Cold thinking in the post-bull market era: how will the various tracks of the crypto industry develop under the market reshuffle?

Original by Joel John

Original compilation: Yangz, Techub News

Translator’s note: Against the backdrop of Trump’s vacillating tariffs and volatile global trade situation, the cryptocurrency market is experiencing a significant cooling. The author of this article analyzes the current structural changes in the cryptocurrency market from 16 dimensions. In this special period of the dual role of macro policies and market mechanisms, the cryptocurrency industry may usher in a profound value restructuring - which is not only a brutal reshuffle process, but also the only way 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 are going to evolve.

1. At its core, cryptocurrencies are the trajectory of money in its current form. Blockchain is to money/assets what the Internet is to information, and as a consequence, speculation is still the industry’s most important use case.

While the speed and scale of speculation will fluctuate, the most significant results (and the largest source of revenue) in this space will continue to come from speculation and the secondary use cases that arise from it, such as lending, derivatives, broker-dealers, etc.

2. With Circle’s initial public offering (IPO) application, the stablecoin track may usher in its phased peak. In my opinion, the cut in interest rates will be another domino affecting the sector. Considering the dual pressures of channel moats and regulatory challenges, the next big opportunity for stablecoins may not be so hot. (Recommended reading: “Techub Financial Report Interpretation: Circle Sprints to IPO, But Revenue Growth Can’t Hide Profit Dilemma”)

For non-Silicon Valley founders in particular, the real marginal opportunity lies in being able to leverage geographically sourced fintech applications on crypto payment rails, rather than “exporting” dollars. Of course, it’s a different story if you can raise more than $10 million from the start and have your headquarters in the United States.

3. The DePIN track should theoretically be hot, but when combined with service level agreements (SLAs) and the scale required for large-scale AI projects, the real investment opportunities will be focused on networks that can generate more than $100 million in demand-side revenue. These networks will almost (always) partner with private equity or hedge funds to meet short-term capital liquidity needs. As of now, I haven’t seen a single token-based network that has been able to scale to this extent (and remain reliably operating).

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 doesn’t touch the token system.

4. The reason why we started to focus on the relationship between tokens and revenue stems from two fundamental shifts. First, in a post-pump.fun world, the valuation premium that tokens enjoy is gone. When assets are vested, it becomes extremely difficult to maintain a fully diluted valuation (FDV) of more than $100 million; Second, today’s stock and forex markets are just as volatile as cryptocurrencies, and the trends are clearer, leading to a complete drying up of marginal buying in the cryptocurrency market.

The fundamental reason why project parties really need to worry about revenue is that for liquidity funds (the last marginal buyer), there are only about 50 revenue-generating tokens worth allocating, and there may be less than 30 of them with real growth potential.

5. VCs have a strong incentive to insist that “tokens as a business model are not dead yet” and to tout that “Web3 is coming”. If you choose to turn a blind eye to industry trends, you can continue to pretend to be deaf and dumb for a while.

In my opinion, we are entering a phase where there will be fewer and fewer founders issuing tokens, and they will hold the earnings in the form of small teams. Crypto VCs may not be able to cope well with this shift, as their liquidity has traditionally come from exchange listings and retail buys. One might blame the macro environment for the reduced deployment of crypto VCs, but the real reason is that in the years since FTX, the portfolio’s ability to deliver returns has been greatly diminished as the market has changed.

6. In my opinion, there are no more than 10 crypto funds that have the ability to write checks and build Uber/Cisco-level achievements. There may be fewer than 30 partners who actually understand how to achieve this kind of achievement. The lack of large-scale consumer apps in the crypto space is often attributed to issues such as poor user experience or poor marketing. In my opinion, part of the core challenge lies in the fact that the nature of current capital is constrained by a 3-year return cycle and is overly obsessed with the liquidity that comes with listing tokens. This has become the “opium” of cryptocurrency ventures. Perhaps, in this environment, there is an opportunity to build large-scale consumer applications with a longer-term perspective.

