The New Era of the Crypto Market: Transitioning from "Point Shaving Bull" to "Value Bull"

After experiencing the unforgettable bull market from 2020 to 2021, the current crypto market is filled with confusion and challenges for investors. The carnival era triggered by the large-scale injection of liquidity from global central banks has long gone, and today's global financial markets are at a delicate balance: on one hand, the unexpectedly strong U.S. economic data, and on the other hand, the Federal Reserve's unwavering hawkish stance. The historically high interest rate environment is like a mountain, pressing down on all risk assets.

This paradigm shift, dominated by the macro environment, has made this round of the encryption cycle the most challenging period for retail investors. The previous model, which relied on liquidity-driven, purely emotional speculation, has become ineffective, replaced by a "value bull" market that places greater emphasis on intrinsic value and is driven by clear narratives and fundamentals.

However, challenges and opportunities coexist. When the bubble bursts, true value investors will usher in their golden age. Because it is in such an environment that institutional compliance entry, technological programmed deflation, and real applications integrated with the实体经济 will be able to showcase their true, cyclical value.

1. Difficult Times Under Macroeconomic Headwinds

The difficulties of this cycle stem from a fundamental reversal in macro monetary policy. Compared to the extremely loose environment of the previous bull market, the current market faces the most severe macro headwinds in decades. To curb the most serious inflation in forty years, the Federal Reserve has initiated an unprecedented tightening cycle, which has brought dual pressure to the crypto market and completely ended the old model of easy profits.

1. Macroeconomic Data Predicament: Interest Rate Cuts Are Far Off

Understanding the Federal Reserve's hesitation at the end of interest rate hikes hinges on interpreting recent macroeconomic data. This seemingly "good" data has, however, become "bad news" for investors anticipating easing.

Despite inflation retreating from its peak, its stickiness is far greater than expected. The latest data shows that while the annual CPI in the U.S. in May was slightly below expectations, the core inflation rate stubbornly remains at a high of 2.8%, still significantly away from the Federal Reserve's target of 2%. This stubbornness is directly reflected in the Federal Reserve's latest economic forecasts and the closely watched "dot plot". After the June meeting, Federal Reserve officials significantly lowered their rate cut expectations, reducing the median number of cuts for the year from three to just one.

At the same time, the U.S. labor market continues to show remarkable resilience. The non-farm payroll report for May showed that 139,000 new jobs were added, better than market expectations, while the unemployment rate remained low at 4.2%. A strong job market means that consumer spending is supported, which in turn will put upward pressure on inflation, making the Federal Reserve more hesitant about interest rate cuts.

2. The "attraction" of high interest rates: the "bleeding" effect of crypto assets

This macro background has directly led to the difficult situation of the crypto market:

Liquidity Drying Up: High interest rates mean a reduction of "hot money" in the market. For the crypto market, especially small-cap coins that heavily rely on new funds to drive price increases, the tightening of liquidity is the most fatal blow. The once prevalent situation of "everything rising together" has been replaced in this cycle by a structural market characterized by "sector rotation" or even "only a few hotspots."

Opportunity cost skyrockets: When investors can easily obtain a risk-free return of over 5% from U.S. Treasury bonds, the opportunity cost of holding assets like Bitcoin, which do not generate cash flow and have volatile prices, sharply increases. This has led to a significant outflow of funds seeking stable returns from the crypto market, further exacerbating the market's "bleeding" effect.

For retail investors accustomed to chasing hot trends in a flood of liquidity, the change in this environment is brutal. The lack of in-depth research and a strategy of simply following the crowd can easily lead to heavy losses in this cycle, which is exactly where the "difficulty" of this cycle lies.

2. The Emergence of New Opportunities: From Speculation to Value

However, the other side of the crisis is an opportunity. The macro headwinds act like a stress test, squeezing out the market's bubbles and filtering out the core assets and narratives that truly have long-term value, thereby opening up an unprecedented golden age for prepared investors. The resilience of this cycle is precisely driven by several strong endogenous forces independent of macro monetary policy.

1. Institutional Year: Spot ETF Opens the Golden Bridge

In early 2024, the U.S. Securities and Exchange Commission (SEC) historically approved the listing of a spot Bitcoin ETF. This is not just a product launch, but a revolution in the crypto world. It opens a "golden gate" for trillions of dollars in traditional finance to invest in Bitcoin in a compliant and convenient manner.

By the second quarter of 2025, only two major ETFs had a total managed asset amount exceeding hundreds of billions of dollars, and the sustained daily net inflow provided strong purchasing power to the market. This "new influx" from Wall Street largely hedged against the liquidity tightening caused by high interest rates.

