Ethereum is half dead and the copycat season is far away. Why is this bull market more difficult than a bear market?

Author | Aylo

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First of all, this cycle is really difficult, don’t let anyone fool you and say it’s not difficult. But the reality is that every cycle is more difficult than the previous one. The number of market participants is increasing, competition is becoming more and more intense, old players are becoming smarter, and naturally more people will fail in the end.

If you don’t have a heavy position in BTC or SOL in a bear market, you’re likely not making any money at all, and you may even be crazy. If I didn't use SOL, I would probably have a hard time.

Yes, there are indeed some individual big winners in this round, but I bet that if you take a big position on these assets, you will likely eventually throw away some or even most of the gains back. After all, most people will not stop after a big profit. They always feel that the "cycle is not over yet" and want to take another shot, but in the end they return the money they have made.

The principle of "playing stupid games and getting stupid prizes" will always apply, but for traders and gamblers, sometimes the process is lengthened.

So, why is this cycle so difficult?

01. Trauma sequelae (PTSD)

In the past two large-level altcoin cycles, most currencies have experienced a 90-95% plunge. The collapse of Luna and FTX has exacerbated the chain reaction of the industry, and the market has fallen more severely than expected. A large number of heavyweight players have been liquidated, and the encryption borrowing platform has not yet recovered.

This "traumatic sequelae (PTSD)" has deeply affected encrypted native users. During this cycle, the trading model of the altcoin market largely reflects a mainstream view - "all projects are scams." During the past two crypto market cycles, people generally believe that “this technology represents the future.” But by the current cycle, this belief has been greatly weakened or even destroyed, and many people no longer believe in the long-term prospects of the crypto industry. On the contrary, the view that "everything is a scam" has become one of the mainstream cognitions.

No one dares to hold any assets for a long time because they don’t want to experience the pain of halving or even clearing the assets again. This led to an extreme "Max Jeet Cycle" - everyone is trying to rush to take the lead and treat others as a takeover.

Social media (encrypted tweets on X) has exacerbated this emotional trading, with market participants looking for the top of the cycle every day, causing market sentiment to fluctuate even more violently.

This psychological impact is not only reflected in trading behavior, it also affects the construction and investment methods of the entire ecosystem. Today, projects are facing stricter scrutiny and the threshold for trust is greatly raised. This has a dual impact: on the one hand, it helps to screen out obvious scams; on the other hand, it also makes it harder for truly valuable projects to gain attention and development opportunities.

02. Innovation

Current innovation is more iterative, and infrastructure is constantly being optimized, but it is not as disruptive as the 0→1 breakthrough when DeFi was born, and it also lacks major progress that makes people shine. This makes it easier to resonate with the views such as "the crypto industry has no substantial progress", and also gives birth to more narratives such as "the crypto industry has achieved nothing".

The entire innovation pattern has shifted from revolutionary breakthroughs to gradual improvements. While this is in line with the natural laws of any technological development, this change presents new challenges for markets that rely on narrative-driven.

In addition, we still lack real "killer applications" - breakthrough products that can push on-chain users to hundreds of millions of levels have not yet appeared.

03. Supervision

The previously domineering SEC has caused great chaos in the industry and seriously hindered development. In particular, DeFi, a track that could have attracted a wider range of users and found a market fit (PMF), was directly choked and failed to grow further. In addition, the SEC also forcibly prevented all governance tokens from conveying value to holders, ultimately shaping the market narrative of "these tokens are worthless", and to some extent, this has indeed become a reality.

SEC not only forced a large number of developers (for example, Andre Cronje publicly stated that the SEC's suppression allowed him to completely withdraw from the industry), but also blocked the integration of traditional finance (TradFi) and the crypto industry, ultimately forcing the entire industry to rely on venture capital ( VC) Financing. This directly leads to an imbalance in the supply and demand structure, the price discovery mechanism is distorted, and the market value is firmly controlled by a few institutions.