7. The combination of crypto and artificial intelligence (Crypto x AI) may seem popular, but it is difficult to keep up with the development of AI itself. This may be the first area where the phenomenon of “emperor’s new clothes” in our industry has been exposed. Concepts such as data sourcing and distributed computing provisioning are theoretically appealing, but their potential for scale remains to be proven. Most networks that have achieved scale rely on distributed data centers, which still settle earnings in dollars.

AI models don’t show a premium advantage just because the data source is “compensated.” The real potential, or similarity with the P2E model, is the crowdsourcing IP address space, which I think is a very interesting segment.

8. There is an opportunity in the crypto space to create a native digital bank for the middle and upper income groups. Think about it, from payroll management + fund transfers + portfolio construction (stocks/treasuries) to loans, all of this is available to crypto-native users. This group of users is those who earn between 5,000 and 200,000 per month in the cryptocurrency space and want their banks to handle all of them. While the addressable market size for this type of bank (TAM) between 5,000 and 10,000 people, in my opinion, there is unique value in building such a platform.

9. Farcaster could bring DAOs back to life. Many DAOs have fallen because it turns out that people simply don’t want to be involved in the governance of lending or derivatives platforms. If the community on Farcaster grows to 10,000 people, and those communities are able to coordinate resources (such as community assets) on-chain, then DAOs will gain traction again.

I hope this will be the way for Memecoins to return. When done properly, this type of asset may be more sustainable than Dogecoin/Catcoin. The core challenge for Farcaster was how to balance the needs of content creators with the financialization of the platform. Without financialization, it could be reduced to just another ordinary agreement; If financialization is successful, it will become the prototype of the next generation of the Internet.

10. The current chain game feels lifeless, but from an ROI perspective, it is the segment with the highest ROI in consumer applications. The teams still working in this space today need some kind of “crazy quality”, and those who are really strong will likely create a sustainable gaming market with millions of users. It is often assumed that this track died in 2022 (after Axie), but if you add in the cooling-off period of 1 year after the frenzy, and the product development cycle of more than 2 years, 2025/2026 is likely to be the first year of the explosion of crypto games.

11. Long-tail altcoins will have a hard time making a comeback. This is different from 2018 and 2023, when there was a lack of retail investors, and now retail investors are still active in the market, but they are no longer chasing the 50th fungible token.

In my opinion, this will change the investment logic of the crypto industry. In the past, the bet was “whether this token will be listed on the exchange”, but now it has become “whether this token is important”. These are two very different questions, and few have found the answers.

12. The brain drain in the crypto industry will be more rapid than liquidity depletion. Specifically, witnessing practitioners move to the AI track, or seek other jobs due to sluggish progress in the crypto space, this shock will be a far greater blow to morale than a drop in the price of the currency. Unlike 2018 and 2023, the current macro environment portends more lasting pains, while the AI space continues to make 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 shift.

13. Research and media organizations in the cryptocurrency space are going through a period of consolidation. Ordinary creators have become frustrated with the industry – L2 projects have historically been the main funders, and working with them has become a torment. In the next 18 months, the only way for creators to survive is through hyper-financialization. In other words, you have to get enough profit margins to be able to invest time in polishing high-quality content.

Companies that can combine creation (writing/research), financialization (asset/transaction structuring) and moats (distribution channels/processes) will make a lot of money. But teams with this kind of gene are extremely scarce.

14. If there are fewer founders who issue coins and more and more founders who can grow by millions of users, then the next pool of capital to be unlocked in the crypto space will be private equity. While not yet at scale, private equity firms are likely to be the dominant force in the next 18 months as long as companies generate more than $10 million in annual revenue. The total number of companies that meet these conditions is about 50, of which perhaps 20 are privately held. So, for now, it’s still a tiny market.

15. I think it’s possible to set up a fund of about $10 million to invest in projects that combine creative content (music/art/writing) with cryptographic primitives and distribute them at 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 in particular.

16. The cryptocurrency industry has both a moral and an idealistic side when it comes to how it shapes the world. Compared to 2018, the industry now achieves a 100-fold product-market fit (PMF), but only at a fraction of the premium it once had. In this kind of market, knowing how to block out the speech of pedants and focus on data signals has become an art, even a survival skill. It’s important to remember: you are shaping and being shaped by the world in which you live. Initiative itself is a moat.

Link to original article