Faith collapses, will the copycat season no longer exist? Crypto markets move towards nihilism

Author: Route 2 FI, Substack

Compilation: BitpushNews Yanan

The crypto market is undergoing a profound change, especially for newcomers who have only entered this field in the past 12 to 16 months.

What once seemed relatively simple trading methods—operated on a centralized exchange, can "step in success with half a foot"—are becoming increasingly complicated. The entire market structure is more like a highly volatile gambling arena than a traditional financial trading market, which puts unprecedented high requirements on traders' agility and market awareness.

The tried-and-tested "buy and long-term holding" (HODL) strategy has now basically failed. Everyone's currency holding cycle has been greatly shortened, from several months to just a few weeks or even days. (Remember the classic suggestions of those old players? We must insist on "buying altcoins at low prices and holding them until the bull market high")

The main reason for this change is that new projects and new tokens spring up like mushrooms after a rain. They compete for market attention and capital flow, constantly challenging the status of old projects, making market competition more intense, and the market situation changes rapidly.

Even events traditionally seen as favorable can trigger unexpected market reactions. For example, Trump's high-profile launch of Meme coins may bring a large number of new users and attention to the entire crypto field, but it may also cause the prices of many altcoins to suffer heavy losses. Typically, the beneficiaries of these events are limited to Bitcoin (BTC), Solana (SOL), and the Meme coin itself. Many crypto investors have already realized this through "paying tuition fees" - if they do not have a heavy holding of BTC and SOL in their portfolio, they are likely to face the risk of a significant decline in assets.

Similar market dynamics were also staged when Berachain announced its launch, and the news caused a shock to the Abstract ecosystem as market attention and funds flowed quickly to the former. Faced with this high volatility and uncertain environment, the safest strategy is to accept that this volatility will become the norm and realize that market volatility may be as the emergence of new tokens, new public chains and new projects continue to emerge. It will further intensify.

At present, many investors are re-adjusting their strategies to gradually increase their holdings of BTC and stablecoins, while significantly reducing their long-term altcoin positions. The market's focus is shifting from the concept of "long-term investment" altcoins to a "trading" strategy that focuses more on short-term opportunities.

In the current cycle, one of the core goals of participants is to avoid becoming the last buyer of a failed project and watch its price return to zero. In the second half of the current market cycle, long-term investments in any currency except Bitcoin (BTC) may not be able to achieve ideal risk returns. While altcoins may be close to the bottom, the possibility of collectively reaching new highs for all currencies, NFTs and ecosystems is getting smaller and smaller.

A large number of new coins are issued every day, which not only disperses market attention, but also makes the funds more diversified, making it difficult for old projects to rise again.

This round of crypto market cycle is particularly challenging, and the uncertainty in the market is more obvious than before. In the past, investors generally believed that popular altcoins would rebound sooner or later after a plunge, but now, that confidence is shaking.

During the market cycles in 2017 and 2021, investors are generally willing to buy the altcoins they are optimistic about when the market falls, provided that the market value of these projects is not too small (usually not less than US$100 million). The consensus at the time was that the prices of these currencies would rebound at least during this cycle. Tokens that have gained market recognition in the early stages often maintain their advantage until the end of the cycle.

However, this cycle is different (yes, it's really different). The market is filled with narratives and sub-narratives, competing with each other for a brief level of attention. Investors are now becoming more cautious about "buying on dips" because the entire market narrative that a currency relies on may collapse at any time, resulting in investment becoming worthless.

In the past, we were used to a holistic market cycle, but now, the market is cut into multiple independent "mini cycles", each experiencing its own rise and decline. Bitcoin (BTC) and Solana (SOL) are still seen as relatively safe assets and may eventually remain in place, but their returns are no longer as attractive for investors seeking exponential growth— After all, BTC has rebounded 6 times from the bottom, and SOL has risen 20 times. The key question at this time became: Should we invest in crypto projects in the AI ​​track? Although this track has attracted much attention recently, many tokens have fallen sharply from all-time highs, and there is no guarantee that they will return to their peak.

The fragmentation of the market makes it more difficult for investors to accurately capture and exploit emerging trends. The crypto market has always been a highly speculative field, although past market cycles have tried to give it legitimacy, such as emphasizing “peer-reviewed blockchain technology”, “solid fundamentals” and “real world applications”. However, this cycle basically abandoned these appearances and instead accepted a more "nihilistic" market logic - everything depends on whether it can attract and maintain market attention.

