Hyo@0xfafel
Future of DigitalAsset(Crypto)
-personal thinking about current market’s narrative
I still believe that 2025 was one of the best market in several years to make money when thinking ahead. There will still be opportunities in 2026, but I think the advantage or disadvantage of positioning will become much more pronounced depending on what you did in 2025.
I’m not sure how the market will move after that, but what’s clear to me is that we’re in a fundamentally different phase compared to previous crypto markets, mainly because the industry has entered the regulatory domain and because the liquidity dynamics are structurally different now.
Because of that, I’m convinced that both the frequency and the magnitude of “money printing events” will decline going forward. It means market will be more complex and it makes you hard to earn money from this market.
Aside from AI narrative, which changes our lives directly, the crypto market is essentially repeating an old meta (like ICO). In previous cycles, each phase had a distinctly new narrative (ICO, DeFi, NFT, P2E, ICO, fixed-yield with stablecoins, airdrop-marketing & new distribution concepts, memes, SocialFi, PerpDex, prediction markets, ICO).
But right now, except PerpDex, there aren’t meaningful new narratives, and perp DEXs themselves do not bring in positive external liquidity; they actually amplify risk. Of course, it doesn't mean perp dex is just the bad thing. But it is clear that perp dex is not mature enough for now.
(Let's keep seeing Hyperliquid, Lighter, EdgeX, Pacifica, and etc. Few of this will take over BNB.)
After the current massive liquidation driven by excessive OI and exchange's ADL issues, many market makers and VCs were hit, but the stabilization that followed was quicker and less damaging than expected. Orderbooks also normalized. This means current crypto market fundamental is strong.
However, since then, I can feel that inflow of liquidity into the market has declined, and the market is mostly rotating on internal liquidity using leverage. It feels very similar to 2021.
Still, because perp DEXs dominate the meta, OI remains disproportionately high relative to market liquidity, and there is still no perfect solution to ADL issues. This feeds directly into liquidity fragility, and after the liquidation cascade we even saw stablecoin depegs and some exchange/protocol earn products malfunctioning.
(IMO) The psychological baseline for “acceptable FDV for promising projects” has continued rising, from around $1B in the past, to ~$2.5B late last year / early this year, and to ~$4B now. This is my personal assessment, but I consider the psychological valuation benchmark to be one of the best indicators of whether a cycle can be sustained.
And, I think we’re close to a point where that baseline gets reset back down to a more reasonable level. In other words, I expect a pullback significant enough to break the current valuation psychology. The risks driving this are:
•Excessive OI and ADL-related cascading liquidations
(leading to liquidity gaps and orderbook dislocations)
•Operational failures in DATs
(large outflows happening in the middle of (1)’s liquidity environment)
For this reason, I expect the market to decline meaningfully(cannot expect what will be trigger) and it will take quite some time for liquidity to recover and for conditions to stabilize again.
During that process, outflows will be larger but the market will lack sufficient inflows to absorb them, which could lead not only to exchange liquidity issues but also to failures across OTC desks, VCs, and related companies. And finally, the psychological benchmark for valuations could break entirely.
Of course, as long as there is no fundamental flaw in blockchain technology or Bitcoin’s core value proposition, crypto as an asset class will find some reasonable valuation equilibrium. Once the valuation resets to a more appropriate level, market will recover.
