After Bitcoin's ETF in the US stock market, a very contradictory situation has intensified.
On one side, major legitimate media and financial institutions are starting to engage with cryptocurrencies, with some getting involved.
On the other hand, liquidity in the crypto market continues to decrease, the wealth effect is shrinking significantly, and market trends are fully leaning towards speculation, reverting to a barbaric period.
In summary, the fundamentals are becoming increasingly legitimate, yet the market is becoming more chaotic and disorderly.
Why does such a contradictory scene occur?
Is global finance or the development of cryptocurrencies at a bottleneck due to the redundancy of newly added quantities?
Is it that cryptocurrencies, as decentralized finance, are being deeply influenced by centralization?
I have thought about the above questions for a long time.
If it is due to the influence of centralization, even if altcoins do not experience the prosperity of 2017 or 2021, relying on the fundamentals and various positives from the past year should not lead to such a decline.
So, does the current situation of altcoins encounter the same issues as the major A shares?
With the development of the market, the number of new coins has become increasingly redundant, and funds are being severely diverted.
The market has no strength left to create an all-encompassing altcoin bull market that could multiply dozens of times.
However, due to the harshness of altcoins and the ongoing divergence from Bitcoin's price trend, some traders have already left the market, and most of those remaining have serious FUD emotions.
As the major player of cryptocurrencies, Bitcoin and altcoins have a complementary effect. As long as Bitcoin's status remains unshaken, altcoins will not disappear; it's just a matter of two solutions.
Like the development of most emerging things, when at a bottleneck point where progress cannot be made, one must either seek new paths to break through.
Or start over, similar to the cycle theory of large financial systems.
The current trend of altcoin development is like rebuilding a new order. Since the market cannot absorb a massive altcoin market value, it will depreciate to a relatively reasonable range.
Then it evolves towards the direction needed by the current market, such as the main RWA and AI sectors.
Looking back at last September's article, there were both right and wrong views. At that time, the article believed that the current liquidity was insufficient to support a major bull run, but with Trump's successful campaign, the market was propelled by a wave of bullish sentiment, and my personal views were somewhat shaken.
After the favorable effects of Trump have been exhausted, most coins have fallen back to the lows of last September.
In other words, excluding Trump as a middle factor, the market has continued its downward trend since September, which means the phase of eliminating valuations.
So, since it is an extension of a bear market, before the turning point arrives, the crypto market may still need to go through a relatively struggling period.