However, the market is now ushering in some positive changes. As more projects emerge in the form of public sales, the crypto industry is gradually breaking the shackles imposed by the SEC.

 Excerpts from Cronje about his negotiations with the SEC


 Translation: Those letters are sent one after another, changing the attack angle every time. Initially, they launched an \"investigation\" on me in the name of financing and SEC violations, which confused me—after all, I am neither a U.S. citizen nor a U.S. resident, nor a U.S. citizen or resident.  
  
 I spent weeks or even months trying to gather information and answer their questions (many of them were data they asked for, and I simply couldn\'t have). This torture has consumed a lot of my time, energy and resources. At this stage, I was almost forced to stop development and research and development altogether, and focus all on this battle between law and regulation.

04. Financial nihilism

The above factors have jointly promoted the prevalence of "financial nihilism" in this cycle. The essence of financial nihilism is to lose faith in the market, but have to play with it. Since you have seen through everything, then speculate to the end. You can make a profit. Even if you bet on Memecoin, it is better than holding stupidly.

The “useless governance token” narrative, coupled with the high FDV and low float pattern created by SEC, has caused many crypto-native users to completely abandon their long-term holding fantasies and turn to Memecoin, looking for a more "fair" one. Chance.

In addition, in real society, young people who want to achieve class leap can almost only rely on gambling investment. Asset prices soared, but wages were far behind by the endless depreciation of fiat currency, making Memecoin's "encrypted lottery" particularly attractive. The core value of a lottery is never odds, but it carries hope, which is why it has always attracted people.

As gambling culture has a natural market fit in the crypto market, and related technologies (such as Solana and Pump.fun) are becoming more and more mature, the number of new tokens issuances has ushered in explosive growth. In essence, there is only one core logic for all this - there are a large number of users in the market who desire extreme speculation, and demand determines the market.

The crypto market has always had the saying that it is "struggling on the front line", but this concept has been widely recognized in this cycle.

This nihilistic investment mentality is reflected in many aspects:

·Suha speculative culture emerged and entered the mainstream

·The investment cycle is further shortened

Trading behavior is more inclined to short-term speculation rather than long-term investment

·Popularization of extreme leverage and high-risk operations

·Adhere to fundamental analysis is "indifferent"

05. Experience in the past cycle has become an obstacle

The past few cycles have taught investors that by buying some altcoins in a bear market, you can eventually get a return that exceeds BTC.

Almost no one is a naturally good trader, so in the past cycle, the safest strategy for most people was to hold - even the most depressed altcoins will eventually be a turn for the rise. .

But this cycle is entirely a market for traders and is more conducive to sellers than long-term holders. Traders even obtained the biggest profit opportunity in this round of cycle through HYPE airdrops.

The market narratives of this cycle generally have a short lifespan and lack sufficiently convincing themes. Market participants are more mature than ever and are good at extracting value more efficiently, so the local bubble of altcoins is not blown to extremes as they did in the past.

Take the first round of speculation in AI Agent narrative as an example - this may be the first time the market has truly felt that "this is the new narrative we have been waiting for." However, it is still in its very early stages and long-term winners may not have really emerged.

06. BTC welcomes new buyers, but most altcoins do not

The differentiation between Bitcoin and other crypto assets has never been more obvious than it is now.

BTC has successfully attracted buying from traditional finance (TradFi), gaining a strong, sustained source of passive demand for the first time. Even some central banks have begun to discuss including BTC on their balance sheets.

In contrast, altcoins are harder to compete with BTC than ever before. This is not difficult to understand - BTC has a clear growth goal before it, namely challenging the market value of gold, and altcoins do not have a similar grand narrative.

There are few new buyers for altcoins. Despite some retail investors returning to the market after BTC hit an all-time high (but they bought XRP), overall, new retail investors' capital inflows remained limited, and negative reputation issues in the crypto industry remained.

07. The transformation of ETH role

The decline in BTC's market value share is mainly affected by the growth of ETH's market value.

