The New Challenges of the Crypto Assets Cycle: Why Is This Round So Difficult?

The current crypto assets cycle presents unprecedented complexity. Each cycle is more challenging than the last, and participants must not only face fiercer competition but also contend with an increasing number of seasoned players. If one does not hold a significant amount of Bitcoin or SOL during the bear market, it is likely to end up in losses and difficulties.

The difficulties of this period stem from multiple factors:

1. Aftermath of Psychological Trauma

After experiencing two rounds of large-scale altcoin cycles, in which most coins plummeted by 90-95%, along with the systemic impact caused by the Luna and FTX events, it has left deep psychological shadows on native players in the Crypto Assets space. This has led to the following phenomena:

• Participants are unwilling to hold any assets for the long term.
• The emotional fluctuations are more intense.
• The tendency to continuously seek market tops has intensified.

This psychological impact is reflected not only in trading behavior but also affects the construction of the entire ecosystem and investment methods. Projects face stricter scrutiny, and the threshold for gaining trust has significantly increased. This change has both advantages and disadvantages: while it helps filter out obvious scams, it also makes it more difficult for legitimate projects to gain attention.

2. Transformation of Innovative Models

Current innovations are mostly iterative, with continuous improvements in infrastructure, but there is a lack of breakthrough innovations from 0 to 1 like DeFi. This has led to some doubts about the progress of Crypto Assets and the rhetoric of "Crypto Assets achieving nothing."

The innovative pattern has shifted from revolutionary breakthroughs to incremental improvements. This is the natural law of technological development, but it undoubtedly poses challenges for a narrative-driven market.

Currently, there is still a lack of killer applications that can attract hundreds of millions of users to the blockchain.

3. Regulatory Pressure

The actions of regulatory agencies have severely hindered the development of the industry, especially in areas with greater product market fit and a broader audience like DeFi(. They also prevent governance tokens from delivering value to holders, which has contributed to the viewpoint that "all these tokens are useless."

The negative effects of regulatory pressure include:

• Forcing some builders to leave the industry
• Hinder the interaction between traditional finance and the Crypto Assets industry
• Causing the industry to be overly dependent on venture capital financing
• Leading to poor supply and price discovery dynamics

4. The Rise of Financial Nihilism

The above factors have collectively led to financial nihilism becoming a significant characteristic of this cycle. The "useless governance tokens" and the high FDV and low circulation dynamics caused by regulation have prompted many native players in the Crypto Assets space to turn to meme coins in search of "fairer" opportunities.

The social background has also played a role in exacerbating the situation: asset prices are soaring, fiat currency is devaluing, wages are growing slowly, and young people have no choice but to seek wealth through speculation. In this environment, the lottery-like appeal of meme coins is becoming increasingly prominent.

Manifestations of financial nihilism:

• "Fallen" culture has become mainstream
• Investment cycle shortened
• Focus more on short-term trading rather than long-term investment
• Extreme leverage and risky behavior have become normalized.
• Hold a "whatever" attitude towards fundamental analysis

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5. Experience becomes a shackle

Experience from the past few cycles has taught people that they can buy altcoins in a bear market and ultimately gain returns by outperforming Bitcoin. This strategy has failed in the current cycle and has instead become a hindrance.

This cycle is more suitable for traders rather than holders. Traders have even achieved maximum returns by participating in airdrops of popular projects. The first hype cycle of the AI Agent is a typical example, although long-term winners may not have emerged yet.

6. Bitcoin and Altcoin Differentiation

The differences between Bitcoin and other Crypto Assets are unprecedentedly clear. Bitcoin has first gained strong demand from traditional finance, with central banks around the world even considering incorporating it into their balance sheets.

In contrast, altcoins lack new buyers. Although some retail investors returned to the market when Bitcoin hit new highs, overall, the influx of new retail investors is insufficient, and Crypto Assets still face reputation issues.

7. The Role Transition of Ethereum

The growth of Ethereum's market cap was a major factor in the decline of Bitcoin's dominance. Many believe that the rise of Ethereum is the trigger for the "altcoin season," but this heuristic approach has not worked so far in this cycle, as Ethereum has performed poorly due to fundamental reasons.

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Investment Strategy Recommendations

1. Pay attention to projects with the following characteristics:

   • Clear revenue model
   • Actual product market fit
   • Sustainable Token Economics
   • A strong narrative complements the fundamentals ) such as AI and RWA (

2. Consider adopting a barbell strategy: allocate 70-80% to Bitcoin and SOL, and use the remaining funds for more speculative investments. Regularly rebalance to maintain the ratio.

3. Adjust your strategy according to your personal time and energy. If you cannot pay full attention to the market, do not try to compete with full-time traders.

4. Try to combine different fields:

   • Establish a solid asset base
   • Participate in low-risk airdrop opportunities
   • Identify emerging ecosystems and layout in advance
   • Focus on a specific category

Despite the current challenging situation, the altcoin market still has growth potential. However, the chances of truly surpassing Bitcoin and SOL are likely limited to only a few industries and a limited number of altcoins. The rotation speed of altcoins is expected to continue accelerating.

Even in extreme cases resembling traditional altcoin seasons, most altcoins may only be able to provide average market returns. This year may still see some large altcoin projects, with liquidity continuing to disperse.

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