The direct consequence of this trend is that the market's attention cycle is getting shorter and shorter. Once upon a time, the bull market cycle could last one year or even longer, but now the market's fanatic period may only last for months, weeks, or even days.

At the moment, the market seems to be in a "Meme supercycle" (or is it over?). However, even the most popular Meme coins have fallen sharply from their peak, making the rationality of investing in them questionable.

Nowadays, the risk of becoming a "taker" is higher than ever. In past market cycles, similar price plunges have been often seen as a bottom-buying opportunity, as the market generally believes that the prices of these tokens will eventually rebound. But the question now is: Can these currencies still regain attention from the past?

The current market tends to be "leaders" rather than "laggards". Projects that bet on undervalued tracks or focus on fundamentals but lack market heat are often marginalized.

While Meme coins and AI tracks are the winners in the market right now, investors are still cautious about these trends—the shift in market focus is too fast to predict. The core reason for this general uncertainty is that there are too many choices in the market. Thousands of tokens and projects are competing for investors’ attention, making it increasingly difficult to identify which projects have real potential and which are just a flash in the pan.

When attention is both dispersed and short-lived, it is even more difficult for the market to form a lasting upward trend. So, is this phenomenon a new normal in the crypto market, or is it a temporary fluctuation caused only by the current market environment? This is still an open question.

Each market cycle usually goes through a chaotic stage, with market attention dispersed and then a clear winner emerges. However, there is also a possibility that the market has undergone fundamental changes: the investor's attention cycle has been permanently shortened, and no single narrative can dominate the market for a long time.

Macroeconomic factors are also shaping the current market structure. The loose monetary policy in the past has made investment relatively simple, and abundant liquidity has promoted the formation of speculative bubbles. However, in a environment of high interest rates and tight liquidity, the market has become more difficult to navigate.

The decline in investor confidence in "buy on dips" may reflect a broader economic reality. Investors have become more conservative amid rising economic uncertainty. There are also increasing discussions about the four-year cycle, and some people predict that this cycle will be lengthened. However, despite some changes in the market, the four-year cycle is still working, just a little different from previous models. Compared with the bull market in the past, this cycle seems even more sluggish - Bitcoin (BTC) only rose about 1.5 times higher than the previous high, and Ethereum (ETH) has not even broken through the previous high.

This round of market rise is mainly driven by institutional investors such as the launch of Bitcoin ETFs and micro-strategy. These factors have attracted new institutional funds to enter the Bitcoin market, but outside of BTC, there is a clear insufficient inflow of funds. In addition to Bitcoin, speculative funds mainly flow to Meme coins, and the life cycle of these tokens is shorter than before, and the market pace becomes extremely fast.

The wider speculative capital seems to have not returned to the market, and the market lacks the momentum to drive overall new highs. Funds flow more in the crypto market than in a steady stream of new capital. Due to the lack of strong liquidity providers, the current market hotspots cannot form a large enough capital effect, nor can they attract a large number of new investors to enter the market.

The characteristics of this cycle are significantly different from the bull market in the past. This raises a fundamental question: Has the cyclical pattern of the crypto market changed? The key factors that have driven the bull market in the past—loose monetary policy and avid retail investors—seemed to become less powerful in the current environment. The "altseason" that the market is looking forward to, that is, all altcoins generally usher in exponential growth stage, and has not yet truly arrived.

The gap between BTC and TOTAL2 (the difference between Bitcoin market value and the total market value of all other crypto assets) continues to expand since the launch of Bitcoin ETF. The past "counterfeiting season" was often a period of "brainless rise", and all tokens will generally rise due to the influx of speculative funds. However, today's Bitcoin market has become an independent ecosystem, and its price movements are driven more by ETFs, micro-strategy, macroeconomic and political factors than traditional crypto market cycles.

In contrast, the altcoin market is more like a high-risk casino, and it is worth participating only if it has a high net inflow of funds and has "choose the right gambling table".

Where there are winners, there must be losers. The crypto casino in 2025 is more difficult to control than before. There are too many "gambling tables" (that is, different altcoin tracks) in the market today, and a large number of new tokens are born every day, competing for market attention and capital flow. Too many investment choices make real opportunities more difficult to distinguish, and also increases the risk of investors betting on the wrong track and becoming a "taker". Surviving in this complex and rapidly changing market requires extremely high market acuity, execution and adaptability, which not everyone has.

Despite this, there are still hopes for the "copycat season". I hope they are right, too.