Bitcoin underperforms gold, but the golden age of the crypto economy has just begun.

by Ryan Watkins Compiled by: Deep Tide TechFlow

Introduction: In 2026, the crypto economy is in the midst of its most critical transition period in 8 years. This article delves into how the market has made a “soft landing” from excessive expectations in 2021 and gradually establishes a valuation framework based on cash flow and real use cases. The author explains the pains of the past four years through the “red queen effect” and points out that with the deregulation of the United States and the explosion of enterprise-level applications, crypto assets are shifting from cyclical speculation to long-term trend growth. In the face of a global crisis of trust and currency depreciation, this is not only a recovery of an industry, but also the rise of a parallel financial system. For investors deeply involved in Web3, this is not only a cognitive reshaping but also an underestimated entry opportunity across cycles. The full text is as follows: Core points

• The asset class overdrafted expectations prematurely in 2021; Since then, valuations have been returning to rationality, and the valuations of high-quality assets are now more reasonable.
• With the relaxation of the regulatory environment in the United States, the issues of alignment and value capture of tokens have finally ushered in a turning point, making tokens more valuable for investment.
• The growth of the crypto economy is shifting from cyclical to secular, and the industry has already generated some valuable use cases beyond Bitcoin.
• The winning blockchain is solidifying its position as a standard for startups and large enterprises, and is becoming a gathering place for some of the fastest-growing businesses in the world.
• As altcoins endured a four-year bear market, market sentiment hit rock bottom, multi-year opportunities for top projects were mispriced by the market, and few analysts consider exponential growth in their modeling.
• While top projects may thrive in the next era of the crypto economy, increased pressure on delivery expectations and increased competition from businesses will weed out vulnerable players.
• Nothing is more powerful than the idea that the time is ripe, and the crypto economy has never felt more unstoppable.

In my eight years in the industry, the crypto economy is in the midst of the biggest transformation I have ever seen. Institutions are accumulating chips, while pioneering cypherpunks are diversifying their wealth. Businesses are gearing up for S-curve growth, and disillusioned industry-native developers are leaving the market. Governments are guiding the global financial transformation to blockchain orbits, while short-term traders are still worried about the movement of the lines on the charts. Emerging markets are celebrating financial democratization, while angry youth in the United States are lamenting that this is nothing more than a casino game. Recently, there have been many articles about “which period in history is the crypto economy most like today”. Optimists liken it to the post-dot-com bubble burst, believing that the industry’s speculative era is behind us, and that long-term winners like Google and Amazon will stand out and climb along the S-curve. Pessimists likened it to emerging markets, such as certain markets in the 2010s, suggesting that weak investor protection and chronic capital shortages could lead to underperformance in asset prices, even if the industry was booming. Both perspectives have their merits. After all, history is the best guide for investors besides experience. However, the inspiration that analogy can bring us is ultimately limited. We also need to understand the crypto economy in its own macroeconomic and technological context. The marketplace is not a single entity – it consists of many characters and stories that are interconnected yet different. Here is my best assessment of where we are in the past and where we are headed in the future. The Red Queen’s Cycle “Now, here, you see, you have to run desperately to stay where you are. If you want to go somewhere else, you have to run at least twice as fast as that!” —— Lewis Carroll In many ways, expectations are the only thing that matters in financial markets. Exceeding expectations, prices rise; If expectations are not met, the price will fall. Over time, expectations fluctuate like a pendulum, and forward returns tend to correlate negatively with them. In 2021, the degree of overdraft expectations in the crypto economy was far beyond most people’s understanding. This overheating is evident in some ways, such as DeFi blue chips trading at 500x price-to-sales (P/S multiples) or eight smart contract platforms at the time with valuations surpassing $1000M. Not to mention the Metaverse and NFT nonsense. But the chart that best reflects this calmly isBitcoin/Gold ratio。 Despite our stride, the price of Bitcoin against gold has not reached a new high since 2021 and is actually still on the decline. Who would have thought that in the global crypto capital in Trump’s mouth, after the listing of the most successful ETF in history, while the dollar was systematically depreciated, Bitcoin would be less successful as digital gold as it was four years ago? ! As for other assets, the situation is much worse. Most projects enter this cycle with a range of structural issues that exacerbate the challenges of dealing with extreme expectations:

• Most projects’ revenue is cyclical., and on the premise that asset prices continue to rise;
• Regulatory uncertaintyhindering the participation of institutions and businesses;
• Dual ownership structures have led to a mismatch of interests between equity insiders and public market token investors;
• Expose the deficiencies of the normThis leads to information asymmetry between the project team and the community;
• Lack of a shared valuation framework, resulting in excessive volatility and a lack of fundamental price bottoms.

