Crypto Assets market's new normal: Why is this cycle so difficult?

The difficulty level of this round of Crypto Assets cycle has exceeded many people's expectations. Compared to previous years, the number of participants has surged, and competition has become fiercer. If investors did not hold a large amount of bitcoin or Solana during the bear market, they likely did not achieve ideal returns and may even face losses. So, what exactly is the reason that led to the uniqueness of this cycle?

1. The Ongoing Impact of Past Trauma

After experiencing two rounds of large-scale altcoin cycles, most projects have seen a drop of 90-95%. The collapse of certain events has further exacerbated the overall decline in the industry, causing prices to fall far below their rightful levels. This trauma deeply affects the psychology of Crypto Assets participants.

Nowadays, few people are willing to hold assets for the long term because they do not want to suffer huge losses again. Market sentiment is more volatile, and everyone is constantly looking for the peak of the cycle. This mentality not only affects trading behavior but also impacts the construction of the entire ecosystem and investment methods. Projects are now facing stricter scrutiny, and the threshold for gaining trust has significantly increased. This has both positive and negative effects: while it helps filter out obvious scams, it also makes it harder for legitimate projects to gain attention.

2. Shift Towards Innovation

At the current stage, we see more iterative innovation, and the infrastructure is also continuously improving. However, breakthrough innovations like decentralized finance (DeFi) that go from 0 to 1 are rare. This makes it easier for critics to question the progress of Crypto Assets, leading to more statements like "Crypto Assets have achieved nothing."

The innovative pattern has shifted from revolutionary breakthroughs to incremental improvements. While this is a natural process for any technological development, it undoubtedly poses challenges for a narrative-driven market.

Currently, we still lack killer applications that can attract hundreds of millions of users, which is essential for the mass adoption of Crypto Assets.

3. The Impact of Regulatory Environment

The actions of regulators have severely hindered the industry. They not only obstructed the development of the industry but also restricted the further expansion of certain market-potential areas such as DeFi (. Furthermore, they prohibited all governance coins from passing any value to holders, which to some extent led to the statement that "all these coins are useless."

Regulatory pressure has forced many builders to leave ), such as Andre Cronje resigning due to regulatory pressure (, hindering the interaction between traditional finance and the industry, and ultimately forcing the industry to turn to venture capital firms for funding. This has resulted in poor supply and price discovery dynamics, with value being controlled by a select few.

4. The Rise of Financial Nihilism

The above factors have collectively led to financial nihilism becoming an important feature of this cycle. The "useless governance tokens" and the dynamics of high FDV and low liquidity caused by regulation have prompted many native participants in Crypto Assets to turn to meme coins in search of "fairer" opportunities.

In today's society, asset prices are soaring, fiat currencies are constantly depreciating, and wages are growing slowly. Young people have to take risks to accumulate wealth. This makes meme coin lottery-style investments very attractive. Lotteries always offer hope, and the gambling in the Crypto Assets field seems to have a stronger product-market fit.

Due to the more advanced technology of Crypto Assets in gambling, the number of issued tokens has surged. This reflects a strong demand for high-risk, high-return investments. The term "trench" has been around in the Crypto Assets field for a long time, but it has become a widely understood concept in this cycle.

This nihilistic attitude is reflected in multiple aspects:

• The rise and mainstreaming of "fallen" culture
• Shortening of the investment period
• Focus more on short-term trading rather than long-term investment
• Normalization of extreme leverage and risky behavior
• Holds an indifferent attitude towards fundamental analysis

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5. Limitations of Past Experience

Experience from previous cycles tells investors that they can buy some altcoins during bear markets and eventually gain returns by outperforming Bitcoin. However, this strategy faces challenges in the current cycle.

This round of the cycle is more favorable for traders rather than long-term holders. Traders have even achieved maximum gains by participating in various project airdrops. The first hype cycle of artificial intelligence agents is a typical example, although it is still in the early stages, long-term winners may not have emerged yet.

6. The Divergence Between Bitcoin and Altcoins

The gap between Bitcoin and other Crypto Assets has never been so evident. Bitcoin has gained strong demand from traditional finance for the first time, and even central banks are considering including it on their balance sheets.

In contrast, altcoins face greater challenges in the competition with Bitcoin. This is understandable, as Bitcoin has a clear target with a market value comparable to that of gold.

Altcoins generally lack new buyers. Although some retail investors have returned to the market when Bitcoin hit new highs, overall, there is insufficient inflow of new retail investors, and there are still reputation issues with Crypto Assets.

7. The Role of Ethereum's Transformation

The decline of Bitcoin's dominance is largely influenced by the growth in market capitalization of Ethereum. Many believe that the trigger for "altcoin season" is the rise of Ethereum, but this heuristic approach has not worked so far in this cycle, as Ethereum has underperformed due to fundamental reasons.

Nevertheless, fundamental factors will ultimately play a role in the long term. Investors need to have a deep understanding of the projects they support and how they truly surpass Bitcoin. Currently, there are very few projects that meet this criterion.

![Why is this cycle so difficult for the counterfeit season to come?])https://img-cdn.gateio.im/webp-social/moments-189167f7963ab1ce507e51ac22c85263.webp(

Investment Strategy Suggestions

In the current market environment, investors may consider the following strategies:

1. Look for projects with the following characteristics:

   • Clear income model
   • The actual product-market fit
   • Sustainable Token Economics
   • A strong narrative to complement the fundamentals ) such as AI and the tokenization of physical assets (

2. Improve trading skills, focus on short-term trading opportunities.

3. Use a barbell strategy: Allocate 70-80% of funds to mainstream assets such as Bitcoin and Solana, and use the remaining funds for more speculative investments. Regularly rebalance to maintain these proportions.

4. Adjust strategies based on personal circumstances. Full-time workers may find it difficult to compete with round-the-clock traders and need to adopt methods that are more suitable for themselves.

5. Combine different fields: Establish a solid asset base while participating in airdrop opportunities, early ecosystem layout, or focusing on specific categories.

Despite the current market environment being challenging, there are still reasons to remain optimistic. The altcoin market is likely to experience growth this year, but projects that truly surpass Bitcoin and Solana may be limited to only a few sectors and a limited number of tokens. The speed of market rotation is expected to continue to accelerate.

Even in extreme liquidity easing conditions, most altcoins may only provide market average returns. However, we can still expect that some important altcoin projects will emerge this year, and market liquidity will continue to diversify.

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