Challenges and Opportunities in the New Cycle of Crypto Assets

The current Crypto Assets cycle is more challenging than ever. The number of participants is continuously increasing, and competition is becoming increasingly fierce. It is difficult to achieve profitability unless one holds a large amount of Bitcoin or other mainstream coins during the bear market. There are several key reasons why this cycle is so tough:

1. The Impact of Psychological Trauma

In the past two large-scale altcoin cycles, the value of most tokens plummeted by 90-95%. Coupled with some significant events that had negative impacts, this led to the entire industry suffering a heavy blow. This trauma has deeply affected the Crypto Assets community, causing participants to be reluctant to hold any assets for the long term, and the emotional volatility has intensified.

This psychological influence 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 trust threshold has significantly increased. While this helps filter out obvious scams, it also makes it harder for legitimate projects to gain attention.

2. Innovation Slowdown

Although infrastructure continues to improve, there is a lack of jaw-dropping breakthrough innovations like those seen in early decentralized finance. This has led some to question the progress of Crypto Assets, even deeming it "ineffectual." The landscape of innovation has shifted from revolutionary breakthroughs to incremental improvements, which is a natural process of technological development, but poses a challenge for a narrative-driven market.

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

3. Regulatory Pressure

The actions of regulatory agencies have severely hindered the development of the industry, especially in some promising areas. They have restricted the ability of tokens to transfer value to holders, leading to the view that "all tokens are useless" becoming a reality to some extent.

This regulatory environment has forced many builders to leave, hindered the interaction between traditional finance and the Crypto Assets industry, and ultimately led to an over-reliance on venture capital funding, resulting in poor supply and price discovery dynamics.

4. The Rise of Financial Nihilism

The above factors have collectively led to financial nihilism becoming an important feature of this cycle. Many Crypto Assets natives have turned to meme coins, seeking "fairer" opportunities. In today's social context, asset prices are soaring, fiat currency is devaluing, wages are growing slowly, and young people are forced to seek wealth through high-risk investments, making meme coin lottery-style investments extremely appealing.

This nihilistic attitude is reflected in multiple aspects:

• "Decadent" culture has become mainstream
• Investment period shortened
• Focus more on short-term trading rather than long-term investment
• Extreme leverage and high-risk behavior have become normalized.
• Have a indifferent attitude towards fundamental analysis

5. Limitations of Past Experiences

Experience from previous cycles tells investors that they can buy altcoins in a bear market and eventually gain returns by outperforming Bitcoin. However, this cycle is more suited for traders rather than holders. Some of the largest gains come from speculation and airdrops, rather than long-term holding.

6. The Divergence Between Bitcoin and Altcoins

The gap between Bitcoin and other crypto assets has unprecedentedly widened. Bitcoin has attracted a large amount of investment from traditional finance, even drawing the attention of central banks around the world. In contrast, altcoins face more intense competition and lack new buyers.

7. Changes in the Role of Ethereum

The growth of Ethereum's market capitalization was once seen as a trigger for the rise of altcoins, but in this cycle, this correlation has not manifested. Ethereum's poor performance due to fundamental reasons has affected the performance of the entire altcoin market.

Investment Strategy Recommendations

1. Look for projects with a clear revenue model, actual product market fit, sustainable token economics, and a strong narrative.

2. Consider becoming a better trader by focusing on short-term trading opportunities.

3. For most investors, adopting a barbell strategy may be a wise choice: allocating 70-80% of funds to Bitcoin and mainstream tokens, with the remaining portion used for more speculative investments.

4. Adjust strategies based on personal time and energy to avoid direct competition with full-time traders.

5. Try to combine different fields: establish a solid foundation for your asset portfolio while focusing on airdrop opportunities, emerging ecosystems, and investments in specific categories.

Despite the current challenges in the market, the altcoin market still has growth potential. However, the possibility of truly surpassing mainstream tokens is likely limited to only a few industries and tokens. Investors need to remain vigilant and adapt to the rapidly changing market environment.