Author:Aylo
Compiled by: TechFlow
First of all, this cycle is really hard, and don’t let anyone pretend to tell you it isn’t.
But the reality is that each cycle is harder than the last. You are competing against a larger pool of players, more and more of them are becoming more sophisticated, and ultimately there are more losers.
If you don’t have a majority of your holdings in BTC or SOL during a bear market, then you’re probably not making money and you may even be tearing your hair out.
I would have struggled myself if I hadn't been trading in SOL. Yes, we did have some big individual winners, but I guess if you speculated heavily in these assets, you would probably end up giving some or even a large portion of your gains back. Especially since people don't just quit after a big win.
They will say "there's still time in the cycle" and then think it can keep going up and that's how they give their gains back. The truism of "playing stupid games, winning stupid prizes" never fails. Sometimes this just plays out for traders and gamblers on a longer timeframe.
So why is this cycle so difficult?
PTSD (Post-Traumatic Stress Disorder)
We have two examples of large altcoin cycles where most tokens dropped 90-95%. Coupled with the Luna and FTX crashes, this caused a ripple effect across the industry, and asset prices may drop lower than they should have.
Many big players were wiped out, and we have not seen the return of crypto lending platforms in this cycle. This PTSD has deeply affected crypto natives. Especially the way the altcoin market is traded, mainly because "everything is a scam" has become the mainstream view in this cycle.
In the first two cycles, the belief that “this technology is the future” was more prevalent, but now it has become a minority view, or ranked alongside “everything is a scam.” No one wants to hold onto anything for the long term because they simply don’t want to lose a large portion of their portfolio again.
This created a “max jeet cycle.” This sentiment was also amplified on Crypto Twitter as participants kept looking for the top of the cycle.
This psychological impact extends beyond trading behavior — it affects the entire ecosystem’s attitude toward building and investing. Projects now face a higher standard of scrutiny, and the threshold for trust has been raised exponentially. This has both positive and negative aspects: while it helps filter out obvious scams, it also makes it harder for legitimate projects to gain traction.
Innovation
While innovation continues and infrastructure continues to improve, there are no longer jaw-dropping 0 to 1 breakthroughs like DeFi.
This makes arguments like “cryptocurrency isn’t making progress” easier to accept and leads to more “cryptocurrency is nothing” narratives.
The innovation landscape has shifted from revolutionary breakthroughs to incremental improvements. While this is the natural evolution of any technology, it presents challenges for a narrative-driven market.
We also still lack the breakthrough applications that are necessary to bring cryptocurrencies to hundreds of millions of on-chain users.
Regulation
The corrupt SEC has created chaos. They have hindered the progress of the industry and prevented certain areas like DeFi that could gain product-market fit (PMF) among a wider audience from developing further.
They also prevent all governance tokens from delivering any value to holders, thus creating the narrative of “all these tokens are useless”, which is somewhat true. The SEC drove away developers (see Andre Cronje’s account of the SEC getting him kicked out), prevented traditional finance (TradFi) from interacting with the industry, and ultimately forced the industry to raise money from VCs. This led to poor supply and price discovery dynamics, with value captured by a few.
However, we are seeing some positive changes now, such as Echo, Legion and more public sales.
Financial nihilism
All of the above factors have led to financial nihilism becoming an important factor in this cycle.
The high FDV (fully diluted valuation) and low circulation dynamics caused by “useless governance tokens” and the SEC pushed many crypto natives to memecoins in search of “fairer” opportunities. Indeed, in today’s society, as asset prices soar and wages cannot keep up with the endless depreciation of fiat currencies, young people have to gamble to improve their status, so memecoin lotteries are attractive. The reason why lotteries are attractive is that they provide hope.
As gambling has product-market fit (PMF) in crypto, and we get better technology in gambling (like Solana and Pump.fun, etc.), there has been a surge in the number of tokens issued. This is because a lot of people want ultra-high-risk gambling, and where there is demand there is supply.
“The trenches” has always been a part of crypto, but in this cycle it has become a widely known term. This nihilistic attitude manifests itself in a number of ways:
- The rise of “degen” culture and its mainstreaming
- Shortened investment time cycle
- Focus more on short-term trading rather than long-term investing
- The normalization of extreme leverage and risk taking
- The “indifferent” attitude towards fundamental analysis
Experience from previous cycles has become an obstacle
Past cycles have taught people that they can buy some altcoins during a bear market and eventually get rewarded by outperforming BTC.
Almost no one is a good trader, so this has been the best path for most people in the past. Overall, even the worst altcoins have a chance.
