Cold thinking in the post-bull market era: How will various tracks in the cryptocurrency industry develop under the market reshuffle

Author: Joel John

Compiled by: Yangz, Techub News

Translator's note: Amid the swaying Trump's tariff policy and the turbulent global trade situation, the cryptocurrency market is experiencing a significant cooling. The author of this article analyzes the structural changes in the current cryptocurrency market from 16 dimensions. In this special period of dual roles between macro policies and market mechanisms, the cryptocurrency industry may usher in a profound value reconstruction - this is not only a cruel reshuffle process, but also a necessary path for the industry to mature.

Here are some of my general views on the current state of the cryptocurrency market, or how I think cryptocurrencies will develop.

1. The core of cryptocurrency is the currency trajectory in its current form. The role of blockchain on currency/assets is just like the role of the Internet on information. The consequence is that speculation is still the most important application scenario in the industry.

Although the speed and scale of speculation will fluctuate, the most significant achievements in this field (and the largest source of income) will still come from speculation and the resulting sub-application scenarios such as lending, derivatives, brokerage dealers, etc.

2. As Circle submits its initial public offering (IPO) application, the stablecoin track may usher in its phased peak. In my opinion, a rate cut will be another domino affecting the field. Given the dual pressures of channel moat and regulatory challenges, the next major opportunity for stablecoins may not be as hot.

Especially for founders who are not from Silicon Valley, the real marginal opportunity lies in the ability to take advantage of regional fintech applications that crypto payment tracks, rather than "exporting" the US dollar. Of course, if you can raise more than $10 million from the start and have your headquarters in the United States, the situation is a different matter.

3. The DePIN track should theoretically be hot, but combining the scale required by Service Level Agreements (SLAs) and large AI projects, real investment opportunities will be focused on networks that can generate around $100 million in demand-side revenue. Such networks almost (always) work with private equity funds or hedge funds to meet short-term capital liquidity needs. As of now, I haven't seen any token-based network that can scale to this extent (and remain reliable).

The good news is that networks that can scale to this size do exist. The bad news is that most of the revenue generated by these networks will not touch the token system.

4. The reason why we began to pay attention to the relationship between tokens and income stems from two fundamental changes. First of all, in the world of "post-pump.fun", the valuation premium enjoyed by tokens has disappeared. When assets belong, it becomes extremely difficult to maintain a full dilution valuation (FDV) of more than US$100 million; secondly, today's stock and foreign exchange markets are no less volatile than cryptocurrencies, and the trend is clearer, resulting in the complete exhaustion of marginal buying in the cryptocurrency market.

The fundamental reason why the project party really needs to worry about revenue is that for liquidity funds (the last marginal buyer), there are only about 50 tokens that can generate revenue, and among them, there may be less than 30 that have substantial growth potential.

5. Venture capital institutions have strong motivation to insist that "tokens as a business model have not yet died" and advocate that "Web3 is coming." If you choose to turn a blind eye to industry trends, you can continue to act deaf and dumb for a while.

In my opinion, we are entering a stage where fewer and fewer founders are offering tokens and they will hold the proceeds as small teams. Crypto Ventures may not be able to handle this transition well, as their liquidity has traditionally been derived from exchange listing and retail paying. Some might blame the macro environment for the reduction in crypto venture deployments, but the real reason is that in the years since FTX, the ability of portfolios to provide returns has been greatly weakened as markets change.

6. In my opinion, there are no more than 10 cryptocurrency funds that have the ability to write checks and build Uber/Cisco-level achievements. Among them, there may be less than 30 partners who truly understand how to achieve this achievement. People always believe that the lack of large consumer-grade applications in the cryptocurrency space is due to problems such as poor user experience or poor marketing. In my opinion, part of the core challenge is that the essential attributes of current capital are bound by the 3-year return cycle and are overly obsessed with the liquidity brought about by token listing. This has become the "opium" of cryptocurrency venture capital. Perhaps, in this environment, there is an opportunity to create large-scale consumer applications with a longer-term perspective.

7. The combination of cryptocurrency and artificial intelligence (Crypto x AI) seems to be popular, but it is difficult to keep up with the pace of development of AI itself. This may be the first area that exposes the phenomenon of "emperor's new clothes" in our industry. Concepts such as data traceability and distributed computing resource provisioning are theoretically attractive, but their scale potential remains to be verified. Most networks that have scaled down rely on distributed data centers, which still settle their earnings in US dollars.

