in certain emerging fields (such as AI agents) indicate changes in the market.

6. Changes in Buyer Structure

The differentiation between Bitcoin and other Crypto Assets is becoming more apparent:

• Bitcoin has attracted new demand from traditional financial institutions.
• Shitcoins lack new buyers, retail inflow is insufficient
• Crypto Assets overall still face reputation issues

7. Ethereum Role Transformation

The performance of Ethereum has changed its impact on the altcoin market:

• Ethereum's fundamentals are underperforming, failing to effectively drive the altcoin market.
• Investors need to gain a deeper understanding of the project's fundamentals and value proposition.

Investment Strategy Recommendations

1. Look for projects with the following characteristics:

   • Clear income model
   • Actual product market fit
   • Sustainable Token Economics
   • Strong narrative support (such as AI and tokenization of physical assets)

2. Consider adopting a barbell strategy:

   • Mainstream Crypto Assets (such as Bitcoin and Solana) account for 70-80%
   • Allocate less funds for speculative investments
   • Regularly rebalancing the investment portfolio

3. Adjust strategies based on individual circumstances:

   • Assess the time and effort that can be invested
   • Consider combining strategies from different fields, such as participating in airdrops, early ecosystem involvement, etc.

4. Stay alert and flexible:

   • The altcoin market may grow, but there may be limited projects that perform exceptionally well.
   • The rotation speed of altcoins may continue to accelerate.
   • Focus on global liquidity trends

Despite the challenges of this cycle, there are still opportunities in the market. The key is to adapt to the new market dynamics, conduct thorough research, and maintain prudent risk management.