Why is the 2025 crypto market in a low sentiment? Market restructuring viewed from the imbalance in the monetary system

Rewritten from Messari’s 100,000-word annual report “The Crypto Theses 2026”

Introduction | The system isn’t broken, but participation methods have completely changed

In November 2025, the Crypto Fear & Greed Index dropped to 10, entering the lowest fear level in history. This reading usually only appears during exchange collapses, Ponzi project failures, or systemic credit crises.

But this time, it’s entirely different. In 2025, there were no major platform misappropriations, nor did core infrastructure fail. Stablecoin issuance hit new highs, total market cap did not fall below previous cycle highs, and regulatory institutionalization continued to advance. From a factual perspective, this is not a year of industry collapse.

So why is everyone talking about the “most painful” year?

Messari’s straightforward answer in the report: the same market offers two completely opposite experiences.

Wall Street institutional investors thrived in 2025—ETFs provided low-friction allocations, DAT (Digital Asset Vaults) became stable buyers, and regulatory boundaries gradually clarified. But retail investors, staying up late to hunt for Alpha, experienced the hardest year—stories lost value, volatility no longer translated into returns, and the relationship between effort and results was thoroughly broken.

The market isn’t rejecting people; it’s just rewarding them with a different mechanism.

Why “not making money” is misread as “industry is failing”

The true trigger for emotional breakdown isn’t price decline but cognitive dissonance.

Past crypto cycles carried an implicit assumption: as long as you’re diligent, early, and aggressive enough, you can earn excess returns. But 2025 broke this assumption for the first time:

• Most assets no longer gained premiums just by “telling stories”
• L1 ecosystem growth no longer automatically translated into token returns
• High volatility no longer meant high yields

As a result, many participants developed a false impression: if I didn’t make money, the entire industry must be failing.

Messari’s conclusion, however, is the opposite: the industry is becoming more like a mature financial system, not a machine continuously generating speculative bonuses.

This isn’t a matter of personal ability but the friction cost of role switching in different eras. Using old identities to participate in a new system will inevitably lead to emotional breakdown.

The fundamental issue: the global monetary system is failing

Superficial emotional swings conceal a deeper imbalance in the monetary structure.

Over the past 50 years, the debt-to-GDP ratios of major global economies have shown a highly consistent, nearly irreversible upward trend:

• USA: 120.8%
• Japan: 236.7%
• France: 113.1%
• UK: 101.3%
• China: 88.3%

This isn’t a failure of any single country’s governance but a common outcome across systems and political structures.

When government debt grows faster than economic output over the long term, the system can only maintain stability through inflation, low real interest rates, or financial repression. Regardless of the path chosen, the cost is borne by the same group: savers.

When debt outpaces growth, savings are destined to be sacrificed.

2025 was the year more participants first clearly realized this. Hard work doesn’t necessarily preserve wealth; savings themselves are continuously shrinking.

The emotional collapse in the crypto market fundamentally stems from shaken confidence in the entire financial system. Crypto is just the first place where this impact is felt.

Why BTC is chosen for this role

If the problem lies in the monetary system, why is the answer BTC instead of others?

Messari’s clear judgment: BTC is no longer in the same competitive dimension as other crypto assets.

Money isn’t a technical issue; it’s a consensus issue

Money is a social consensus, not a technical optimization problem. In other words:

• Money isn’t about “who’s faster”
• Not about “who’s cheaper”
• Not about “who has more features”

It’s about who is perceived as a stable store of value over the long term. From this perspective, Bitcoin’s victory isn’t mysterious.

Three years of data laid bare

From December 2022 to November 2025:

• BTC increased by 429%
• Market cap from $318 billion to $1.81 trillion
• Entered the top ten in global asset rankings

More importantly, relative performance: BTC.D (Bitcoin dominance) rose from 36.6% to 57.3%. During a cycle where “altcoins should be skyrocketing,” capital continued to flow back into BTC.

This isn’t a coincidence; it’s the market reclassifying assets.

ETFs and DATs are essentially institutionalized consensus

Bitcoin ETFs aren’t just “additional buying pressure.” They fundamentally change who is buying, why they are buying, and how long they can hold:

• ETFs turn BTC into a compliant asset
• DATs make BTC part of corporate balance sheets
• National reserves elevate BTC to a “strategic asset” level

When BTC is held by these roles, it ceases to be a “high-volatility risky asset that can be discarded at any time” and becomes a currency asset that must be held long-term.

Once money is treated this way, it’s hard to go back.

Why the more “boring” BTC resembles money more

This might be the most counterintuitive point of 2025:

• BTC has no applications
• No narrative rotations
• No ecosystem stories
• Not even “new things”

Precisely because of this, it embodies all the characteristics of “money”:

• Doesn’t rely on future promises
• Doesn’t need growth narratives
• Doesn’t require teams to continuously deliver

It only needs to avoid mistakes. In a high-debt, low-uncertainty world, “not making mistakes” itself becomes a scarce asset.

The dilemma of Layer 1: from narrative back to reality

Once BTC established its status as the “main cryptomoney,” an unavoidable question emerged: If money already has an answer, what is left for Layer 1?

81% of market cap is in the “money” narrative

By the end of 2025, the entire crypto market cap was about $3.26 trillion:

• BTC: $1.80T
• Other L1s: about $0.83T
• Remaining assets: less than $0.63T

Approximately 81% of crypto asset market cap is priced as “money” or “potential money.”

This means the valuation logic for L1s is no longer about “application platforms” but about “whether it qualifies as money.”

The terrifying valuation multiples versus actual income

Excluding cases like TRON and Hyperliquid, L1s face an unexplained phenomenon:

Adjusted P/S multiples:

• 2021: 40x
• 2022: 212x
• 2023: 137x
• 2024: 205x
• 2025: 536x

Meanwhile, total L1 revenue:

• 2021: $12.3 billion
• 2022: $4.9 billion
• 2023: $2.7 billion
• 2024: $3.6 billion
• 2025 (annualized): $1.7 billion

This is a divergence that can’t be explained by “future growth.” The valuation is inversely related to fundamentals—the lower the income, the higher the multiple.

Reclassification, not mispricing

Many think L1s are mispriced by the market. Messari’s view is the opposite: the market isn’t mispricing L1s; it’s reducing their “money imagination space.”

If an asset:

• Can’t store value stably
• Can’t be held long-term
• Can’t provide certain cash flows

Then it ultimately only has one pricing method: high-beta risk assets.

SOL case: needs explosive growth to surpass

Solana was one of the few L1s that outperformed BTC in 2025. But Messari pointed out a highly damaging fact:

• SOL ecosystem grew 20–30 times
• Price only outperformed BTC by 87%

To achieve significant excess returns over BTC, L1s need ecosystem explosions at a scale of orders of magnitude, not linear growth. The return function has already been rewritten.

BTC as “money” makes L1’s burden heavier

Before BTC established a clear monetary status, L1s could tell stories about “becoming money in the future,” and the market was willing to pay for that possibility in advance.

Now that BTC is solidified, the market no longer offers the same premium for “a second money.”

This leaves L1s with a tougher question: If you’re not money, then what exactly are you?

Conclusion | Emotions are not the truth

The market sentiment in 2025 genuinely reflects participants’ pain but doesn’t accurately reflect the system’s state.

• Emotional breakdown ≠ industry failure
• Increased pain ≠ loss of value

Emotions are just a signal: the old participation methods are rapidly becoming obsolete. Understanding this is the prerequisite for adapting to the next era.

The market isn’t wrong; it’s changing its definition of “what can be considered money.” Those who can adapt to this new standard will thrive in 2026.