The 'survival rules' of this Bull Market have completely changed?

Author: Haotian

Chatting with friends from different circles, I found a very interesting phenomenon...

It seems that only 'Holders' are extremely pessimistic about the current market environment, while most Traders do not think so.

My top post reveals the existence of "four parallel cycles and four different strategies", apparently embracing the new rules Trader has become the winner, while the Holder who adheres to old experiences has become a cannon fodder?

Ultimately: the 'survival rules' of this bull market have completely changed:

In the previous cycle, the market was still stratified into groups of Holders, Traders, and Builders, each able to profit according to their respective investment models; this time, you will find that Holders and Builders are in despair, with only Traders with a touch of gambling able to survive in the market.

Next, the 4 major structural changes I am about to analyze may completely reshape your understanding of the current Crypto market ecosystem.

• 1. VC funds entering a systemic wave of exits: liquidity shifting from incremental to stock game;

In the previous cycle, VC funds played the role of incremental funds, forming a synergistic effect with retail funds, jointly promoting the arrival of a booming bull market. In the current cycle, a large amount of institutional funds, after frenzied layout in the past 2-3 years, have entered the harvest period and exit window.

At present, VC coin has been labeled as "Dog Does Not Care", showing a "high opening + continuous decline" decadent characteristic. Although VC's heavy capital support for Crypto industry innovation is also to make money, the key is that there is a fundamental conflict between VC's exit logic and retail investors' investment logic.

When VC enters the exit period, retail investors are actually buying liquidity for institutional investors' exits.

This explains why, even in a bull market, 'launching is the peak' has become the fate of VC coins.

——2）Industry narrative ecosystem fundamental reconstruction: Short, flat, fast MEME has defeated the long-termism of technological narrative;

In the previous cycle, innovation presented a sectoral distribution, and funds also flowed sectorally.

DeFi Summer has a clear 6-month construction and outbreak period, the NFT craze extends from art collection to the metaverse with a complete 9-month narrative cycle, and GameFi has a clear 12-month development context from the Play-to-Earn concept of Axie Infinity to the entire sector's ecosystem construction.

You see, each sector has its own technical logic, application scenarios, and value accumulation process, more importantly, each has a clear "retail investor participation and exit window." Ordinary investors can enter in the early stage of sector rotation, follow the narrative development, and obtain excess returns.

But the rise of MEME has completely changed this game rule.

What are the features of MEME? Taking off in 7 days, peaking in 30 days, and approaching zero in 3 months. I wonder, when speculative funds can make more than 10 times profit in a month by manipulating the market or speculating, who would still be willing to wait for a 2-year construction period of a technical project?

MEME is not wrong, but the trend of chasing MEME's ultra-short-term gameplay has completely crushed the survival and development space of traditional technical narratives.

Under the short-term trend-driven lure, the funds and innovation behind MEME have fallen into a speculative and manipulative quagmire. As a result, the teams truly focused on technical development are not receiving financial support, while concept-packaged projects are gaining massive attention.

Finally, when the market shifted from 'universal sector rotation' to 'specialized high-frequency harvesting', retail investors lost the opportunity window to profit from following the technological narrative.

-3) Macro liquidity tightening and endogenous narrative overload: the innovation dilemma under double squeeze;

In terms of the external environment, the repeated adjustments of the Fed's rate cut expectations, the continuous fermentation of geopolitical risks, and the cautious attitude of traditional financial markets towards risk asset allocation are all squeezing the incremental sources of funds for the Crypto market. In particular, the strong performance of US tech stocks and AI concept stocks has provided risk capital with a more 'secure' high-yield option, further compressing the funding sources for Crypto.

In terms of internal environment, the industry has fallen into the dilemma of "narrative overload." The dense emergence of technical concepts such as Layer2, Restaking, zkVM, AVS, modularization, chain abstraction, Intent... far exceeds the market's ability to digest, yet falls far short of expectations in terms of user experience, practical applications, and value delivery.

In my view, the underlying issue is that the crypto industry has shifted from the past geek innovation culture to an inward competition driven by market speculation demand.

In the early days, Crypto innovation revolved around concepts such as decentralization, censorship resistance, and TPS performance, or was guided by solving practical problems. However, at this stage, some projects are focusing on how to package concepts to attract investment.

As a result, the concept becomes cooler and cooler, the technology stack becomes more and more complex, but ordinary users cannot feel the actual value at all.

Ultimately, the caution of external funds and the loss of internal innovation have formed a vicious cycle: the market no longer cares how advanced your technology is, only whether your story is attractive enough. This inverted incentive mechanism is strangling real innovation, and the entire industry's value judgment system is beginning to collapse.

-4) CEX role transformation: from ecosystem builder to liquidity harvester;

In the last cycle, mainstream CEXs such as Binance enjoyed a huge dividend of institutional funds entering to incubate first-tier projects, promoting the growth of high-quality projects through Launchpad, labs investment incubation, and other means, with the 'listing effect' being particularly prominent.

At that time, the exchange held a huge number of users and liquidity, indeed playing a role in price discovery and liquidity allocation.

However, in the current cycle, CEX has become the industry's dividend "consumer" and liquidity "harvester", constantly calling for Big Brother Build, but ignoring what 'Binance has no dreams' means.

Now, being listed on an exchange not only has lost its money-making effect, but has instead become a "peak takeover signal." Originally hoped that the emergence of Binance Alpha would become a cradle for innovation incubation and guidance, but in reality, it has become another product "killer" that competes for market share and squeezes liquidity.

What the coin observation area, what the airdrop points system, are all just using the mindset of internet products to operate retail investors as a "traffic pool".

The core logic is that CEX faces high operating costs to meet risk control and compliance needs, so it has no choice but to use the advantage of accumulated user pool to "maintain the profit model".

So strategically, we have shifted from actively supporting projects to passively screening projects, from bearing market liquidity risks to avoiding risks... from creating incremental value to distributing and squeezing existing liquidity.

In this way, the originally healthy 'exchange-project party-user' three-party win-win ecosystem is broken. The exchange no longer bears the responsibility of value discovery, the project party loses an important growth channel, and the users become a harvested traffic pool.

It is lamentable that when the most important liquidity hub in the industry begins to 'lie flat and collect rent,' the innovative vitality of the entire ecosystem is systematically drained.

Above.

Taking into account the above four structural changes, we can clearly see a harsh reality:

Holders face a market where technological faith collapses, long-termism fails, and value investment logic is completely bankrupt; while Traders face a paradise of abundant liquidity, huge volatility, and speculation opportunities everywhere.

They are not facing the same market at all.

In the short term, the Trader's strategy does indeed better suit the current environment, but in the long run, when the entire industry becomes a zero-sum game casino, the foundation of innovation will be eroded, and the market's sustainable development will lose its momentum. After the Holder, the Trader's survival environment will also be squeezed dry, and the market will ultimately have no winners.

Perhaps, this is exactly the "growing pains" that the Crypto industry must go through to mature.

The market eliminates participants who do not adapt to the new environment in the cruelest way, and is also using the final speculative frenzy to puncture this gambling-like survival environment.

As a dedicated Holder, at least I still have a simple dream: "When speculation is pushed to the extreme, when the casinoization reaches its peak, the market may find a new balance point after a thorough 'de-glamorization' and return to the essence of technological innovation and value creation."

Note: Share your story. What frustrates you the most as a Holder? As a new Trader, what have you gained in the new situation?