The CEO of a global asset management company referred to the success of the Bitcoin ETF as "a revolution in the capital markets" and stated that this is just "the first step in asset tokenization." This endorsement from a top financial institution has greatly boosted market confidence and provided retail investors with a clear signal to follow the footsteps of institutions and engage in long-term value investment.

2. Halving Narrative: Faith in Code and Hardcore Support

The fourth "halving" of Bitcoin in April 2024 will reduce its daily new supply from 900 to 450 coins. This code-defined and predictable supply deflation is the unique charm that distinguishes Bitcoin from all traditional financial assets. Against the backdrop of stable or even growing demand (especially from ETFs), the halving of supply provides a solid, mathematically grounded support for Bitcoin's price. Historical data shows that in the 12-18 months following the previous three halvings, Bitcoin's price reached all-time highs. For value investors, this is not a short-term speculative gimmick, but a reliable, cycle-spanning long-term logic.

3. The Narrative Revolution: Web3 Begins to Solve Real Problems

Macro headwinds force market participants to shift from pure speculation to digging into the intrinsic value of projects. The core hotspots of this cycle are no longer baseless speculative tokens, but rather innovative narratives that attempt to solve real-world problems:

• Artificial Intelligence (AI) + Crypto: Combining the computational power of AI with the incentive mechanisms and data ownership of blockchain to create entirely new decentralized intelligent applications.
• Real World Asset (RWA) tokenization: Tokenizing real-world assets such as real estate, bonds, and artworks onto the blockchain to unlock their liquidity and bridge the gap between traditional finance and digital finance.
• Decentralized Physical Infrastructure Network (DePIN): Utilizing token incentives to enable global users to collaboratively build and operate infrastructure networks in the physical world, such as 5G base stations and sensor networks.

The rise of these narratives marks a fundamental shift in the crypto industry from "speculation" to "value investment." For retail investors, this means that the opportunities to discover value through in-depth research have greatly increased, and knowledge and understanding have become more important in this market than mere courage and luck.

III. Survival Rules in the New Cycle: Patiently Layout Between the Final Chapter and Prelude

We are at a crossroads of an era. The "hawkish finale" of the Federal Reserve is playing out, and the prelude to easing has yet to begin. For retail investors, understanding and adapting to the new rules of the game is key to navigating the cycle and seizing golden opportunities.

1. Fundamental shift in investment paradigm

• From chasing trends to value investing: abandon the illusion of finding the "next hundredfold coin" and shift towards researching the project's fundamentals, understanding its technology, team, economic model, and the competitive landscape it operates in.
• From short-term speculation to long-term holding: In a "value bull" market, the true returns belong to those investors who can identify core assets and hold them for the long term, transcending volatility, rather than frequent traders.
• Build a differentiated investment portfolio: In the new cycle, the roles of different assets will become more distinct. Bitcoin, recognized by institutions as "digital gold," serves as the "ballast" of the portfolio; Ethereum, with its strong ecosystem and ETF expectations, is a core asset that combines value storage and productive properties; while high-growth small-cap coins should be the "rocket boosters" based on in-depth research and small position allocations, focusing on frontier tracks with real potential such as AI and DePIN.

2. Be patient and prepare in advance.

Data from a research institution reveals an interesting phenomenon: in the last 12 months of the terms of the past three Federal Reserve Chairmen, even with interest rates remaining high, the S&P 500 index averaged a 16% increase. This indicates that once the market is convinced that the tightening cycle has ended, risk appetite may warm up in advance, even before any interest rate cuts occur.

This "front-running" trend may also appear in the crypto market. While the market's attention is generally focused on the short-term game of "when will interest rates be cut," the true wise individuals have already begun to contemplate which assets and which sectors will occupy the most advantageous positions in this future feast driven by the resonance of macro tailwinds and industrial cycles when the prelude to easing finally begins.

Conclusion

This round of the encryption cycle is undoubtedly a severe test of retail investors' cognition and mentality. The era of the "point shaving bull" where one could easily profit with guts and luck has come to an end, and a "value bull" era that requires deep research, independent thinking, and long-term patience has arrived. This is precisely its "difficult" aspect.

However, it is also in this era that institutional funds have poured in on an unprecedented scale, providing a solid bottom for the market; the value logic of core assets is becoming increasingly clear; applications that can truly create value are starting to take root. For retail investors who are willing to learn, embrace change, and view investment as a journey of cognitive realization, this is undoubtedly a "golden age" where they can compete alongside top minds and share in the long-term growth dividends of the industry. History does not simply repeat itself, but it is always remarkably similar. Between the final chapter and the prologue, patience and foresight will be the only path to success.