1. Institution-led Market: Elephants Dance and Ants Remain Silent
In July 2025, Bitcoin broke through $112,000, setting a new historical high, yet the discussion heat in cryptocurrency forums is 40% lower than during the 2021 bull market. Behind this contrast is a fundamental shift in market structure—institutional investors are becoming the absolute main players.
The average daily net inflow for the U.S. Bitcoin ETF reached $370 million, with traditional giants like BlackRock and Fidelity continuously increasing their holdings through compliant channels. This capital acts as a magnet for 'digital gold,' firmly anchoring market liquidity in Bitcoin. In stark contrast, the siphoning effect in the altcoin market is evident: the proportion of altcoin trading on Binance fell from 85% in 2024 to 77.83%, while the total locked value (TVL) of DeFi protocols has shrunk by 60% from its 2021 peak.
This shift is particularly evident in on-chain data. The net outflow of Bitcoin from exchanges has been positive for six consecutive months, indicating institutions are continuously accumulating coins; meanwhile, the on-chain activity of altcoins remains sluggish, with daily transaction numbers for public chains like Solana only at 35% of 2022 levels. The market is shifting from a 'retail-driven Wild West' to a 'compliance farm controlled by institutions.'
2. The Dilemma of Altcoins: Narrative Vacuum and Trust Crisis
While Bitcoin continues to set new highs, the altcoin market has fallen into a state of 'fire and ice.' Among the top 100 altcoins by market capitalization, over 70% have dropped more than 50% from their 2024 peaks, and the evaporation of $300 billion in market value is a concentrated eruption of multiple structural contradictions.
1. Exhaustion of Narratives and Innovation Gap
The narratives supporting the altcoin bull market in 2021, such as DeFi, NFTs, and the metaverse, have gradually faded, while new narratives have yet to take shape. Although concepts like AI chains and RWA (Real World Asset tokenization) are frequently mentioned, there are very few projects that have materialized. For instance, the total market capitalization of AI tokens has risen from $2.7 billion in 2023 to $36 billion, yet 90% of projects remain in the white paper stage. In contrast, a few projects like BitTensor that have truly achieved technological integration saw their TAO token rise by 17% in 2025, becoming a rare 'power player' in the market.
2. Liquidity Traps and Manipulation Risks
The liquidity crisis in the altcoin market is becoming increasingly prominent. According to CoinMarketCap, over 60% of altcoins ranked below the 50th by market capitalization have a 24-hour trading volume of less than $1 million, making them highly susceptible to manipulation by whales. The recent case of the Labubu coin is shocking: after soaring 300% in a week, it plummeted 91.66%, with over 90% of investors trapped. This model of 'fund pool - airdrop - exit' has become a tumor in the altcoin market.
3. Regulatory Squeeze and Compliance Costs
The passage of the U.S. (GENIUS Act) has established a regulatory framework for stablecoins but has indirectly suppressed altcoins. The act requires stablecoin issuers to hold 100% of their reserves in dollars, leading top stablecoins like USDT and USDC to capture 90% of market share, forcing small to medium-sized projects out due to high compliance costs. While Hong Kong (Digital Asset Development Policy Declaration 2.0) attempts to promote compliance innovation, it currently focuses on traditional fields like tokenized bonds, offering limited support for altcoins.
3. Shifts in Investor Psychology: From FOMO to JOMO
The community's indifferent reaction to Bitcoin's new highs essentially reflects a shift in investor psychology from 'Fear of Missing Out' (FOMO) to 'Joy of Missing Out' (JOMO). This transformation is manifested in three dimensions:
1. Iteration of Risk Awareness
Investors who experienced the 'crypto winter' of 2022 have significantly decreased their trust in altcoins. On-chain data shows that in the first half of 2025, the proportion of users withdrawing from centralized exchanges to personal wallets increased by 37% year-on-year, reflecting the spread of the 'holding coins through the winter' mentality. Discussions on social media about 'Bitcoin being the only safe asset' have surged by 210% compared to 2021, while interactions on altcoin-related topics have decreased by 45%.
2. Rising Participation Thresholds
An institution-led market is reshaping investment rules. Ordinary retail investors wishing to participate in Bitcoin ETFs must complete KYC/AML certification through compliant platforms, while on-chain operations for altcoins (such as cross-chain bridging and liquidity mining) still require a high technical barrier. This 'digital divide' has led to a 62% year-on-year decrease in the number of new investors, further shrinking market vitality.
3. Reconstruction of Value Consensus
The narrative of Bitcoin as 'digital gold' is being reinforced by institutional investors. The Bitcoin holdings of listed companies exceeded ETF inflows in the second quarter of 2025, while sovereign funds' Bitcoin reserves reached $12 billion. This 'national team' endorsement has deeply ingrained Bitcoin's safe-haven attributes. In contrast, the value positioning of altcoins is becoming increasingly vague: they lack Bitcoin's scarcity and struggle to demonstrate their actual application value.
4. Path to Breakthrough: From Speculative Gaming to Value Investment
In light of the current market predicament, investors need to reevaluate crypto assets from three dimensions:
1. Narrative Selection: From Riding the Hype to Real Demand
Truly valuable altcoins should have clear application scenarios. For example, Stellar (XLM) connects over 200 financial institutions through cross-border payment protocols, with fees only 1/10 of traditional SWIFT; Avalanche (AVAX) allows businesses to build dedicated blockchains within 24 hours, reducing costs by 90%. Common characteristics of such projects include: solving real pain points rather than creating conceptual bubbles.
2. Data Validation: On-chain Indicators and Fundamental Analysis
On-chain data is key to identifying quality projects. Key metrics to focus on include: the dispersion of holding addresses (the top 10 addresses holding less than 50%), the growth rate of active users (monthly growth exceeding 20%), and real revenue capability (such as transaction fee income for DeFi protocols). For example, MakerDAO's MKR token saw a 120% increase in 2025 due to continuous growth in protocol income, becoming a 'cash cow' among altcoins.
3. Risk Hedging: Layered Allocation and Dynamic Balance
In a Bitcoin-dominated market, investors can adopt a 'core + satellite' strategy: allocating 60%-70% of funds to Bitcoin as a 'ballast,' while using the remaining funds to invest in altcoins with technical breakthroughs (such as AI chains and RWA projects). At the same time, attention must be paid to the risks of contract trading—when the long-short ratio of Bitcoin exceeds 3:1, the probability of market correction significantly increases.
5. Conclusion: Survival Rules Across Cycles
The current crypto market is undergoing growing pains of 'institutionalization' and 'compliance.' Bitcoin's new high is not an endpoint but a sign of market maturity; the stagnation of altcoins is not the end but the beginning of value return. For investors, the real opportunity lies in:
• Identifying True Narratives: Avoid 'Air Coins' and focus on projects that solve real problems;
• Embrace Compliance: Participate in the market through ETFs, compliant platforms, etc., to reduce risks;
• Be Patient: In an institution-led market, long-term holding of quality assets remains the best strategy for navigating bull and bear cycles.
Just as it took Bitcoin 15 years to grow from a geek toy to an institutional standard, the revival of altcoins will also require time. In this 'silent bull market,' projects that can combine technological innovation with real needs will eventually shine after the market reshuffle.$BTC