The AI ​​model does not show a premium advantage because of the data source "get compensation". The real potential, or similar to the P2E model, is the crowdsourcing IP address field, which I think is worth paying attention to.

8. There is an opportunity in the cryptocurrency field to create native digital banks for middle- and high-income groups. Think about it, from salary management + fund transfer + portfolio construction (stock/treasury bills) to loans, all of this is for cryptocurrency native users. This user group is those who earn between 50,000 and 200,000 per month in the cryptocurrency space and want banks to handle all of these businesses. Although the potential market size (TAM) of such banks is between 5,000 and 10,000 people, in my opinion, building such a platform has unique value.

9. Farcaster may bring DAO back to life. Many DAOs have fallen because it turns out that people don’t want to participate in the governance of lending or derivatives platforms at all. If communities on Farcaster can grow to a scale of 10,000 people, and those communities can coordinate resources (such as community assets) on the chain, then DAO will gain attention again.

I hope this will be the way Memecoins returns. If operated properly, such assets may be more sustainable than Dogecoin/Catcoin. The core challenge facing Farcaster lies in how to balance the needs of content creators with the process of platform financialization. If financialization is lacking, it may become another ordinary agreement; if financialization can be successfully achieved, it will become the prototype of the next generation of the Internet.

10. The current chain game gives people a lifeless feeling, but from the perspective of return on investment, it is the market segment with the highest return on investment among consumer applications. Teams that are still working in this field today need some kind of "crazy trait", and those truly capable builders are likely to create a sustainable gaming market with millions of users. People always think that this track will die in 2022 (after Axie), but if you include the 1-year cooling-off period after the fanatic period and more than 2 years of product development cycle, 2025/2026 is likely to be the first year of cryptocurrency games.

11. Long-tail altcoins will be difficult to make a comeback. This is different from 2018 and 2023. At that time, there was a lack of retail investors taking over, but now retail investors are still active in the market, but they no longer pursue the 50th homogeneous token.

In my opinion, this will change the investment logic of the crypto industry. The bet in the past was “whether this token can be on the exchange”, but now it has become “whether this token is important”. These are two completely different questions, and few people can find the answer.

12. Talent loss in the cryptocurrency industry will come more rapidly than liquidity depletion. Specifically, witnessing practitioners switch to the AI ​​track or seeking higher gains due to slow progress in the cryptocurrency sector, this impact will hit morale far more than the decline in currency prices. Unlike 2018 and 2023, the current macro environment predicts more lasting pain, while the AI ​​field continues to achieve exponential progress.

In such a market, a particular company will evolve into a beacon of hope. Corporate culture will eventually become a moat. However, there are very few founders who can see this transformation.

13. Research and media organizations in the cryptocurrency field are undergoing a period of integration. Ordinary creators are already discouraged by the industry - because the main funders have always been L2 projects, and now working with them has become a torment. In the next 18 months, if creators want to survive, they must pass super financialization. In other words, you must obtain sufficient profit margins to invest your time to polish high-quality content in luxury.

Companies that can combine creation (writing/research), financialization (asset/transaction structure design) and moat (distribution channels/process) will make a fortune. But teams with this gene are extremely scarce.

14. If there are fewer and fewer founders who issue coins and more and more founders who can achieve millions of users, then the next capital pool to be released in the cryptocurrency field will be private equity. Although it is not yet in scale, as long as the company's annual revenue exceeds US$10 million, private equity institutions are likely to become the dominant force in the next 18 months. The total number of companies meeting this type of conditions is about 50, of which 20 are privately held. So, for now, this is still a tiny market.

15. I think it is possible to set up a fund of about $10 million to invest in projects that combine creative content (music/art/writing) with crypto primitives and distribute them on a large scale. But this requires partners to have both aesthetic taste, understand the distribution of consumers, and be able to resonate with creators. This is one of the things that interests me particularly.

16. In terms of how to shape the world, the cryptocurrency industry has both a morally degraded side and an idealistic side. Compared with 2018, the current industry has achieved a 100-fold product market fit (PMF), but can only obtain a small part of the previous premium. In this market, knowing how to block scholars' speech and focus on data signals has become an art, and can even be called survival skills. It is important to remember: you are shaping both the world you live in and the world you live in. Subjective initiative itself is a moat.