The combination of these issues has led to a continuous “bleeding” of most tokens, with only a few even reaching their 2021 highs. This has a huge psychological impact, as there are few things in life more frustrating than “keep trying and not getting rewarded.” This disappointment is particularly severe for speculators and speculators who believe that cryptocurrencies are the least labor-intensive way to get rich. Over time, this struggle has led to widespread burnout across the industry. Of course, this is a healthy developmental process. Mediocre efforts should not consistently produce extraordinary results as they have in the past. In the era before 2022, when “Vaporware” could also create huge wealth, it was obviously unsustainable. Nonetheless, the silver lining in all of this is that the above issues are widely understood and the price has priced in these expectations. Today, few crypto natives are willing to explore any long-term fundamental arguments except for Bitcoin. After four years of suffering, the asset class now has what it takes to surprise the market again. ! The crypto economy after enlightenment As mentioned earlier, the crypto economy entered this cycle with many structural problems. Fortunately, everyone is aware of this now, and many of these problems are gradually becoming history. First, in addition to digital gold, there are already many use cases that have shown compound growth, and many more are in the process of transformation. Over the past few years, the crypto economy has produced:

• Peer-to-peer network platform: Enables users to conduct transactions and execute contractual relationships without government or corporate intermediaries.
• Digital dollars: can be stored and transferred anywhere on the planet with an internet connection, providing a cheap and reliable currency for billions of people.
• Permissionless exchanges: Enables anyone, anywhere, to trade the world’s top assets across any asset class around the clock in one transparent venue.
• Novel derivative instruments: Examples include event contracts and perpetual swaps, which provide valuable predictive insights and more effective price discovery to society, respectively.
• Global collateral markets: Enables users to access credit permissionlessly through a transparent, automated infrastructure, thereby substantially reducing counterparty risk.
• Democratized asset creation platform: Enables individuals and institutions to issue publicly tradable assets at a very low cost.
• Open financing platform: Enabling anyone in the world to raise capital for their business and overcome local economic constraints.
• Physical infrastructure networks (DePIN): Distribute operations to independent operators through crowdsourcing capital, creating a more scalable and resilient infrastructure.

