Saying goodbye to the 4-year cycle, how can we continue to make profits in the new crypto landscape in 2025?

Author: Miles Deutscher

Source: Miles Deutscher X Account

Compiled by: TechFlow

The 4-year cycle has ended. We are entering a new paradigm for cryptocurrencies - survival of the fittest and elimination of the unfit.

Here are my strategies for how to deal with market changes in 2025 in order to continue to accumulate wealth in unknown areas.

Before sharing my strategy, let's first look at why the 4-year cycle is a thing of the past.

I think there are two reasons why the 4-year cycle is no longer applicable.

1. The halving effect weakens

First, from the supply side, the halving effect of Bitcoin ($BTC) is gradually weakening.

With each halving, the reduction in the issuance of new Bitcoins is also shrinking.

For example, the halving in 2012 and 2016 saw a 50% and 25% reduction in issuance, respectively, and therefore the impact on market prices is very significant.

But by 2024, the halved issuance reduction was only 6.25%. This means that the halving has been much less effective in promoting prices than before.

2. ETFs change market rules

Secondly, from the demand side, the launch of Bitcoin ETF is a major variable that permanently changes market rules.

Bitcoin ETF is a financial instrument that allows investors in traditional financial markets to invest in Bitcoin indirectly.

Since their launch, they have become the most successful ETF products in history, with demand far exceeding expectations.

This influx of demand not only changed the overall pattern of the crypto market, but also broke many old market laws (such as a 4-year cycle).

The biggest impact of ETFs is actually reflected in the altcoin market. Let me explain in detail.

In the past, you might have often seen a chart showing the price rotation relationship between Bitcoin and altcoins. This does hold true in 2021.

But now, the relationship has expired.

(Original picture from Miles Deutscher , compiled by Shenchao TechFlow)

Bitcoin’s wealth effect disappears

When Bitcoin prices rose in 2017 and 2021, many wealthy Bitcoin whales would transfer profits to altcoins on centralized exchanges (CEXs), driving the altcoin market prosperity.

However, most new capital flows are now entered through Bitcoin ETFs, and these funds are not flowing to the altcoin market.

In other words, the way funds flow has undergone fundamental changes, and altcoins no longer benefit from the wealth effect of Bitcoin.

Retail investors skip Phase 2 (ETH) and Phase 3 (Mainstream Coins)

Retail investors flocked directly to high-risk speculative projects on the chain, which is the so-called "on-chain casino games" (Pump Fun).

Compared with 2021, the number of retail investors in this cycle has decreased significantly. This is mainly due to the pressure from the macroeconomic environment and the fact that many people suffered heavy blows in the previous cycle due to events such as LUNA, FTX, BlockFi and Voyager.

However, retail players who still remain in the market directly skipped the mainstream coins and chose to look for opportunities on the chain.

You can read my detailed analysis of how this phenomenon affects the market here .

If my judgment is correct, that is, the cycle theory is no longer applicable, then what changes will this bring to the future market?

I have a bad news and a good news to share.

The bad news is : It’s even harder to make money by lying down. This is a natural signal that the industry is gradually maturing.

Actually, there are more trading opportunities in the market now, but if you still use the strategy of 2021 - such as holding a bunch of altcoins and waiting quietly for the "altcoin season" - then you may be disappointed. Even poor performance.

The good news is: Since there is no so-called four-year cycle, it also means that a multi-year bear market caused by cryptocurrency-specific factors will no longer occur. Of course, from a macroeconomic perspective, a long-term bear market is still possible, as cryptocurrencies do not operate in isolation and their correlation with the macroeconomics is now closer than ever.

The market's "risk preference period" and "risk avoidance period" are more likely to be driven by changes in macroeconomic conditions. These changes usually trigger short-term mini echo-bubbles rather than unilateral upside trends that last for months. The so-called echo bubble refers to the short-term market rebound caused by changes in the macro environment. Although it is small in scale, it has similarities with the large bubbles in the past.

In these bubbles, there are a lot of opportunities to make money.

For example, in 2024, we witnessed the rotation of different hot spots: November is the meme craze, December is the AI ​​concept, and January is the agents. Next, there will undoubtedly be new trends.

These are great money-making opportunities if you are sharp enough, but require a slightly different strategy than the past cycle.

This leads to what I will discuss next: my strategy.

A few days ago, I had dinner with @gametheorizing and he made a very insightful point of view.

Many people are pursuing an ultimate goal: whether it is to double the portfolio by 5, 10, or 20 times.

But in fact, a better strategy is to focus on multiple small bets rather than just bets. By continuously accumulating a series of small victories, this approach may bring greater rewards in the long run.

Therefore, instead of betting on the full scale and hoping to double your assets quickly in the copycat season, it is better to try to continue to accumulate wealth through the compound interest effect of time .

Specifically, you can adopt a strategy like this:

Small bets > Make a profit, place a bet again > Make a profit again, repeating.

This is why many top traders and thinkers in the crypto field (such as Jordi) were once professional poker players. They learned from poker how to view each trade with a probabilistic mindset, assess possible outcomes, rather than betting blindly.

My portfolio is currently allocated like this:

50% invest in long-term optimistic high-conviction assets, 50% are used for stablecoins and active transactions. I will use this part of the funds to find short-term opportunities in the market and flexibly enter and exit.

In addition, I use stablecoins as a criterion for measuring the success or failure of transactions. Every time I exit the transaction, I turn my profit back to the stablecoin, so that I can clearly see my earnings.

If your cryptocurrency portfolio is too diversified and you don’t know how to deal with current market changes, I shared a guide last week detailing how to optimize your portfolio based on changes in the market.

In this article, I highlighted a key point: the importance of setting the "INVALIDATION" standard for each transaction. It 's like when you decide to buy some kind of cryptocurrency, you need a clear reason to verify ( VALIDATION ) your choice. The so-called "invalidation" refers to the standard of exiting the transaction in a timely manner when market conditions no longer meet your expectations.

I have noticed that many people lack basic risk management awareness when entering a transaction and do not set clear exit standards. This practice often leads to unnecessary losses.

If you want to take a suggestion that significantly improves future profitability now, it is to develop clear technical or fundamental “invalidation” standards for each transaction. This will not only help you better manage risks, but also improve the overall efficiency of transactions.

Of course, your confidence in a transaction and the expected holding time may affect how you set the criteria or trigger conditions for "invalidation". But anyway, this doesn't change the fact that you need to plan ahead. Having a clear exit plan is one of the keys to a successful transaction.

Although the current market may not fully follow the previous cycle laws, I am still full of confidence in the future. As long as you maintain the right mindset and strategy, 2025 is still expected to usher in huge growth space.

At present, we are in a bear market stage, but the market trend will eventually change and bring many new opportunities. Until then, your primary goal is to survive.

The returns in the cryptocurrency market often belong to those who can stick to the storm of volatility. No matter how the market goes ups and downs, patience and tenacity are the key to ultimate victory.