Crypto Assets market's new challenges: Why does this cycle seem particularly difficult?

This round of the Crypto Assets market cycle is more challenging than before, with multiple factors leading to this situation.

Firstly, the significant declines in the past two large altcoin cycles, combined with the impact of the Luna and FTX incidents, have caused serious psychological trauma to market participants. This post-traumatic stress response has led investors to be unwilling to hold assets for the long term, increasing emotional volatility and constantly searching for the cycle peak. This mindset has not only affected trading behavior but also changed the construction and investment methods of the entire ecosystem. Projects are facing stricter scrutiny, and the trust threshold has significantly increased.

Secondly, the innovation landscape has changed. While there are still incremental improvements, there is a lack of disruptive breakthroughs like DeFi. This makes it easier for critics to question the progress of Crypto Assets, while also highlighting the industry's lack of killer applications that can attract hundreds of millions of users.

The worsening regulatory environment is also an important factor. The actions of regulatory agencies hinder the development of the industry, especially in areas with great potential such as DeFi. This not only drives away some builders but also prevents traditional finance from interacting with the industry, distorting the market's supply and demand and price discovery mechanisms.

These factors have together fostered a sense of financial nihilism. Faced with "useless governance tokens" and unfavorable token issuance dynamics, many Crypto Assets natives are turning to meme coins in search of "fairer" opportunities. Socioeconomic pressures have also fueled this trend, making speculative investments more attractive. This attitude is reflected in the rise of a "degenerate" culture, shorter investment horizons, and increased extreme leveraged trading.

The experiences of past cycles have instead become an obstacle. In the past, buying altcoins during bear markets and waiting for them to surpass Bitcoin was a viable strategy. However, this cycle favors traders over holders, requiring participants to possess higher trading skills.

The differentiation between Bitcoin and other Crypto Assets is intensifying. Bitcoin is attracting new buyers from traditional finance and has even drawn the attention of central banks around the world. In contrast, altcoins are lacking new sources of buyers and continue to face reputational challenges.

The transformation of Ethereum's role has also affected the market landscape. In the past, Ethereum's rise was often seen as a trigger for the altcoin market, but this pattern has failed in this cycle.

In the face of these challenges, investors need to adjust their strategies. Consider:

1. Focus on projects with clear revenue models, actual product-market fit, and sustainable token economics.
2. Improve trading skills to adapt to a shorter-term market environment.
3. Adopt a barbell strategy, allocating the majority of funds to Bitcoin and leading public chains, while a small portion is used for more speculative investments.
4. Adjust strategies based on personal circumstances to avoid direct competition with full-time traders.
5. Combine different fields, such as participating in airdrops, early entry into emerging ecosystems, etc.

Despite numerous challenges, there is still room for growth in the altcoin market. However, the projects that can truly surpass Bitcoin and leading public chains may be limited to just a few industries and tokens. Investors need to remain vigilant and adapt to the rapidly changing market environment.