This is not an exhaustive list of all the value use cases that the industry has built so far. But the point is that many of these use cases are showing real value, and they continue to grow regardless of the price movement of crypto assets. ! At the same time, as regulatory pressures ease and founders become more aware of the cost of misalignment, the dual equity–token model is being corrected. Many existing projects are merging assets and revenue into a single token, while others clearly divide on-chain revenue into token holders and off-chain income to equity holders. Additionally, as third-party data providers mature, disclosure practices are improving, reducing information asymmetry and enabling better analysis. At the same time, there is a growing consensus on a simple and time-tested principle: 99.9% of assets need to generate cash flows, except for rare store-of-value assets like Bitcoin (BTC) and Ethereum (ETH). As more fundamental investors enter the asset class, these frameworks will only be further strengthened, and the level of rationality will increase. In fact, if there is enough time, the concept of “autonomous sovereign ownership of on-chain cash flows” may be understood as a paradigm unlock on the same scale as “autonomous sovereign digital store of value”. After all, when else in history have you been able to hold a digital bearer asset and autonomously pay you from anywhere on the planet whenever a program is used? ! In this context, the winning blockchain is gradually emerging as the monetary and financial cornerstone of the Internet. Over time, the network effects of Ethereum (Ethereum), Solana, and Hyperliquid have intensified, thanks to their growing ecosystem of assets, applications, businesses, and users. Their unlicensed design and global distribution make the applications on their platform the world’s fastest-growing business, with unmatched capital efficiency and revenue turnover. In the long run, these platforms are likely to support the overall addressable market (TAM) of financial superapps, which is an area that almost all leading fintech companies are currently competing for. ! Against this backdrop, it’s not surprising that the giants of Wall Street and Silicon Valley are pushing forward with blockchain initiatives at full speed. Now, a wave of new product announcements is popping up every week, covering everything from tokenization to stablecoins and everything in between. It is worth noting that unlike the era before the crypto economy, these efforts are not experiments but production-grade products, mostly built on public blockchains rather than isolated private systems. As the lagged effects of regulatory changes continue to permeate the system in the coming quarters, these activities will only accelerate. With increased clarity, businesses and institutions can finally shift their focus from “Is this legal?” Turning to blockchain is how it expands revenue opportunities, reduces costs, and unlocks new business models. ! Perhaps one of the most illustrative signs of the current situation is that few industry analysts are building models of exponential growth. Anecdotal evidence suggests that many of my seller and buyer counterparts around me don’t even dare to consider an annual growth rate higher than 20% for fear of appearing overly optimistic. After four years of pain, with valuations now resets, it’s time to ask yourself: what if all this really happened to grow exponentially? What if “Dare to Dream” pays off again? Twilight hour “Lighting a candle is casting a shadow.” —— Ursula LeGuin On a cool autumn day in 2018, before starting another tiring day of investment banking work, I walked into an old professor’s office and wanted to talk to him about everything about blockchain. After I sat down, he retold me his conversation with a skeptical stock hedge fund manager who claimed that cryptocurrencies were entering a nuclear winter and were a “solution to the problem.” After giving me a surprise training on unsustainable sovereign debt burdens and crumbling institutional trust, he finally told me how he hit back at the skeptics:10 In the future, the world will thank us for building this parallel system." Although it is not yet a decade from then, his prediction seems extremely prescient, as cryptocurrencies are increasingly looking like a “ripe time” idea. In a similar spirit, and the core thrust of this article, is to prove: the world still underestimates what is being built here. For all of our investors, the most relevant thing is,Multi-year opportunities for leading projects are underestimated。 The last part is key, because while cryptocurrencies may be unstoppable, your favorite token may actually be heading towards zero. The flip side of crypto becoming unstoppable is that it is attracting more intense competition, and the pressure to deliver results has never been greater. As I mentioned earlier, as institutions and businesses come in, they are likely to clean up many vulnerable players. This is not to say that they will win everything and take the technology for themselves, but it does mean that only a few native players will be the big winners around which the world repositioning revolves. The point here is not to be cynical either. In all emerging tech sectors, 90% of startups fail. There may be more public failures in the coming years, but that shouldn’t distract you from the bigger picture. Perhaps no technology is more in line with the current zeitgeist (Zeitgeist) than cryptocurrency. Declining trust in institutions in developed societies, unsustainable government spending in G7 countries, blatant currency devaluation by the world’s largest fiat currency issuer, deglobalization and fragmentation of the international order, and a growing desire for a new system that is fairer than the old one. As software continues to devour the world, AI becomes the latest accelerator, and younger generations inherit wealth from aging baby boomers, there’s no better time to get the crypto economy out of its own bubble. While many analysts define this moment through classic frameworks like Gartner’s hype cycle and Carlota Perez’s “post-frenzy” phase, suggesting that the best returns are a thing of the past, followed by a more tedious instrumentalization phase, the truth is much more interesting. The crypto economy is not a monolithic mature single market, butA collection of products and businesses on different adoption curves。 More importantly, when a technology enters a growth phase, speculation does not disappear, it simply rises and falls with the shift in sentiment and the pace of innovation. Anyone who tells you that the era of speculation is over may just be tired of it, or simply don’t understand history. It’s reasonable to be skeptical, but don’t be cynical. We are reimagining money, finance, and how our most important economic institutions are governed. It should be challenging, but also just as fun and exciting. Your next task is to figure out how best to make the most of this emerging reality, rather than writing endless Tweet threads to argue why it’s all doomed. Because through the fog of disillusionment and uncertainty, for those who are willing to gamble on the dawn of a new era rather than mourn the sunset of the old era, it will be a once-in-a-lifetime opportunity.