Over the past cycle, ETH rises have been often seen as a signal that the “altcoin season” has begun, but this rule of thumb has not worked in this cycle. The fundamental reason is that ETH has been performing poorly and has been dragged down by fundamental factors.

Many traders and investors are confused because ETH is no longer the trigger point to drive the market to take more risks, but instead it has become a sign of the end of many mini alt-szn seasons, which is in line with the past markets. The rhythm is completely different.

Although there have been many narratives and tracks that have been started and operated independently in the absence of ETH, many traders still believe that ETH needs to rise to start a real Alt season.

Of course, the reasons for market changes are far more than these, but these are some of the key points that come to mind when I drink coffee and relax my thoughts.

So, what should I do next? Either work harder or work smarter.

I still believe that in the long run, fundamentals will eventually determine everything. But only if you have to really understand the projects you support and how they actually go beyond BTC. There are indeed some potential candidates on the market at present, but the number is still not large. You can find items with the following characteristics:

· Clear profit model

·Real Market Fitness (PMF)

·Sustainable Token Economic Model

·Brands with strong narrative support (At present, AI and RWA are two areas that meet this standard)

I think that with the changes in the US regulatory environment, projects with strong fundamentals and PMF can ultimately convey value to the Token, which will be relatively more stable investment options. And those agreements that can generate stable income are now in a good development cycle. This is in a significant contrast with the Token model dominated by the "Boshita theory" in the past.

If your strategy is to "wait until retail investors enter the market before smashing the market", then you may be in trouble. The market has evolved and no longer simply rely on retail investors to drive the cycle, and more savvy funds often lay out in advance and snatch these obvious strategies.

Possible strategy directions:

1. Become a better trader

Try to build trading advantages and focus on short-term trading, as there are still many stable short-term opportunities in the current market.

Onchain trading Although the yield multiple is higher, the volatility is also greater, and it is not suitable for people with poor stress resistance.

2. "Barbell Portfolio" still applies (for most people who don't have clear trading advantages

70-80% of the funds are allocated to BTC & SOL, leaving a small portion of the funds for more speculative investments.

Regular rebalancing to maintain reasonable asset allocation.

3. Evaluate your time and adjust your strategy

If you are just an ordinary person, have a job and cannot stay in the market all day, then you cannot compete with young traders who sit in the trenches for 16 hours every day.

But negatively holding altcoins that are not performing well and waiting for the market to be their turn will not be an effective strategy.

4. Explore diversified strategies (combining different fields to improve the winning rate)

Core Portfolio (BTC & SOL) + Low Risk Arbitrage Strategies (such as airdrop mining, which still has opportunities despite the increased difficulty now).

Layout new ecology in advance and occupy a place in the immature ecology, such as HyperLiquid, Movement, Berachain, etc.

Deepen the field in a certain sub-sector and become an expert in the track.

08. The altcoin market still has room for growth, but competition is

more intense

I still believe that the altcoin market still has room for growth in 2025, and the overall market environment is still affected by the global liquidity cycle. But it may only be a few tracks and a few events that can truly outperform BTC & SOL. Moreover, the pace of altcoins rotation will be faster, which means investors need to adjust their positions more keenly.

If the market really ushers in crazy monetary easing, we may see a counterfeit bull market similar to the past, but I think the possibility of this happening is lower than the possibility of not happening. Even if it does happen, the increase in most altcoins is only the market average and will not take off in full swing like it did in the past.

There are still a large number of altcoin projects coming soon this year, and market liquidity will still be diluted and dispersed, which requires special attention.

09. Summary: A little hope

I have never seen a person who has been studying the crypto market for several years and cannot make money in the end.

There are still many opportunities in the market, and the growth in this field is still worth looking forward to. After all, I don’t know anything better than others. I just keep adjusting myself according to the actual situation in this cycle.

Another thing is clear - we are no longer in the early stages of a bull market. Whether you make money or not, the bull market has been going on for a long time, and this fact will not change.

"Control downward risks well, and the rise will naturally come naturally." This sentence will always apply.