The next bull market requires killer applications and a favorable macroeconomic environment. 1. How did previous cryptocurrency winters occur? The first winter occurred in 2014. At that time, the Mt. Gox exchange handled 70% of global Bitcoin trading volume. A hack resulted in the disappearance of approximately 850,000 Bitcoins, causing market trust to collapse. Subsequently, some new exchanges with internal controls and auditing mechanisms emerged, and trust began to be restored. Ethereum also entered the market through ICOs, opening up new possibilities for vision and fundraising methods. This ICO became the catalyst for the next bull market. The boom of 2017 followed when anyone could issue tokens and raise funds. Numerous projects raised billions of dollars with just a white paper, but most lacked substance. In 2018, South Korea, China, and the United States introduced regulatory policies, the bubble burst, and the second winter arrived. This winter didn't end until 2020. After the COVID-19 pandemic, liquidity flooded in, and decentralized finance (DeFi) protocols such as Uniswap, Compound, and Aave gained attention, with funds returning to the market. The third winter was the most severe. After the Terra-Luna collapse in 2022, Celsius, Three Arrows Capital, and FTX went bankrupt. This wasn't just a simple drop in token prices; the entire industry structure was impacted. In January 2024, the U.S. Securities and Exchange Commission (SEC) approved a spot Bitcoin exchange-traded fund (ETF). Following the Bitcoin halving and Trump's pro-cryptocurrency policies, funds flowed back into the cryptocurrency market. 2. The Cryptocurrency Winter Pattern: Major Events → Collapse of Trust → Talent Loss These three winters all followed the same pattern: first, a major event occurred, then trust collapsed, followed by a talent loss. It always begins with a major event. For example, the Mt. Gox exchange hack, ICO regulatory reforms, the Terra-Luna collapse, and the subsequent FTX bankruptcy. Each event differed in scale and form, but the result was the same: the entire market fell into panic. The impact quickly spread, leading to a collapse of trust. People who were previously discussing the next steps in development began to question whether cryptocurrency was truly a meaningful technology. The collaborative atmosphere among developers vanished; they began blaming each other and arguing about who should be held responsible. Doubt led to a talent drain. Those who had once created new momentum in the blockchain field began to become skeptical. In 2014, they moved to fintech and large tech companies. In 2018, they moved to financial institutions and artificial intelligence. They left to find places that seemed more secure. 3. Is it a cryptocurrency winter now? The patterns of past cryptocurrency winters are still visible today. **Major Events:** Trump's Memecoin launch: Market capitalization surged to $27 billion in one day, then plummeted 90%. **October 11 Liquidation:** The US announced a 100% tariff on Chinese goods, triggering Binance's largest liquidation in history ($19 billion). **Collapse of Trust:** Suspicion spread within the industry. Focus shifted from the next product development to mutual blame. **Talent Loss Pressure:** The rapid development of the artificial intelligence industry promises faster exits and greater wealth than cryptocurrencies. However, it's difficult to call this a cryptocurrency winter. Past winters often stemmed from within the industry. The Mt. Gox exchange was hacked, most ICO projects were exposed as scams, and FTX collapsed. The industry itself lost trust. Now the situation is different. ETF approvals ushered in a bull market, while tariffs and interest rates triggered a decline. External factors both pushed the market up and pulled it down.
The builders haven't left yet.
Real-world assets (RWA), perpetual decentralized exchanges (PerpDEX), prediction markets, InfoFi, privacy protection. New narratives are constantly emerging and being created. While they haven't shaken the entire market like DeFi, they haven't disappeared either. The industry hasn't collapsed; what has changed is the external environment.
We didn't create a spring, so there's no such thing as a winter.
We didn't create a spring, so there's no such thing as a winter.
4. Post-Regulatory Market Structural Changes This reflects a significant shift in market structure brought about by regulation. The market has differentiated into three tiers: 1) regulated areas, 2) unregulated areas, and 3) shared infrastructure. The regulated sectors encompass RWA tokenization, exchanges, institutional custody, prediction markets, and compliant DeFi. These sectors require auditing, disclosure, and legal protection. Growth is slow, but capital is substantial and stable. However, once in a regulated area, it's much harder to achieve the explosive returns of the past. Volatility decreases, limiting both upside and downside potential. On the other hand, unregulated areas will become more speculative in the future. Low barriers to entry and rapid volatility will make it more common to see stocks rise 100 times in a day and fall 90% the next. However, this area is not without its challenges. Industries born in unregulated areas are highly innovative and, once recognized, move into regulated areas. DeFi is a prime example, and prediction markets are now following suit. It's like a testing ground. But the lines between unregulated and regulated industries will become increasingly blurred. Shared infrastructure includes stablecoins and oracles. They are used in both regulated and unregulated areas. Institutional RWA payments and Pump.fun transactions both use the same USDC. Oracles provide data for tokenized bond verification and anonymous DEX liquidation. In other words, as the market differentiates, capital flows also change. In the past, when Bitcoin rose, other cryptocurrencies would also rise through a trickle-down effect. But now the situation is different. Institutional capital entering the market through ETFs has stayed in Bitcoin and stopped there. Funds in regulated areas will not flow into unregulated areas. Liquidity only stays where value is validated. And even so, Bitcoin's value as a safe-haven asset relative to risky assets has not yet been proven. 5. Conditions for the Next Bull Market Regulatory issues are gradually being resolved. Developers are still building. So, two things remain. First, new killer use cases must emerge in the unregulated space. It must create unprecedented value, like the "DeFi Summer" of 2020. AI agents, InfoFi, and on-chain social networking are candidate examples, but their scale is insufficient to drive the entire market. We need to re-establish the process of validating experimental results in unregulated areas and bringing them into the regulatory sphere. DeFi has done this, and prediction markets are doing it now. Secondly, the macroeconomic environment is crucial. Even if regulatory issues are resolved, developers begin building, and infrastructure continues to improve, its development space remains limited if the macroeconomic environment is unsupportive. The "DeFi Summer" of 2020 saw explosive growth in the DeFi market with the release of liquidity after the COVID-19 pandemic. The rise following the approval of ETFs in 2024 also coincided with market expectations of interest rate cuts. No matter how well the cryptocurrency industry performs, it cannot control interest rates and liquidity. For the industry to gain acceptance, the macroeconomic environment must improve. The kind of "crypto bull market" where all cryptocurrencies rose in tandem is unlikely to return. The market has become more differentiated. Regulated sectors are growing steadily, while unregulated sectors are experiencing significant price fluctuations. The next bull market will eventually arrive, but not everyone will be able to benefit from it.
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