The laughter remains, but the crypto world has become "alienated": when all narratives collapse into the single posture of shilling coins

Original Article Title: "Crypto Industry Observation Mar 30 2025"
Original Article Author: XinGPT

After returning from Hong Kong Consensus, I met some friends in China one after another, with the familiar laughter still echoing in my ears. The old friends are still active, including KOLs, agencies, market makers, and traders. Despite the people remaining and the market not collapsing, the only thing that has changed is the "spirit" of this market.

This is not a bull market, nor is it a bear market. It is not a market dominated by greed or fear as people are familiar with, but a kind of indescribable "alienation"—an industry atmosphere that veteran investors have never experienced, making it feel like a completely different world.

In this era, there is only one business left in the crypto industry: selling coins.

Three Pillars: Creation, Discovery, Circulation

By a rough estimate, the crypto industry has always revolved around three pillars:

· Value Creation—Technological innovations such as Bitcoin, Ethereum, stablecoins, Layer 2, DeFi, AI Agents, etc., satisfy user needs and create real-world value.

· Value Discovery—Through VC investments and trading pricing, potential assets are captured, price discovery is achieved through market mechanisms, and industry development is driven.

· Value Circulation—Market makers, agencies, media, KOLs, etc., establish coin distribution channels, help projects reach retail investors, and complete first- to second-level circulation.

These three elements should have been interlocking gears, complementing each other in the market ecosystem. However, what we see now is:

The first two are declining, while the third is prospering.

Projects no longer pursue users and products, and VCs no longer study trends and market segments. The entire market is left with only one voice echoing loudly: "How do we sell this coin?"

The Coin Selling Economics and Resource Club

In a rational and healthy market, the three links should be inseparable, with the project team developing products, meeting user needs, gaining profits, and a capital market premium; first- and second-tier institutions providing capital allocation to the project, intervening in downturns, exiting in peaks for profits; and the circulation side laying out sales channels, providing higher capital efficiency to the capital market.

However, the current crypto industry no longer sees project teams or VCs discussing which areas of the industry still have room for innovation, what kind of products can be developed, or what needs can be met. Even in the generally discredited VC industry in the second half of 2024, there was still partial industry enthusiasm like AI Agents that could inspire entrepreneurs.

Secondary institutions are also generally lying flat, with meme coins reaching their peak upon listing, meme coin liquidity almost drying up, and BSC's sustainability still lacking.

In this market environment, the only remaining active institutions in the industry are the third category: MM liquidity providers, agencies, and intermediaries. The topics of discussion revolve around how to generate good data or secure relationships with major exchanges, how agencies promote to attract buying pressure, and how proactive liquidity providers collaborate with the buying community to dump more trading volume.

The market participants are highly homogeneous, all trying to squeeze out the increasingly scarce liquidity in the crypto space.

As a result, the resources at the top (top projects, major exchanges and their listing departments, and well-resourced MM and agencies) have formed an unbreakable interest group. The lifeblood of the crypto space flows from LPs to VCs on one end, and from VCs to top projects, while on the other end, it seeps through the capillaries of the secondary market's retail investors, nourishing the parasitic entities of this interest group, causing them to grow larger as prices rise.

Disappearance of Entrepreneurs

After FTX went bankrupt in 2022, the crypto space experienced a dark period when Bitcoin fell to 18,000, and altcoins fell silent.

However, unlike that moment, a large amount of funds in the crypto space now lie in the hands of VCs, secondary funds, and large holders. These funds have a hematopoietic function. VCs will invest in startups, and entrepreneurs can generate positive externalities, create value, and attract funds.

At this moment, a large amount of funds are being bled by intermediary parties. Entrepreneurs and project teams only seek to list and make a price difference, becoming intermediaries between VCs and the secondary market without needing to create value, only needing to create "hollow" stories. From the perspective of traditional business logic, if downstream distribution channels eat up most of the costs, then upstream research and development and operation costs must be cut.

Hence, project teams simply give up developing products, using all funds to facilitate promotion and listing processes. Since many projects without products and users can still list, promotion can now be wrapped in a "meme" narrative. The less spent on product and technology, the more funds can be allocated to listings and pumping.

The innovation path in the crypto space has become:

"Tell a good story → Package quickly → List through connections → Cash out and exit."

Product? Users? Value? Those are self-indulgent ideals of romanticism.

Extraction is Destiny

Superficially, project teams spend money on listing and increasing token prices, creating a win-win situation where funds exit, secondary retail investors have room to maneuver, and intermediaries profit from their transaction fees.

However, in the long run, the loss of positive externality results in only intermediaries growing larger and larger, with the extraction ratio increasing after forming a monopoly.

The upstream project party reduces production and research costs, the squeeze of regulatory pressure and extraction leads to a severe risk-reward imbalance, and they have no choice but to exit. The downstream retail investor PvP becomes more and more severe, with "every time being the last one in," and after the money-making effect is lost, a large number of people exit the market;

Essentially, whether it is an exchange platform, MM, or agency, the intermediary is a service provider, and the service provider does not directly create value and positive externality. However, when the service provider and the extracting party become the largest interest group in the market, the entire market is like a cancer patient with a tumor, and the ultimate outcome is definitely that the cancer cells thrive as they are fed, and the host withers and dies after the nutrients are drained.

The Power of Cycles and Post-Disaster Reconstruction

The cryptocurrency market is ultimately a cyclical market.

Optimists believe that after this trough of liquidity drought, a real "Spring of Value" will eventually appear one day. Technological innovation, new use cases, and new business models will rekindle innovative enthusiasm. Innovation never dies, and there is always an end to the bubble. If there is a glimmer, it is a beacon.

Pessimists believe that the bubble has not yet burst, and the cryptocurrency market still needs to undergo a more profound "avalanche reshuffle." Only when the extractors have no coins left to extract, and the market structure dominated by intermediaries collapses, can true reconstruction possibly occur.

In the meantime, practitioners must navigate through a chaotic and muddy stage: questioning, internal conflicts, fatigue, and doubting life.

But this is the essence of the market—the cycle is the fate, and the bubble is the prelude.

The future may be bright, but the tunnel leading to that light will be very long.

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