But this cycle is a trader’s market, more suited to sellers than holders. Traders even got the biggest gains of this cycle through the HYPE airdrop. The narrative of this cycle didn’t last long, and there were few convincing narratives. There were more sophisticated players in the market who were better at extracting value efficiently, so the mini altcoin bubble was not particularly large.
The first hype cycle for AI agents is an example of this. This was probably the first time people felt “this is the new thing we’ve been looking for.” But it’s still early days, and the long-term winners may not have emerged yet.
Bitcoin has new buyers, while altcoins mostly don’t
The divergence between Bitcoin and other assets has never been more pronounced. Bitcoin unlocks demand in traditional finance. For the first time, it has an incredible new source of passive demand, and now there are even central banks discussing adding it to their balance sheets.
It’s harder than ever for altcoins to compete with Bitcoin, which makes sense because Bitcoin has a very clear target in mind — the market cap of gold.
There really aren’t any new buyers for altcoins. Some retail investors returned when Bitcoin hit new highs (but they bought XRP 💀), but overall, there isn’t enough new retail money flowing in and crypto still has a bad reputation.
The Changing Role of Ethereum
The decline in Bitcoin dominance is largely due to the growth of Ethereum’s market cap. Many people use the rise of Ethereum as the trigger for the “alt season”, but this rule of thumb has not worked in this cycle because Ethereum has performed poorly due to fundamental reasons.
Many traders and investors are having a hard time accepting that Ethereum has failed to drive higher risk appetite and, in fact, it continues to play the role of ending the mini alt season, which is the opposite of what has happened in the past.
Despite evidence that certain narratives and sectors can run without Ethereum doing anything, many traders still believe that Ethereum needs to rise in order to usher in a true alt season.
How can I do this?
So, what should you do from here?
Work hard, or work smarter. I still believe that fundamentals will always work in the long run, but you have to really understand the projects you support and how they can actually outperform Bitcoin. There are only a few candidates that meet this criteria at the moment.
Look for projects that:
- Clear revenue model
- Actual product-market fit
- Sustainable Token Economics
- A strong narrative that complements fundamentals (I think AI and RWA fit this bill)
I believe that projects with stronger fundamentals and product-market fit (PMF) that are finally able to accrue value to their tokens due to the unlocking of US regulation have become lower risk options. Protocols that can generate revenue are now poised to outperform. This is a significant shift from the “greater fool theory” that dominated many previous token models.
If your strategy is to “wait for the retail to come in and then sell,” then I think you’re in big trouble. The market has moved beyond a purely retail-driven cycle, and sophisticated players are likely to preempt this obvious strategy.
You can choose to become a better trader and try to develop your edge and focus on taking more short-term trades, as this market does offer many consistent short-term opportunities. On-chain trading may offer greater multiples, but it can also be more ruthless on the downside.
For most people who don't have a clear edge, the "barbell portfolio" is still the best option. Allocate 70-80% of your funds to BTC and SOL, and then leave a smaller percentage for more speculative investments. Rebalance regularly to maintain these proportions.
You need to understand how much time you can devote to the cryptocurrency space and adjust your strategy accordingly.
If you are a normal person with a normal job, competing with young people who sit there for 16 hours a day is not going to work. The strategy of passively holding underperforming altcoins and waiting for your turn is also no longer going to work in this cycle.
Another strategy is to try to combine different areas. Build a portfolio based on solid assets, and then look for opportunities like airdrop mining (now more difficult, but still low-risk opportunities), or identify some emerging new ecosystems and deploy them in advance (such as HyperLiquid, Movement, Berachain, etc.), or focus on a specific area.
I still believe the altcoin market will grow this year. The conditions are in place and we are still tied to global liquidity, but significant outperformance of BTC and SOL will be limited to a few sectors and a smaller number of altcoins. Faster altcoin rotation will continue to occur.
If we get some crazy money printing, maybe we’ll see something closer to a traditional alt season, but I think the likelihood of that is lower than we’d like. Even in that case, most alts will only provide average returns. We still have a lot of important alts coming online this year, and liquidity will continue to be diluted and dispersed.
It won’t be easy, but I’ll give you some hope: I’ve never seen someone who has been serious about crypto for years fail to make decent money.
There is still a lot of opportunity in this asset class and many reasons to be optimistic about its growth.
Ultimately, I don’t know any more than anyone else, I’m just adapting to what I’m seeing in this cycle.
Also, I would add this: We are not early in the cycle. That much is clear. The bull market has been going on for a long time, and that fact does not change whether you make money or not.
“Control the downside risk and the upside will take care of itself.”
This famous quote will always be true.
