Market Analysis: Key challenges facing cryptocurrencies in this bull cycle
Intro
We are halfway through 2024, and I hope to take some time this week to cleanse myself of my past writing style. Explore what I believe are the biggest difficulties cryptocurrencies have to face during this bull cycle. As a product designer for the Web3 project, I have been involved in the crypto for nearly four years without knowing it. It can be said that my experience in the cryptocurrency industry has allowed me to witness many changes day and night. Since entering 2024, although many projects in the crypto are actively deploying different tracks (such as GameFi, SocialFi, AA Wallet, intention projects, etc.)
In fact, all projects have only one purpose, which is to take the project out of the web3 environment. However, many popular tracks such as Restaking, Memecoin, Bitcoin L2, Rune Inscription, etc. What these tracks do does not help the project beyond Web3. Therefore, I hope to use this article to explain why it is so important for projects to go out of the environment (outside of Web3).
Problems currently existing in the crypto
Why is it important for projects to “get out of the environment”? Although the Bitcoin ETF was approved a few months ago and the price of Bitcoin once reached a new high of $73,000, you may also notice that the surrounding environment and people’s discussions are not as enthusiastic compared to the previous bull market. It seems that only people within the industry feel the FOMO atmosphere, while outsiders have no idea about it.
The biggest problem in the cryptocurrency community right now is the lack of new capital inflows. Although the approval of Bitcoin ETFs has indirectly brought about capital inflows, mainly from investments from large investors, the teams behind these are definitely not inferior to or even better than any veteran in the crypto in terms of capital operations and risk management. If you expect to make a profit from them, you may be wrong.
New large investors will carry out sophisticated investment strategies and risk management, while whales who have been in the cryptocurrency environment for a long time will choose lower-risk investment products and projects (because they have no reason to choose high-risk investments). Under such circumstances, from whom can Laojiao gain more benefits? In addition, we have learned smarter than before, and the old leeks do not take over at will. Rather choose to invest in meme coins with a more equitable distribution. You take my money or token today and I will take yours back tomorrow. Although the trading volume looks good, it actually does not mean much. It is just a competition to see who has the better ability to cut leeks. This is precisely because of the lack of capital flow, especially the capital flow of retail investors.
Current crypto ecology and narrative
Looking back at the project and ecological development in the first half of 2024, popular story lines include Identity, Liquid Staking, Liquid Restaking, Memes, Bitcoin Narrative, etc. Judging from the projects operating in these tracks, they mainly serve existing cryptocurrency users. Because the knowledge threshold required for these projects is too high for a Web3 beginner. If a cryptocurrency project hopes to truly break out of the outside world, it must first make the project simpler and easier to understand.
So I think using GameFi and SocialFi, or even account abstraction and intent stories to lower the barrier to entry for users, is the right direction. Imagine you are also a newbie, you know that cryptocurrency can allow you to make good profits in the short term, but the question is how to enter? Don’t imagine that these newbies will learn how to enter the world of cryptocurrency because of the high returns. In fact, they are holding back because of fear and the unknown.
Successful examples in the crypto in the past
The memories are also good. Although it is still in the early stages of the bull market, you can also say that it is in the mid-term stage in terms of currency price performance. Perhaps we need to wait for a period of time when we can truly achieve several-fold growth. I think that the superior performance in the last bull market was precisely because the project or narrative was able to break out of the environment. I would like to ask which investment novice and user during the last bull market didn’t know NFT? Frankly speaking, what NFT is is not important to everyone. What is important is that when I hold it, I have the same status as Justin Bibier or even Stephen Curry. Even everyone will have the understanding that if I don’t buy it today, I will regret it if it doubles tomorrow.
What the crypto needs is these fantasy mentality, every new blood who comes to the crypto with the dream of getting rich overnight. However, looking at the projects and narratives in the first half of the year, whether it is Liquid Restaking or Inscription, the threshold is too high for novices, and the storytelling is not enough. Therefore, this is precisely the reason why the project cannot be out of the environment.
How to solve and deploy the next
Still, I think there are ways around it. The most direct solution is to create more narratives that can get out of the environment and greatly reduce the entry threshold for users. This is why I am optimistic about different tracks that focus more on interaction, such as GameFi, SocialFi, etc. Novices can use the products of these tracks to get a seamless experience, enter the game first and learn later, reducing user learning costs and thresholds. This is one of the reasons why I am optimistic about TON in this bull market cycle. TON has the user support of Telegram behind it. I believe that the number of users is not a big problem for them at all. The problem is just the conversion rate. .
In addition, waiting for interest rate cuts is also one of the factors activating the market. After all, we are currently in an interest rate hike cycle, and the hot money in the market is limited. In addition, the current market is very focused on Fomo AI-related investment products, and the cash flow into the crypto is indeed limited. I think waiting for the market to cut interest rates, and then cooperating with the rotation of market sectors, and creating two to three tracks that can get out of the environment, I think this will be the solution for the next crypto.
Chinese Version (中文版本): https://followin.io/zh-Hant/feed/11719703
